CNN/Money One for credit card only hard offer form at $9.95 One for risk-free form at $14.95 w/ $9.95 upsell  
Technology > Tech Biz
Googling 'Schadenfreude'
On the eve of its IPO, Google finds itself barraged by negative news. Guess what the problem is.
August 11, 2004: 4:58 PM EDT
By Eric Hellweg, CNN/Money contributing columnist

Sign up for the Tech Biz e-mail newsletter

BOSTON (CNN/Money) - For a company that says its No. 1 mantra is "Don't be evil," Google sure has engendered a lot of animosity over the past couple of weeks.

The PR folks there must be reeling from all the negative news, even as they keep silent to comply with Securities and Exchange Commission pre-IPO mandates.

We've seen quite a bit of Schadenfreude during the past four years. There was much glee surrounding the misfortunes of the dot.commers, and even more joy arose as self-enriching corporate executives did perp walks.

Through it all, Google stood above the fray, basking in good -- no, glorious -- press as it announced its intent to go public. Somewhere along the way to raising $3.46 billion, however, Google pissed some people off.

Where are the cranks?

The angry party doesn't seem to be short sellers -- though you'd think they'd be anxious to knock down the stock, especially since investors are hammering tech stocks right now. Short sellers borrow stock and sell it, hoping to make a profit by buying back the shares at a lower price.

I checked in with a few. Most said that it's still too early to assess the short interest and that with all the hype surrounding the stock, combined with the IPO's focus on the retail investor, there's no way to know how this stock will fare out the gate. Others disagreed.

"I know a lot of hedge funds that are salivating at the opportunity to short Google," says Scott Rothbort, president of LakeView Asset Management. manager Varlin Zapata says he won't advise his site's subscribers to short the stock, but he points out that the IPO will be "released during red markets," the wave short sellers have been enjoying for four months.

"That may help to increase the selling pressure after the IPO," he says.

Going Dutch

That's pretty innocent talk from a cold and callous crowd. My guess is that the people who are really upset with Google just happen to work on another part of Wall Street. Many of the large investment firms have a vested interest in seeing Google's IPO founder.

Why? Because the company went with a "Dutch auction" format, and that's a threat to the cozy system maintained by the investment banking establishment. If Google's IPO goes well, it'll set a bad precedent: The banks won't get an enormous cut of the fees, and they won't get shares they can "flip" for profit.

Interestingly, the negative stories reporting soft interest in the stock all appeared within a 24-hour period starting on Aug. 5. Almost all of the bad press was attributed to anonymous sources. I'm not a conspiracy theorist, but the sudden burst of news from multiple outlets bore all the marks of a vendetta.

I'm not the only one who thinks this."There's a backlash from the Street -- a well-orchestrated campaign against Google -- and it's insidious," says Patrick Byrne, CEO of "The ubiquity of [the negative stories] and that they all manifested on the same day? I smell a skunk."

Street backlash

Byrne's no conspiracy theorist either; he knows from which he speaks. Byrne's company used a Dutch auction to go public in 2002, and it immediately felt the wrath of the Street.

"We were warned by big banks that if we [went public via Dutch auction], there'd be retaliation. Most said no one would ever talk to us, or pick up coverage. They've been true to their word on that."

Despite all the negative publicity that has plagued the company recently, Google's popularity and sheer size mean that it has a chance to thwart the Wall Street system.

Google Inc.
Corporate Finance

Overstock's Byrne is rare in that he'll go on the record with his anti-Wall Street tales, but he's not alone in his sentiments. I've spoken to many CEOs who share his frustrations with the Street's machinations. He'll be cheering loudly for Google's success from the sidelines, while other hope quietly that the stock does well.

"Google can put a torpedo below the waterline at Wall Street," Byrne says. "All we could do was throw a hand grenade."

Sign up to receive the Tech Investor column by e-mail.

Plus, see more tech commentary and get the latest tech news.  Top of page

American media keeps falling for Russian trolls
Xiaomi wants to raise over $6 billion in Hong Kong IPO
Etsy sellers confront unknowns after Supreme Court ruling
The weird reason that mighty Amazon isn't in the Dow
Xiaomi wants to raise over $6 billion in Hong Kong IPO
Why GE may need to stop paying its 119-year old dividend

graphic graphic