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Google Plans an IPO
Posted by
CmdrTaco
on Mon Jun 25, 2001 08:27 AM
from the best-search-engine-online dept.
from the best-search-engine-online dept.
Rich Jones writes "According to this story over at the BBC
every geek's favorite search engine is contemplating an IPO. " Hopefully this wouldn't effect the lean mean searching that I've come to love from the unquestioned king of search engines. Now that the hype surrounding IPOs has fizzled, its nice to see a company that looks as good as Google thinking about it.
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Google Plans an IPO
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Some thoughts on this rumor... (Score:5)
No company that relies on banner ads [google.com] for revenue is ever going to be successful again, not even when they provide the value that Google's do (they're cheap, and work pretty well, but that's not a real business model, kids). I'll stand by that prediction -- not too brave of me.
GOOGLE MAKES MONEY LICENSING USE OF THEIR ENGINE.
Yahoo! pays to use it [yahoo.com] (although they didn't buy access to the entire page index, so a direct Google search will often give better results). So do about 50 other major companies. When I say 'their engine' I mean the many Googleclusters in Santa Clara, Sunnyvale, and (I believe) Herndon, not just the software.
Some of my friends and ex-coworkers work there -- "Nobody at Google ever quits" they say, and aside from contractors, this appears to be true. It is a wonderful work environment [google.com] and they have filled their cubicles with Microsoft Research caliber PhD's and ex-professors. They are working on image retrieval technologies [google.com] (not truly useful yet) and have pretty much cornered the search-engine-ASP market [google.com]. (In fact, since I last talked to anyone at Google about this, they've added ANOTHER 70 PARTNERS!)
The technology rules -- I have converted every single employee at my current company (far from an IPO, but profitable nonetheless) to using the Google Toolbar [google.com] because it saves so much time. (and they in turn have converted most of their acquaintances...) If things continue this way, not only will they be an attractive investment, but vast numbers of potential investors may habitually use Google the way they use Microsoft's site. If things go REALLY well, even Microsoft may end up using Google for their search services. That's damn good awareness. And that is why I say...
I STILL HOPE THEY DO NOT IPO YET.
Not just because I doubt my erstwhile coworkers will cut me in for friends-and-family ;-) but because the market is atrocious and I, like (I pray) most /. readers, would want to see them rewarded for superior technology and hard work, rather than having a fair-to-middling IPO due to the .com spectres. If revenues continue to increase (and I believe they will -- Google's search engine is lightyears ahead of new entrants like Teoma [teoma.com] due to its already being deployed and well tested), a Google IPO in a year or two would probably be a huge hit, as it may catch the economy coming OUT OF a dip.
Marc, Shawn, Chris, and everyone else at Google, you're doing a great job, and I will buy into the company's IPO either way. But I hope Doerr and Brin and Page, or whoever would be making the decision, decide to hold off a little bit!
effect (Score:5)
Actually, I hope that it continues to effect that sort of searching, and that an IPO doesn't affect it negatively....
Re:A few thoughts. (Score:4)
Some other dead ends:
You get the idea... often a sub-optimal but very well understood approach will be significantly more usefull then a theoretically superior but unworkable approach. With the rate of change of the internet, I don't know how else you could possibly keep up to date.
I am amazed at how good a job Google does every time I search. It's performance and accuracy are nothing short of astounding if you understand the nature and size of the solution space they cover.
Bill
Re:Inacuracies in the BBC Article (Score:3)
So the BBC seems to be thinking 'cluster'='large server' perhaps. Of course we know that isn't quite right, but nontechnical people might not understand the difference.
Profitable (Score:3)
Now lets just hope that they don't become yet another stock value management company.
Re:A few thoughts. (Score:4)
Google uses keyword searching. I've said it before, and I'll say it again. Keyword searching is a Dead-End Technology. It scales badly, throws too many false positives and too many false negatives, and makes no allowance for international variations in spelling.
Keyword searching by itself is a dead end. But Google isn't just keyword searching. Google's real strength is it's ability to distill information from links to and from web pages. Google effectively makes ever web page author an intelligent indicer. Google pulls out previously ignored data on the value of a web page. In short, Google works.
Keyword searching scales badly? Compared to what? There is no magical way to avoid looking at every page and doing some form of analysis. Every search engine needs to pay roughly the same price to build up their data set. As for searching, quickly collecting results from an optimized database is fast. Database work is a heavily studied and optimized area. Search cost should be sub-linear to the size of the database.
