Schadenfreude over Google

Lots of people are licking their wounds over missing out on Google. Nice piece in today’s NYT based on talking to some of the Sand Hill Road venture capitalists who were offered a slice but failed to see the opportunity. The piece quotes one such loser as saying:

“The thing we couldn’t come to grips with was, ‘Gee, can we work with these two guys?’ It was clear our vision of how things had to be done were totally incompatible with their vision.”

“We were wrong,” he said. “It would’ve been a great investment. But nevertheless, if you think you’re going to be instantly in conflict with the principals, you don’t want to make the investment.”

One meeting, he said, left him feeling that the two Google founders, then in their mid-20’s, were headstrong and naïvely egalitarian in ways that seemed incompatible with their ambitions.”

I love that bit about Larry and Sergey being “headstrong and naively egalitarian”. It didn’t put off John Doerr of Kleiner Perkins Caufield & Byers and Michael Moritz of Sequoia Capital, the two venture capitalists who did bet on Google. When it was reported that the pair had put $25 million into the company I remember thinking “This will fly”, because Doerr has always had terrific judgement. His $11 million stake is now worth $3 billion. Not bad, eh?

Writing in the Boston Globe, Jonathan Zittrain from the Berkman Center concludes that the company’s Dutch auction was a success. “Google gave the public a chance to buy shares directly, on an equal footing with banks and big traders,” he writes. “The response from the financial establishment was understandably sour. The result was that, during Google’s so-called ‘quiet period’ preceding the IPO, the information vacuum was filled by the establishment, which gravely identified the company’s ‘missteps’ and ‘blunders.’ … The auction worked as a pricing mechanism precisely because the valuable expertise of the investment banks and institutions was naturally folded into the bidding process, lowering the cheekily high price Google was initially seeking and leaving sentimental investors for once with the chance to sell brand new shares side-by-side with the big players when the opening bell rang.”

Couldn’t have put it better myself. In fact I did in my column last Sunday!