Offbeat image belies Google's traditional roots
By David A. Vise
Washington Post
WASHINGTON — Google Inc.'s founders relish describing the firm they've built as unconventional and anti-establishment. But the search engine juggernaut's carefully crafted roster of early-stage investors reads like a Who's Who of Silicon Valley, placing the company in the mainstream of technology startups.
Initial investors in the company included Jeffrey P. Bezos, chief executive of Amazon.com Inc.; Andy Bechtolsheim, co-founder of Sun Microsystems Inc.; and Wilson Sonsini, the prestigious Silicon Valley law firm that is advising Google on its upcoming initial public offering, according to company filings.
In addition, Google has strong financial ties to Stanford University, which has hatched many startups, and where the co-founders met before dropping out to launch the firm. The university's president, John Hennessy, is on Google's board of directors and is a shareholder, as are David Cheriton, a Stanford computer professor, and the university's Office of Technology Licensing, which has taken stakes in more than 100 firms.
The networking continued in a private round of financing, as Google attracted big-name venture capitalist John Doerr of the investment firm Kleiner Perkins, and Michael Moritz of Sequoia Capital. The two serve as Google board members, and each of the firms they represent invested about $12.5 million for 9.4 percent of the company. Analysts say those stakes could be worth more than $1 billion after the IPO.
"It is a traditional Silicon Valley old-boys network," said Alan Meckler, chief executive of Jupitermedia Corp. "It is very similar to what happened in the 1990s when there were a group of 20 or 30 venture capital firms and key people. There is a lot of history repeating itself here."
Tom Taulli, a principal of Bridgewater Capital Corp. who has written a book on initial public offerings, said that by having Wilson Sonsini as the company's lead outside counsel, Kleiner Perkins as a major investor and Stanford as its progenitor, Google is following a time-tested path.
"Wilson Sonsini is blue blood and royalty in Silicon Valley when it comes to IPOs," Taulli said. "They are it. Call it whatever you want, but the facts are the facts. This is a very traditional Silicon Valley company."
Bezos has been an early investor in a number of start-ups. The Amazon chief is often sought after because he can ensure access to high-quality software development, the right venture capital and a cadre of insiders who know how to guide a start-up.
Both venture capital firms encouraged Google's young co-founders, Sergey Brin and Larry Page, to recruit a seasoned chief executive who would have credibility with investors. In 2001 the firm recruited Eric Schmidt, the former chief technologist of Sun, who was then running Novell Inc., to serve as chief executive.
The company is taking an unorthodox approach by conducting an electronic auction for its estimated $2.7 billion public offering, and inviting individuals to participate, rather than allowing Wall Street investment firms to decide how to allocate and price shares. The strategy is designed to create a more stable base of long-term investors by setting a high price for shares, often a deterrent to speculators looking to buy and sell for a quick profit.
