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June 16, 2004

Guy on Google's Gamble

In an interview to Red Herring, Guy Kawasaki, founder of investment banking firm Garage.com, had this to say about Google's plan to make its IPO via a "dutch auction" model:

"There are many ways to look at the Dutch auction. One way is, “Let’s make sure that no one over pays and gets spiked.” That’s one theory. Another theory is that doing it this way, the company leaves as little money on the table as possible. That’s a completely different outcome. That is what Google cares about. Maybe it cares about both, but you can understand how Google would care about the idea that “we sold our stock for $12 and it closed at $120, so we left maybe $100 on the table.”

So, there are many reasons behind its decision. But the interesting question will be: Will large institutions buy blocks of stock? Nobody knows the answer to this. We’re not going to know until it happens. So if the large institutions don’t go in and all the moms and pops go in and buy 100 shares, is that a stable equity base? That’s the question. I don’t know. It is going to be interesting."