International variations? If you mean regional variations on the same language, it's solvable by keyword equivalence lists. Many search engines already know to search for misspellings and different conjugations. Again, what would you suggest to replace it?
But in a few years time, will Google be any more useful than Altavista? Google is already more useful than Altavista (in most areas). All Altavista can do is catch up to Google. Meanwhile Google can explore further improvements. If Google is foolish enough to sit on their laurels, they'll be overtaken by someone with a clever idea.
If not, then the investors would be better throwing their cash into an R&D house that might actually produce some long-term return.
Investors don't look three years into the future. They might see two years. Probably only one. Long term research is a fundamentally risky investment. Many times you don't develop something useful, you just discover things that don't work. Don't expect investors to sink money into big maybes.
All in all, it's a bit silly to predict doom for one of the most effective search engines without having a better idea to point to. Researches are working on better searching. Google itself came from such a project. I expect Google is doing some of that research itself.
why ISN'T it a good time to IPO? (Score:3)
If a company has solid fundamentals, is increasing revenues and moving towards profitability while sustaining healthy growth, now is as good or better a time to go public than two years ago.
People who make this complaint seem to assume that the best time to go public is when everyone else is, when there is exuberance in the market and stock charts zooming all over the place. At such a time when public retail trader demand (and private institutional demand) for new IPOs was at an incredible high, you saw supply rise to meet the demand by pumping out one crappy IPO after another. Eventually, people started to realize that investing in companies with no fundamentals, no differentiation, no stable growth, no profits, etc.... was investing in (ahem) bad companies and they stopped doing it (public traders and private financiers).
I think it is more reasonable for quality companies, dotcom or no, to go public when the market itself is stable. There isn't the incredible demand that there used to be, sure- and there is even less supply. But when good companies good public, smart people (public and private) know they might be worth investing in. I think Google will probably fare rather well. By saying that, I mean that they'll close above their offer price- and by the end of the year- probably still be above that price. No, that isn't a VA Linux $350 2nd day closing price- but I bet Google won't drift down to $3.00 within 18 months, either, if they've become profitable.
Agreed, remember, an IPO isn't a panacea (Score:3)
Other posts have mentioned how Yahoo! started as a directory. Remember Lycos? Search engine gone wrong. Remember AltaVista? Serach engine gone bad. Remember Excite? Search engine gone totally wrong.
These companies didn't all start with the intention of becoming bloated portals, but they wound up that way because there was a compelling business case that forced them to seek other methods of building revenue.
How is Google going to be different?
An IPO is primarily a means for a company to raise large amounts of cash with which to take the company up to the next level. That's the traditional case for an IPO, at least. In the past few years, the IPO has become a means of generating enough cash to build a company from thin air. Blame the companies all you want, but investors who didn't pay attention to the underlying mechanism of the IPO should take the blame just as well.
In the case of Google, I absolutely love it as search engine, but I'm not convinced I should love it as an investment. Let's hope Google is contemplating an IPO for the right reasons, and not as a means of staving off death.
Re:Profitable (Score:5)
It appears that either:
There is, among the public, some bizarre fascination with IPOs. For some reason, people think that your business isn't a "real" business until it makes a public offering. Come ON people! Companies go public for money - that's ALL. Look at the privately-held companies that are many times as large as little startups as Google (I used to work for one: Watkins Motor Lines, part of Watkins Associated Industries: $1B plus in revenues). If you're making money, it's not necessary to sell public stock.
Beta image searching tech! (Score:5)
Just check out [google.com] their beta image searching technology with the search term 'slashdot'.
Matt
Re:Profitable (Score:3)
As for "seeling their search engine software"... it sounds more to me like they are renting it out-- since their corporate overview specifically mentions that "All of Google's commercial products are hosted by Google, alleviating the need for organizations to manage their own costly search software and resources." Which says to me that there is a revenue stream from subscriptions, and that they will have less worries about market saturation-- since saturation will simply imply a lot more subscriptions.
Re:In the beginning... (Score:3)
Also, remaining private is not an option. When VCs are on board, there are three options for the company: go public, sell to another company, go out of business. The life of a VC fund is usually 10 years or less. The VC wants to sell the stock and distribute the proceeds, or have the company go public and distribute the stock before that. If the company is private, distributing the stock to fund investors is problematic. There are often contractual provisions that force the company to go public in some timeframe (ie. registration rights, redemption rights.)
