Google’s IPO

The New Yorker: The Talk of the TownThat, as it happens, is what Google is contemplating. To be sure, the company has made the rounds on Wall Street and auditioned the usual investment banks. But it is also considering a different approach. Instead of hiring an investment bank, Google would effectively let the market set its share price. The process, which is often called a Dutch auction, is simple. Investors submit bids over the Internet telling the company how many shares they want and at what price. The company then calculates a price at which it can sell all its shares and raise the most money. Investors who bid that price or higher get shares, while those who bid lower do not. The virtue of this system is that no one is rewarded for personal connections — no kickbacks, no quid pro quo. And the company knows that it’s not being shortchanged: the price is that which the market is willing to pay. [ “(extlink)The New Yorker”:http://www.newyorker.com ]

If Google could pull off cutting out the middleman, it would really be a vindication of the idea that the internet and easy information processing can revolutionize any number of processes.