Friday, October 22, 2004

I know I'm spending ahead of the curve, but we've started really enjoying a bottle of wine at dinner every night. We're just learning, so I've tried my share of bad wine, but we're at the point where there are a few wines to begin to stockpile.

So of course, I go to the web to find what's out there, but I only know, the old Virtual Vineyard. Only they don't have the inventory I'm looking for and it's not much cheaper than my local winestore.

But then I find and it's awesome. Even googling for online wine was too much for me, searching but not finding. But here's a site that gets you exactly what you want in seconds.

It must be new, because there are no referrer links in Google yet, but it's my find of the day!

Skype shows up at my doorstep

I check my email this morning and what's there but my brother-in-law from Taiwan sending me a link for PC Home Online and asks me to download Skype.

Like everyone with overseas family, we've been happy with the lower cost of long distance these days. We only pay 5 cents per minute for great service from EOT. Only a few years ago it was more than 25 cents per minute.

Asia is adopting technology rapidly, particularly Taiwan. They immediately put it to practical use. Email (and spam) and the web are everyday tools for business. But it's not usually my relations pushing technology my way. Last time I was in there, I spent two days ridding a PC from CWS and teaching proper PC hygiene.

On downloading I ask myself why this isn't just another IM program. After all, they all have voice chat. But come to think of it, even though I've know it was there, I've never actually tried any of them.

So between the price (my favorite price is free) and the fact that I know that everyone that is using Skype will be able to accept a voice call (I guess that's why I never tried it before, I never found anyone to speak with) and the apparent huge penetration in Taiwan, I'm going to give it a try and let you know how it is . . .

Brilliantly Bumbling Google Earns a Bundle

If you were smart, and who doesn't think the people at Google are smart, how would you maximize value?

How about creating demand, shortening supply, then pouring fuel on the fire with a blow out quarter?

Indulge me in a few numbers:

1.) Initial filing range $100 to $135 per share for 25.7 million shares.

2.) WR Hambrecht says that placed bids indicated an auction price of $97 per share.

3.) But the smart institutions realize that the correct strategy is to trash talk the stock to lower demand, then set a price to ensure the classic 15% IPO discount. The investment banks helped make this happen by keeping control over institutional distribution.

4.) Price at $85 per share, but reduce the supply of shares to 19.6 million. Sure, it's only 7% of the total shares outstanding, but it's also 24% fewer shares that can trade until lockups expire.

5.) VCs decide not to sell, top brass reduce their sales too.

  • Kleiner doesn't sell 2.1 million shares
  • Sequoia doesn't sell 2.4 million shares
  • Schmidt doesn't sell 368,965 shares
  • Brin doesn't sell 481,113 shares
  • Page doesn't sell 482,415 shares
So what happens when the company announces a monster quarter, something expected right after an IPO?

Well in a few minutes the stock will open at $170 per share.

That means Kleiner and Sequoia each made about an extra $150 million by not selling in the IPO. In itself that's more than a 10x on their initial $12.5 million investments. Sure, they're locked up for a little while longer. No sympathy here.

Now individuals are different that VCs and selling a 10% stake in one security that is your whole net worth is prudent. Also, while the VCs can distribute their shares to their LPs (and keep a nice 20-25% piece for themselves), management can't sell their shares easily while still running the company.

Still, this was all predictable (just as the IPO result was).

We'll see what the lockup expiration in November brings, but I'd say they've created sufficient demand today that any dip will be short lived.