Google IPO: From Playboy to NASDAQ

Summer afternoon, summer afternoon – the two most beautiful words in the English language.Henry James

Dear Vorticians,

With those precious, beautiful summer afternoons dwindling away – we’re only about two weeks away from Labor Day – we finally witnessed the conclusion (or, some would argue, the beginning) of the story that has consumed the tech industry for months: The initial public offering of Google.

Everything about this one was unusual, from the announcement of the auction format for share sales right on to the Playboy interview with founders Sergey Brin and Larry Page that threatened to trip up the IPO at the last moment. (That piece guaranteed U.S. Olympic high jumper Amy Acuff, who graced Playboy’s September cover, a place in the hearts of investors everywhere. “Hey, I’m not looking at the pictures, I’m researching a stock!”)

When it was all said and done, demand for the stock was not as high as wags had anticipated. Google’s shares launched at significantly less than the original announced bid range of $108 to $135 a share, although they jumped 18%, to close at just over a C note on Thursday. Not bad, but nothing like the legendary IPOs of the go-go Internet years.

Many folks heralded the IPO as a harbinger of revival in the tech business, a catalyst to a new golden age. In that light, it’s difficult to view the launch as anything but a disappointment. Google’s shares didn’t rocket off the pad and all the talk about the Google IPO has certainly not fueled a rebirth in the NASDAQ, which has been dismal for months now. Other tech IPOs have been scratched or scaled back, and there’s little sign that Google’s coattails were strong enough to pull anyone else up.

But carrying an entire industry is far too much of a burden to put on any one company, particularly one in a field as narrowly delineated as search. By any measure of a startup’s progress, Google is an amazing success story. It dominates the search market, it has changed the world’s thinking about what search can do and how it can be used, it has forced some of the industry’s biggest companies to rethink their strategies, it’s profitable and it’s socked away an awful lot of dough. Google has developed a unique culture of innovation that offers lessons for other companies and, what’s more important, it did all these things during some of the darkest days for the high-tech business.

So what, after all the shouting fades away, should we read into this event, what does the Google IPO say about the state of our industry? What lesson can we take away?

I think the only lesson is that the dream lives on. The dream that a couple of smart guys can turn a market on its head and make themselves and others fabulously wealthy by outthinking, out-maneuvering and simply outdoing even well-heeled competitors. It’s the same dream that fueled companies like Salesforce.com and Blackboard, Inc., which are among the other tech IPOs this summer. It’s the dream that has made the technology business the centerpiece of the American economy.

What a great dream and what a great lesson to re-learn. It’s more refreshing than a tall lemonade on a hot summer afternoon.

Thoughts on what Google has taught us, or on any other topic, can reach me at jgallant@vortex.net.

Before I go, however, two other notes: First, a new Nielsen/NetRatings report issued this week showed that the number of broadband users in the U.S. surpassed dial-up Internet users for the first time. Now there’s an inflection point worth celebrating.

Second, the days of summer really are racing by. We’re about six weeks out from VORTEX 2004 (http://www.vortex.net) and the time to register is now. I hope you’ll be joining us at this great event.

Thanks, and bye for now.