John Paczkowski on Google

“We’re not evil; we’re also not stupid: Much has been made of Google’s forthcoming auction-style IPO, and the promises of a system that attempts to put individual investors on a level playing field with large mutual funds and institutional investors. Should the auction function as intended, it will wrest virtually all control away from the IPO’s underwriters, and make it difficult for speculators to sell out early for a quick profit. Small-time investors are hoping that Google’s unorthodox methods will prove successful, and perhaps even effect some change in the conventional “wisdom” that has long governed initial public offerings. But that may be wishful thinking. In the coming weeks, big institutional investors will likely demand that Google and its underwriters hand them a piece of the IPO at a price lower than the one that will be set at auction. And Google may well cede to those demands. It’s certainly left itself room to do so. In its S1, the company said its offering price may reflect ‘the prices bid by professional investors.’ What does this mean? That powerful institutional investors, as they often do, will end up having a say in how Google’s IPO plays out, and that they could end up profiting from it more than anyone else.” [From Good Morning Silicon Valley]