Google’s attempt at an auction could break a piece of the cronyism that has plagued corporate America and has caused huge failures from the demise of Enron to the collapse of the technology bubble. Middle men creaming large fees for little value-add and dolling them out to friends is not a good thing regardless of whether you are a free market evangelist or not. This is why I am so surprised that people like Dan Gillmor are choosing to attack Google’s offering. Google’s offer price is an attempt to derive price from real demand, not what generates profits for middle men. This benefits small investors in the long term.
Why aren’t Google’s PR team on the offensive over this!
“If Google’s offering works…then this IPO would legitimize an alternative to the traditional IPO that will diminish the power of Wall Street investment banks. Other companies, companies with lower profiles than Google, will have a new alternative for raising money. Wall Street doesn’t even like to think about that possibility.”
“If, on the other hand, Google’s IPO fails — if not enough investors bid, or if the price is too low, or if the IPO sinks, leaving hordes of angry individual investors and the company with egg on its face — then the auction model will go back on the shelf and Wall Street investment banking will go back to business as usual.”