David Rubenstein: evaluation

Transcript context

…But is the future simply more direct offerings? Because when Google went on the market, we had all heard of Google. Google was as credible as anyone who might have been underwriting the stock of a Google IPO, so they just sold the stock. Captured whatever price pop there might be for themselves. Right. Well, Google went public through a direct process, I think at $85 a share, and now it’s trading at $2,000 or $3,000 a share. Obviously, it’s been a great stock, but from the beginning, there was great demand, and people knew that Google had a search process that was better than any of the other search processes out there. Remember, when Google started, people said, “Who wants to give Google money as a venture capitalist? Because there are already a lot of search engines out there.” Google actually had so much trouble with their venture capitalists at the beginning. Their venture capitalists talked about taking their money back because Google wasn’t actually performing what they said they were going to do. When Google was ready to go public, people knew there was so much demand for this that you didn’t need an underwriter, probably, to take off the fees that they would probably take off because their underwriting fees might be anywhere from 4 percent to 6 percent. I think the Google founders said, “There’s so much demand. We don’t really need to have the underwriter and take that spread.” But there are very few Googles that are out there. The average company that goes public does not have the demand that Google had when it was going public. Does the financial sector draw too much talent away from the rest of the real economy?…

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