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August 19, 2004
Underwriters Revenge?
Google's IPO priced at what was considered an embarassingly low $85 / share. Today, they opened at $100 / share. Google had tried to bypass the traditional method of underwriting an IPO to, among other things, avoid this type of bounce (in either direction).
The underwriting business wasn't happy about being slighted by these wet behind the ears upstarts and you could argue that their unwillingness to participate fully contributed to the low offering. So what did it cost Google's founders to try and reinvent the wheel? About $20 million. Which probably isn't that big of a deal to them, but it sends a pretty clear message to other fiesty upstarts -- stay within the system!
As an aside, Google's experience is somewhat similar to Pearl Jam when the band tried to do a summer tour without using Ticketmaster. And make no mistake, there are a number of problems with both Ticketmaster and the IPO process, and both should be commended for taking them on.
Posted by Chris at August 19, 2004 12:09 PM
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