Surowiecki on the Google IPO

Kottke notes that James Surowiecki has finally weighed in on the Google IPO.
Surowiecki comments:

When Google went public on Thursday, it immediately became one of the most highly valued companies in the world. Sergey Brin and Larry Page, its co-founders, are now billionaires (at least on paper). And the company raised an immense pile of cash that will stand it in very good stead as it faces an increasingly competitive future. You might think, then, that Google’s initial public offering was a success. But that is far from the message from Wall Street and much of the financial press. They prefer words such as “debacle” and “amateur hour” to describe Google’s performance. On this view, Google looks like a runner staggering across the finish line, out of breath and gasping for water.

The reason, he goes on to say, is that Wall Street is dark on Google because it’s former darling effectively cut it out of one of (if not) the biggest IPOs of the year. The suits had been sallivating over their commissions on this deal it was just a matter of who would get it. But Google committed the biggest crime possible in the eyes of the kindergarten between the river and the graveyard and now they are attempting to make it pay – at least in reputation.
All fascinating stuff. Especially as I’ve just started reading Michael Lewis’ Liar’s Poker – the story of Lewis’s sojourn at the now defunct Wall Street firm Salomon Brothers. (Hence the obscure reference to the kindergarten between a river and a graveyard – Wall Street.)
Surowiecki goes on to say:

Wall Street can spin this however it wants. But Google went public without underwriting from a major investment bank, without handing out favours to well-connected executives and without dictating a price in the manner of Soviet central planners. Because it did, it now has hundreds of millions of dollars that it would not otherwise have had. By any standard, this was one IPO that worked.

In one way it’s slightly ironic and in another way it’s entirely appropriate. The biggest enduring success of the dotcom era thinks up new ways of doing things. The internet is a totally new way of doing things. The brokers want us to believe that we keep doing what we always did, only using the internet, so we keep them and their commissions in the loop.
Google, used its new way of thinking to ask “Why?” and is reaping the benefit. A lesson for us all. The new technology opens new doors, we just have to try them to find out what lies behind. Just look at the top 6 letters on the left of your keyboard. The only reason they are arranged like that was because it stopped the keys from jamming on the earliest typewriters. We’re still using them because that’s the way we’ve always done it.
Well done Google and thanks to James Surowiecki for more independent thinking.

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