Google IPO Could Re-Energize Valley; Success Story Would Be Inspiration For Tech Entrepreneurs By Matt Marshall and Michael Bazeley Mercury News 1,050 words 27 April 2004 (c) Copyright 2004, San Jose Mercury News. All Rights Reserved. Early last year, in the midst of Silicon Valley's dark age, entrepreneur Mark Pincus was putting together a new company called Tribe Networks. Working over his kitchen table in San Francisco, he started hearing rumors about phenomenal revenue being generated by Internet search company Google. "It was awe-inspiring," Pincus, 38, recalls. The buzz helped him believe that Internet companies could make money, even after the Internet bubble burst in 1999, and that it would help his company, too. "That's when I woke up and said `Oh, my God.' " That inspiration, being soaked up by hundreds of other entrepreneurs and venture capitalists, will be further stoked when Google files for an initial public stock offering, perhaps as soon as this week. Observers say Google's shift to a publicly traded company will ripple through the valley, injecting millions of dollars into the local economy through newly minted millionaires, reigniting the region's entrepreneurial spirit, shaking loose investor money and giving the region a much-needed psychological lift. Not incidentally, it will provide a huge windfall to the venture capitalists and investment bankers who have suffered through several lean years. "It will cause a massive restructuring of the valley itself," said author Michael Malone, who has been chronicling the valley's technology culture for years. "Everybody in the valley has been looking for a safe harbor in the valley. The arrival of the Google IPO signals that it's time to go for the brass ring again." Possible deadline The exact timing of the IPO is not known. Google appears to be facing a deadline Thursday that will compel it to start filing public financial reports with federal regulators. Speculation is rampant that the deadline will compel the company to file the paperwork for a stock offering this week as well. The Wall Street Journal reported Monday that Google had chosen Morgan Stanley and Credit Suisse First Boston to be the lead underwriters of its stock offering. All of this has brought long-simmering interest in the secretive company to a boil. Tony Perkins, who is writing an online interactive book about Google, says the IPO profits will bring about a dramatic increase in potential disposable income in Silicon Valley. Scores, if not hundreds, of Google employees could become millionaires once their shares are traded on the public stock market. "It gives one big kiss of approval to the idea that the comeback is indeed back," said Perkins, who runs a business Weblog called the Always On Network. Against the background of scandals in other parts of the country -- namely Enron and WorldCom -- Google's IPO "will highlight that the Silicon Valley system does work, and it works very well," Perkins said. By most accounts, Google is already a tremendously successful company, having rapidly grown from a company started by two Stanford University students six years ago to the leading search engine, with offices worldwide. Validation of success But Lee Jay Lorenzen, founder of shopping Web site Shop.com, said a public stock offering is the ultimate validation of success for many people, particularly college students and entrepreneurs dreaming of making it big. "To me, it re-energizes the entrepreneurial spirit," Lorenzen said. "College students, or someone sitting in India somewhere, may think to themselves that they can build a better mousetrap. That's what entrepreneurship is all about. I'm excited about that." Indeed, many venture capitalists believe that Google's story will fuel the next generation of young entrepreneurs. Paul Koontz, a partner with Foundation Capital, says Google's IPO will provide a much-needed shot in the arm for Silicon Valley. Koontz knows what it's like to work in the trenches of a start-up. He helped get Netscape Communications off the ground as the company's first vice president of marketing. Netscape's successful IPO in 1995 is widely considered the milestone that ushered in the Internet age. Netscape's Web browser sparked ideas behind a whole new set of companies, from Yahoo to Amazon.com. Passing of torch Those companies, too, fueled further optimism and inspired another wave of start-ups. In that way, Google's IPO is viewed as a passing of the inspirational torch. "I don't think anyone's running around the valley saying they're going to be the next $20 billion company," said Pincus, the Tribe Networks founder. "But this is part of a new era on the Internet, where consumer-facing Internet businesses are starting to show they can be profitable. That's what's exciting." But not everyone believes the Google IPO hype is valid. Meir Statman, a finance professor at Santa Clara University who has studied stock-market psychology, downplays the significance of the Google effect for most people. The stock market's partial recovery last year has already played into the psychology of most Bay Area residents, he said, and there is little Google can do to broaden that. "For the people who are in it, it would just add up on their bank account," said Statman, alluding to the celebrities such as Arnold Schwarzenegger and Tiger Woods who were early Google investors. "For most of us, it would mean nothing at all." Purnendu Ojha, CEO of online shopping-comparison site NexTag, said a Google public stock offering will have no effect on when his company decides to go public. "Most people already know that Google is successful," he said. "And we've known they're going to go public for a year now. So what's new? I wouldn't go public based on what another company does." Line for IPOs But many companies appear to be lining up to at least partly capitalize on the optimism that speculation about a Google IPO is generating. Shopping.com, Advertising.com and Claria (formerly known as Gator) are among the more than three dozen tech companies to register for IPOs in recent months. And many other companies are waiting on the sidelines, waiting for Google to stoke investor interest in Internet companies. "There's a lot of companies queued up and ready to go," Malone said. "This sort of drops the flag." Article URL: Click here