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Google Considering IPO Auction Online
HackerStickers writes "An article in the Financial Times states that Google could be considering doing their IPO online via an auction versus the standard methods of raising funds early next year. The article points out that auctioning it could bring in a larger chunk of cash for the company. Would you bid on a piece of Google?"
By becoming public, google loses the ability to continue with constant steady growth and innovative R&D. These things will invariably lead to short sighted planning by the management to "make the numbers" for the next quarter, 6 months, or year. "Growth" will be expected year after year - the innovative ideas that have made google so successful will give way.
No, I won't bid on a share. I would hope that the IPO never happens, as google is still a quality company. I would hate to see that all change.
Stop corporate
I'd pay $20 a share for a stake. Uhh, I mean $22. No, wait, make that $24. Did I say $24? Darn, I meant $26. No, I take that back, what I really meant was...
"Accept that some days you are the pigeon, and some days you are the statue." - David Brent, Wernham Hogg
Hey, unless you're a brokerage house, you'll probably end up paying what you would have, or maybe even a little less, while google will get considerably more.
I don't see a down side to cutting out the old boy network. Hell, maybe it will be a trend, where merit as opposed to heredity or nepotism determine who can get ahead.
When you open up your company for outside investment, that's when a lot of companies go to shit. When you're privately-owned, you can be content to simply turn a nice profit every year.
When you have an IPO, though, your company is worthless to investors unless you continually grow and grow and grow.
Google could continue doing what they're doing right now and maintain a constant level of profit (assuming they're profitable right now, which they supposedly are). But if they hae an IPO they're going to have to try more and more ways to wring more and more money out of investors and users. Get ready for what may be the slow degradation of one of the last "pure" and amazing things on the web...
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Every day punters are likely to want a piece of Google in a big way. The global reach of the brand and the sentimentality with which the everday web user regards it mean that folks are likely to think that it is worth investing in. But this is where where the auction model completely falls down.
The article states that the price could get pushed up as high as $100 billion in an auction - for a company that makes $150 million a year??! This is complete
Google directors get to save a small percentage of the billions they are going to make by skipping on underwriting charges, but the potential for the price being pushed to an artificial high in a auction before a catastrophic crash are large.
While interesting, this isn't the first time a company has done this. In April, 1999 a company called Ravenswood sold 1,150,000 shares online in an IPO auction. Several other companies since have, including Salon.com and Andover.net. Here's a summary of how they went.
Request: ECM unit, 1000 km fullerene cable, 1 tactical nuclear weapon. Reason: Birthday party for foreign dignitary.
Google is one of the few companies that regularly and consistently produces USEFUL functions for the world on a large scale. No one competing for the same market segment even comes close at this time.
Unfortunately when companies IPO, that means that they lose control over company direction and quality. As soon as people have a vested interest in the company, the race to profitability is on. This hurts the development cycle and the processes which control the quality of product. Investors are very demanding and GREEDY. Greed always rears its ugly head and forces companies to release more quickly and with lower costs to attain the extreme profitability that is required by the public.
Sure if you buy in then you can get a cash cow and end up sitting pretty for a while. Just know that over time people always want more money faster than it is currently being earned. This results in unrealistic schemes to achieve such goals.
Some would argue that more money means better product, but I know first hand that more money means more greed and investors would rather have money than good product. This means more regular changes internally to keep up with good profitability ratings.
Fortunately others are starting to compete for this space as well and even if Google looses it's cool due to investor demands, others will be ready to seize opportunity for improvement. Too bad it likely won't be the same Google that we (everyone I know) love today.
-BJ
Of course they'll make more money with a Google-run auction:
"I bid twenty dollars per share"
Did you mean: thirty dollars per share?
Believe me, I'm as surprised by my comment as you are.
It seems, though, that an auction will mean that everyone will pay the maximum amount for the shares rather than a tempting IPO amount. So instead of some people getting in at a $10 IPO value (for example) and riding it to $100, everyone will have to pay $100 each and there will be no IPO ride.
What this means to me that there is no pressing reason why I should participate in the IPO. Presumably the auction will set a price very close to what it will be trading at when shares become available through traditional channels, so why bother? Just wait a few days and see how the stock moves. IPOs in the past have been tempting for investors because there is an expectation it will rise quickly, so everyone wants in. If the IPO is at the "already risen" stock price then there's no rush to get in at the very beginning since a few days later will be essentially the same price on the open market.
This only makes sense for Google, and only the owners. As someone else has said, they already have good profit and I doubt they need more to grow the company. If the company doesn't have any plans on why it needs/wants $15 billion (other than to make a few owners rich) I'd be skeptical of giving it to them.
I want it NOW
This is not a reference to the Google stock, but rather to the pervasive attitude in today's society that is leading to our downfall as a civilization.