With VCs involved, it was only a matter of time before Google went public or was sold. It shouldn't be a surprise, and noone can say management is selling out *now*. In the 'dude, you're a sell-out' sense of the word, they did that when Kleiner invested; in the literal selling out (their stock) sense, most likely they won't be able to do that until at least six months after the IPO.
Re:Yahoo also.. (Score:3)
Inacuracies in the BBC Article (Score:3)
It's nice to see a good company with an excelant reputation braving the Equity Markets. Good luck to them.
--CTH
---
Hmmmm (Score:3)
Re:How goes Google make the $ (Score:3)
In the beginning... (Score:3)
Now...
Yahoo is a corporate behemoth, almost, but not quite as reviled as Microsoft. They are quick to settle upon 'Intellectual Property' and fire off lawsuits as if they were free. Remember Geocities? Yahoo Geocities. Remember E-Groups? Yahoo Groups. A quick and nimble company created by two guys out of their dorm room is now one of the most feared corporate instituations on the planet.
Okay, Google, what did Yahoo do wrong here?
Do what O'Reilly does. (Score:5)
- The company is owned by a select group of founders and investors, instead of a large anonymous mob of stockholders. The founders and investors are likely to know what's better for the company than stockholders seeking only returns on their investment.
- A private company's growth is a direct function of revenue, profit, and cash position. It's growth is a direct result of it's past successes. An IPO creates an unnatural influx of cash that the company didn't "earn" and doesn't necessarily know what to do with. It permits the company to spend money on things they wouldn't DREAM of spending money on if they were still private. In other words, it permits the company to make decisions and do things that are not necessarily good business.
- Sometimes what's best for the company is NOT growth and profit. R&D, poor market conditions, etc. -- any number of reasons to lay low. But stockholders demand PERFORMANCE, dammit! Private companies can employ more restraint.
- Private companies grow organically and typically foster a great deal of employee loyalty and a unique culture. Public companies grow way too fast and acquire smaller companies, destroying said loyalty and culture.
- All too often, going public has nothing to do with what's good for the company, and everything to do with pure, unabated GREED. It all has to do with a few people who want to get very rich very fast. I say screw 'em. They should earn their fortunes the old fashioned way instead: WORK.
Just looking around, I would say that a great deal of what's BAD about America is publicly held corporations. Since when is what is good for stockholders good for America? Big picture here, folks. I say better to have thousands of small private companies than 4 large public corporatations.Tim O'Reilly has stated more than once that he has no intention of bringing O'Reilly public (for many of the reasons I mention above). I applaud him for doing the right thing. Google shouldn't go public. They should succeed on their own merits.
Economy? (Score:4)
Google is everything that DotCom '99 WASN'T...it is neat, but without flash or fancy...in fact, the style of google is definitely lowtech (it looks the same on Lynx as it does in IE). Google really was the start of a new wave of successful content, and they're no doubt making tons of ducats leasing their machines and technology to anybody who needs to search...and it's actually GOOD. Hell, Google picked up my webpage AND I NEVER EVEN SUBMITTED IT. Neither did any of my linkers submit their pages...Google genuinely crawled to it, and even cached it (not a big hit...my front page is maybe 2k). Furthermore, surfers trust google because of it's high quality...it has no need to build a brand, because WoM has more than succeeded.
If Google goes IPO, and manages to remain of high quality, it means the beginning of a new Dot com boom -- one based on everything the original wasn't, and uncovering the type of quality necessary to bring the web into the age of frictionless content we've needed. No banner ads, no obtuse simulacrums of greatness, just the same basic faced technology that make the toaster or the 24 oz. drinking glass such insanely great inventions.
Not a dumb question (Score:3)
IPO stands for Initial Public Offering. It's simply the first time that a company's stock is offered to the general public. It is underwritten by an investment bank, such as Bear Stearns [bear.com], where they function as the dealer for the stock. IPO's are useful since they provide much cash quickly for further investment and growth for the company.
Re:How goes Google make the $ (Score:3)
This is actually fairly simple.
First, the ads don't show up on the start page, which is a good thing. That way you don't lose people right out of the chute.
Second, the ads that they do feature don't look like ads. They're plain text. This is accomplished through their AdWords service which allows prominent placement just above the search results for companies whose chosen profile matches your search.
This provides better speed, less frustration, and helps eliminate the feeling that you and your precious bandwidth are being sold indiscriminately.