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Oogling Google

Jul
30
2004

Posted by Chris Nolan
This week’s eWeek column is about Google and the trend it may be kicking off with its massive sale of insider stock.
Now, as a rule, I don’t like the word “insider” since in Silicon Valley pretty much everyone’s got some connection to someone else. Compared to the public stock market, we are all insiders. Technically speaking, Google is allowing its earliest investors – people who paid for the stock and took the risk – to see a return on their investment. Strictly speaking and speaking strictly in a business sense, there’s nothing wrong with that.


But the world of business and the world of politics – or perception, take your pick – are very different. And Silicon Valley has a habit — a habit common among true believers — of doing pretty much everything to excess. Remember 1999? Me neither. It’s one big blur of good white wine, private rock concerts, and loopy talk about G5s and early retirement. And there are plenty of people still here – or recently re-arrived – who’d like this new bubble to make up for the last one. It’s a dangerous combination, greed and bitterness, a worrisome confluence.
Google’s pricing comes at an interesting moment, according to the IRS. The New York Times had a piece Thursday tracking the wide fluctuations income felt by the wealthiest Americans. Now, I’m not exactly shedding a tear for rich folks who aren’t as rich. But that’s not really what this potential for controversy is about. It is, instead, about people putting their wealth in the stock market and being a little upset when stock don’t increase in value. And the satisfaction they might want.
Says the Times: But now, with many more ordinary employees joining high-level executives in having part of their compensation dependent on stock options and bonus plans, a volatile and relatively unpredictable new element has been introduced to the incomes of millions of workers.
“Risks used to be confined largely to executives and business owners with large incomes,” said Edward N. Wolff, an economist at New York University who studies wealth and income.

No longer, the risk has spread and not everyone in the deal knows the rules and that’s where the trouble lies. With the beginnings of this bubble, we’ve already seen more scrutiny applied to offerings; no longer does the Securities and Exchange Commission shrug when a CEO gives an interview or a filing fails to make a full explanation. And outsiders – and by outsiders in this case I mean, very specifically, The New York Times business staff – are keeping an eye out, too. Silicon Valley is no longer an island to itself, a remote out-of-the way place where technical and financial miracles occur. That’s what’s different this time around.

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