Big names prepare to cash in on Google

From Silicon Valley, where the miracle began, to the wolves who hunt on Wall Street, there is one all-consuming topic: will they or won't they?

"They", as any student of dotcom fairy stories needs no reminding, is Google, the world's most successful internet search engine. And the question that bewitches financial and hi-tech America is equally simple: whether the privately-owned Google will go public, and in the process make some very rich people even richer.

The potential beneficiaries begin with Larry Page and Sergey Brin, who started Google in 1998 as graduate students at Stanford University in California, and who today control between 30 and 50 per cent of the company. Then there are the smart insiders who got into Google early on, such as Andy Bechtolsheim, a founder of Sun Microsystems, the venture capitalists Kleiner Perkins, and Sequoia Capital. Between them, they may own a quarter of Google.

Not unreasonably too, there is Stanford University itself. Not that it needs the money, with its huge endowments. But it was the university which funded Brin and Page in 1996 and 1997 when they worked on their post-graduate project that yielded the search technology that grew into Google.

"The university owns the technology," Katharine Ku, the director of Stanford's office of technology licensing, told The New York Times. "We license it to Google, which back then was just these two kids. They pay us royalties annually." And, she added, with a smile of satisfaction: "We took a bit of stock in the deal."

The list of lucky ones contains some more surprising names - famous people to be sure but not normally associated with an intuitive grasp of hi-tech growth industries or a knowledge of arcane financial market opportunities. They include Tiger Woods, Shaquille O'Neal, Arnold Schwarzenegger and Henry Kissinger - all of them unwitting examples of how when long-shot financial bonanzas arrive, the rich tend to get richer.

The golfer, the LA Lakers guard, the governor of California and the venerable statesman are, according to The New York Times, all investors in a venture fund called Angel Investors, set up in 1998 and which specialised in internet start-ups in the giddy days before the dotcom bubble burst. The firm did exceptionally well at first. Messrs Woods and Kissinger (or rather their financial advisers), as well as various other rich and well-connected people, were tapped to put money into Angel-1 and Angel-2, financial vehicles set up by Ron Conway, the co-founder of Angel Investors.

The two funds invested in hundreds of infant internet companies. Almost without exception, these folded as the markets came to their collective senses about the hi-tech sector in 2000. One did not however, and that was Google. Today those who put their money into Angel-1 and Angel-2 own, indirectly, a tiny sliver of the search engine - and the value of the Google holding that would be unlocked by a public flotation makes up for all the disappointments of the failures, and then some.

This week, the veil may be lifted on some of Google's mysteries. Though it is totally private, its very success appears to have triggered a legal requirement that would require it to make its finances public, by Friday at the latest. Under US market rules, any company with $10m in assets and at least 500 shareholders or stock options holders must file a report to the Securities and Exchange Commission within three months of the end of its financial year. For Google, which is believed to have granted stock options to most if not all of its 1,000 employees, that deadline falls on Friday. At this point the company may well go the whole hog and take itself public.

There would be few bigger cash-ins than Google. A flotation would value it at anything up to $25 billion, compared with the $75m it was worth in 1999. That represents an increase of almost three-hundredfold. The $200,000 invested by Andy Bechtolsheim in 1998 could be worth $300m - 1,500 times more than his original stake. As for Brin and Page, now in their thirties, they will be billionaires many times over.

Of course, it may not happen. Some companies, such as the jeans maker Levi Strauss, go the third way - filing quarterly reports but refusing to allow their stock to be publicly traded. In the meantime, Google would doubtless like to tap the financial markets to counter the challenge of its rivals Yahoo! and Microsoft, which are developing their own improved internet search engines. But it has no overriding immediate need to raise capital.

In that case Messrs Woods, Kissinger and O'Neal will experience a pang of disappointment. But only a pang, and a very shortlived one. They're rich enough already.

- INDEPENDENT