Google heads for IPO

October 23, 2003 11:10 PM

Another "Google heading for an IPO" report- but this time it's for real, according to the Financial Times. Apparently the shares will be sold through an electronic auction "designed to prevent a recurrence of the sort of financial scandals that have engulfed Wall Street since the collapse of the dotcom bubble". Not that Google was ever going to be Enron.
posted by zimbobzim (24 comments total)

So google is going to show the stock market how a good system will work now? Good.
posted by Space Coyote at 11:20 PM on October 23, 2003

So... how will this effect the whole "Don't be evil" thing?

Can that be built into the charter of a publicly traded company?
posted by weston at 12:41 AM on October 24, 2003

Of course what will happen when a contender to rival Google in terms of uselfulness turns up? I think when (if?) Google gets some decent competition they won't have the same attitude they have today to banners etc etc
posted by PenDevil at 12:49 AM on October 24, 2003

$500m revs and $50b market cap is a 100 times valuation. For comparison, Amazon has a 5 times valuation although it has negative earnings but not much. Ebay is more comparable with positive earnings has a 29 times valuation. Is Google 20 times better than Amazon or 3 times better than Ebay? I think Amazon is a better deal for the money at these valuations.
posted by stbalbach at 2:39 AM on October 24, 2003

Considering how broken Google appears to be these days, I'm not sure they're really worth that much...
posted by bshort at 5:10 AM on October 24, 2003

stbalbach: Using revenue multiples (instead of cash flow or earnings multiples) is so 1990's.
posted by trharlan at 5:31 AM on October 24, 2003

There goes google. Once they become slaves to shareholders and profits, it will no longer be the company it was.

Next?
posted by eas98 at 6:23 AM on October 24, 2003

So google is going to show the stock market how a good system will work now?

Hardly sounds like a "good" system to me...unless you're currently a Google owner.

However, investment bankers warned that a pure online auction would risk setting an unrealistically high price for Google's shares, since there would not be enough stock available to meet the massive demand from private investors captivated by the prospect of a new dotcom gold-rush. "They could get a $100bn" stock market value, said one person involved. "However, all the shares would end up with Aunt Agatha in Des Moines and Uncle Milt in Pittsburgh and there would be no real public market at all."
posted by rushmc at 6:26 AM on October 24, 2003

Plus, what eas98 said.
posted by rushmc at 6:26 AM on October 24, 2003

Using revenue multiples (instead of cash flow or earnings multiples) is so 1990's

Google is not public so it is the only way to look at it. But you make a good point. A $50b valuation based in earnings is even more rediculous with somthing like 333 times instead of 100.. which is very 1990's.
posted by stbalbach at 6:31 AM on October 24, 2003

I'm glad that someone at the Guardian could tie together my haphazard thoughts better than I can be bothered to.

boo this.
posted by bonaldi at 6:39 AM on October 24, 2003

Considering how broken Google appears to be these days

Huh? Works for me. Are you pushing the right button?
posted by languagehat at 6:58 AM on October 24, 2003

One important thing to point out about the search engine business is that while it may take a fairly significant outlay in equipment and software to get up and running, it doesn't seem to be subject to the same sort of network effect that keeps companies like eBay and Amazon at the top of their respective heaps.

Literally anyone can get into the search engine business. All you need is a spider, a db and a searching algorithm and you're golden. The trick of course is to come up with a decent searching algorithm.

I think we should ask the LazyWeb to build us a GPL Google.
posted by bshort at 6:59 AM on October 24, 2003

Huh? Works for me. Are you pushing the right button?

Google is getting progressively swamped by people gaming their algorithm, hence their recent abandonment of their PageRank algorithm. Maybe it's just me, but the results that are getting returned are containing more and more chaff.
posted by bshort at 7:01 AM on October 24, 2003

bshort: you're not the only one who has noticed this.
posted by keswick at 8:32 AM on October 24, 2003

Gaming Google: Bloggers to Blame
posted by eatitlive at 8:38 AM on October 24, 2003

Re: Google's wheat to chaff ratio declining.

A few months back, I sent Google an e-mail suggesting that a next step they could take to improve their search engine would be to allow the user to narrow his search by classifying indexed web sites into a few major categories:
1. commercial
2. organizational
3. general information
4. personal (not the same as a blog)
5. blog

I don't know how Google would tell which site was which (using domain extensions wouldn't work since the majority of sites, no matter their content, register as .com) but it would probably be based on words appearing frequently on a page (ie. frequent use of "buy", "sale", etc. = commercial), frequent use of "I", "me", "my" = blog).

Another idea would be to add a line to each search result with five radio buttons allowing users to "vote" on which category a site fits into. If Amazon comes up on my search result, I can click once to vote that it's a commercial site. Metafilter comes up and I vote blog (whereas somebody else might vote general information or possibly even commercial.) But it would end up being based on what the majority of users say.

I still haven't received a reply so I assume their CEO is still contemplating my idea.
posted by Jaybo at 9:25 AM on October 24, 2003

eatitlive: And by posting to Metafilter, a blog, you are hastening Google's demise! Damn you!
posted by keswick at 9:32 AM on October 24, 2003

Google's hastening it's own demise by floating itself.

The Last Days of Google, The End of an Empire. Coming soon to a cinema near you.

Be amazed as the new paymasters interfere and fuck things up. Be astounded at the crass intrusion of commercial priorities. Be shocked as censorship runs rife, lawsuits are launched by the hour, and generally the whole thing decends into a commercial chaos.

</pessimism>
posted by Blue Stone at 11:49 AM on October 24, 2003

You guys are just jealous and possesive of something that doesn't belong to you.
posted by billsaysthis at 1:02 PM on October 24, 2003

uhhh rushmc? Are you saying that free market doesn't work when it comes to stocks?

What's the difference between getting an unrealisticly high market cap right off the bat, and getting an unrealisticly high market cap after the investment bankers and their friends get to own them at the initial artificially low price and then flip it to the public?

The only difference is that the bankers and their preferential customers don't get to make their unearned profit. If Google can pull this online auction thing off, it will be a better system because it eliminates market inefficiency in the form of underwriting fees and underpiced IPOs.
posted by VeGiTo at 3:14 PM on October 24, 2003

Now is a probably the best time to do this. If the IPO does translate into a slowing of R&D, well google is already behind the curve compared to the features at alltheweb.com. Might as well cash out before google has to seriously compete with alltheweb, thus diluting their market dominance.

Not to mention alltheweb does a much better job of giving weblogs lower rankings, thus the number one complaint regarding google of late (its all weblogs all the time) has been solved.
posted by skallas at 3:37 PM on October 24, 2003

uhhh rushmc? Are you saying that free market doesn't work when it comes to stocks?

Sure it will work, and as part of the process of its working, a lot of people will lose a lot of money. The free market, like democracy, requires knowledgeable users if people aren't going to get screwed.
posted by rushmc at 3:56 PM on October 24, 2003

My point is that in terms of a system for initial public offering, and the online auction system (in theory) provides advantages over the old system without adding any new disadvantages.
posted by VeGiTo at 3:59 PM on October 24, 2003