I want it NOW - as in, "I am unwilling to wait, and do the sensible thing, so I will do something completely stupid to get this right now."
Rather than waiting to earn and save enough money to buy (that plasma display|that new video card|that big SUV|...) people just charge it on the ol' credit card. Result - most of their income goes to servicing their debt.
Companies are like this, as well. Rather than borrowing money from a bank, or folding some profits back into R&D, they look for the immediate solution - "Let's sell off part of the company!" Unfortunately, unlike a bank debt which is designed to go away after a time (when you pay it off), selling off part of the company as stock is almost impossible to reverse. True, a company can try to buy back the outstanding shares, but as they do so, the cost of the outstanding shares will rise, and they are unlikely to ever be able to buy them back.
And I am sorry, but any employee who is swayed by stock options IS A TOTAL FSCKING MORON. The only way stock options are valuable is if the stock price of the company significantly increases from the time the options are granted to the time they are vested. As other posters have pointed out, this leads to a company trying to grow continuously, which is simply not possible. As a result, eventually you will get stock options that don't significantly appreciate in value.
There are better ways to "incentivize" an employee (that was the very term that was used by my boss as I was offered stock options - which were so far under water when the company was bought out that I was offered one whole dollar for the lot). A profit sharing plan, in which a percentage of the company's profits are credited to an account in the employee's name, with a vesting period, is FAR MORE effective at giving a key employee a reason to stay than stock options - the employee can SEE the value, can SEE the exact amounts of money he is walking away from, and that value DOES NOT FLUCTUATE as the market varies - hence the employee is unlikely to walk away at an uptick, as upticks and downturns simply don't happen.
Lastly, the whole purpose of playing the stock market has changed. It used to be a means by which you invested you money in a stock in return for dividends - converting cash into an annuity, thus attempting to guarantee youself an ongoing income, while still having the money available for use if needed. In that mode, the stock market is a non-zero sum game - you can gain value without somebody else losing value.
But now, the stock market is played like a trading card game - the idea of holding a stock for years is gone, buy it today and sell it tomorrow, lather rinse repeat. When it is played like that, the stock market becomes a zero-sum game - if I make money on the market somebody else had to lose - if I bought it low from you, then you lost your chance to make money, and if I sell high to you, you are losing money to me.
As a result, since in a zero-sum game everybody is in direct competition with everybody else with little motivation to co-operate, you get the "dog-eat-dog" mindset we see today.
No, I hope Google does NOT IPO. Yes, it would be nice to be able to buy a few shares of a well-run company who's management is planning for the long term. However, the odds of Google remaining such a company after IPO are vanishingly small. To paraphrase Marx (Groucho, not Karl) - "I wouldn't want to own stock in a company that would sell it to me."
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I've felt for a long time that this is an affront to capitalism (yeah, I'm a capitalist... go ahead and mod me down). The only people who make big money did essentially nothing to earn it, besides the company founders who took big risk and make less than they could since the banks keep the price down to make sure they sell the whole float.
At the same time, we've been here before, as this Forbes article from early 2001 describes. Earlier efforts to make IPOs more efficient and democratic failed. It's not clear to me whether this was due to the coincidental collapse of the tech IPO market, or whether it was the result of a coordinate sabotage effort by the big investment banks. (Or maybe, just maybe those banks really do add some value by getting their big customers to serve as market makers).
Google has about as much market clout as I can imagine, so if they decide to go for it, this will serve as a good acid test. If the IPO goes off successfully as an online auction, this probably means that the earlier efforts were just bad timing. If it fails, I might smell a conspiracy.
Peer Pressure
(I know I may burn some karma on this, but it is worth it if I can contribute to putting an end to Everyman's lies about Google.)
Warning: Before modding the parent post, you should know that "Everyman" is the Slashdot alias of Mr. Daniel Brandt, who owns google-watch.org.
I have pointed out many times that google-watch.org is a site full of lies and deception. The reason the site was set up in the first place was that Mr. Brandt didn't think that he got a high enough PageRank, and that his obscure pages about various subjects should rank above other, more informative and popular sources of information on the same subjects. When his obscure site with a page about Donald Rumsfeld did not get a high rank on Google for obvious reasons, he set out on a personal vendetta against the search engine.
In other words, he is not making that site for the good of us all, but to spread FUD about Google. It is a good thing to keep an eye on powerful companies, but this is over the top - it is ridiculous.
Before falling for Brandt's lies and deceptions, please visit Google-watch-watch.org, which exposes his misleading site for what it is.
This latest post on Slashdot is just the latest post in the series of strawman arguments Mr. Brandt is using to try to destroy Google. Also, he still hasn't answered my last reply to him, where I pointed out his hypocrisy, when he complains about how Salon writes a misleading article about him (yeah, right...).
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