Silicon Follies

Chapter 41: IPO -- where'd Paul's office go?


Thomas Scoville
August 4, 1999 8:00PM (UTC)

It was an astronomical event, the birth of a new planet. Out of the swirling collective vapors of investor expectation, corporate hype and industry buzz, Whip Technologies Inc. had finally condensed into a solid mass. White-hot, it spun out of TeraMemory's orbit, dragging Paul in its gravity.

The announcement of the cosmic birth went out in the form of a "red herring" -- a slick, crimson-lettered prospectus describing this newest heavenly body in the corporate cosmos. It also signaled to the world an open invitation to the Initial Public Offering.

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Of all the Silicon Valley acronyms, nothing quickened the pulse like IPO. On those three letters hung the hopes of every bit-slinging entrepreneur in infotech. For any high-technology mogul whom industry history (all 20 years of it, alas) would count as a Success, the initial public offering would mark the biggest one-day percentage leap in personal wealth in his (or, in very unlikely event, her) life.

If these unsentimental, ruthlessly pragmatic scions of electronic industry held reverence for any ritual, this was the one. The IPO was the rite of spring, the canonical Silicon Valley baptism: The infant corporation is lowered into the murky lagoon of the NASDAQ, the water teeming with underwriters, syndicates, investment banks, brokerage houses and -- not least but definitely last -- the general public, all elbowing for prime position and a piece of the new arrival.

At least that was the scenario everyone hoped for, anyway -- including the christened. A successful IPO was conducted exactly like a feeding frenzy, in fact: a spiraling, escalating orgy of greed and acquisition with no conscience, brakes or moderating influence of any kind. Buyers lined up around the block to pay ever-increasing prices for ever-scarcer stock, and to be thankful for the privilege. P.T. Barnum would have wept.

Nevertheless, a wide assortment of high-wire investors and hot-rod financiers -- adrenaline junkies, all -- couldn't get enough of the scene. The IPO offered much more potential stimulation than the usual day at the races; the average speed of the stock market -- even the go-go NASDAQ -- was sedate by comparison. A good IPO was like a whole year of racing collapsed into a few hours. If General Motors equity was the stock market equivalent of the family sedan, then TeraMemory was a Porsche -- and the Whip Technologies IPO a nitro-burning funny car, screaming, belching fire and laying burning stripes of molten rubber down the middle of Wall Street.

A red-hot IPO was never a given, of course; there had been a number of high-profile fizzles. Everything hinged on how much rabid enthusiasm the offering's officers could generate in the weeks leading up to the conflagration.

Much of this could be done by the book; a number of well-established tools and techniques lent themselves to the shaping of investors' expectations: PR, rumor, cunningly crafted press releases. But at the core, the fertilization of a good IPO was black art. And as in so many other risk-ladened endeavors of persuasion, it all came down to a good story. This explained why so many pre-IPO management team leaders were also Celtic bullshit artists; the blarney stone was the wellspring of their core competence.

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Barry had celebrated by throwing a Kristal-soaked, Whip Technologies employee bash with a name-brand rock band.

Paul never got an invitation. For him the transition was marked primarily by the mysterious disappearance of his workplace: He arrived at work one Monday morning to find the entire lab had been ripped out by the roots -- dismembered cubicles, white boards lying in heaps, 10BaseT cables dangling from the ceiling. He made a discreet inquiry to a workman brandishing a cordless drill in the spot where Paul's office used to stand.

The workman answered curtly, uncoupling the segments of another cubicle. "You wheep tech now. You move. Ayet-teen pipty Embockaday-o," came his spicy explanation.

1850 Embarcadero. The location offered a number of advantages: proximity to the bay (and breezes), ready access to upscale Chinese dim sum, and -- for those employees deluded enough to believe they'd ever leave work before dark -- an easy walk to the Palo Alto municipal golf course. Of course, nothing came for free: The office park was wedged up next to 101. The thoroughly congealed freeway was the only avenue of drive-time access. Hello, books-on-tape.

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When he finally made his way to Whip Technologies' new digs, Paul found most of the members of his lab in a freshly painted and barren conference room, negotiating with the group manager for cubicle positions. Everyone, of course, wanted one on the outer edge of the cluster, nearest the windows. The manager declared these should be awarded by seniority.

Except in Paul's case. Though he -- amazingly enough -- theoretically held enough seniority to place him in a cube with a sliver of direct sunlight, his manager passed him over.

Paul was a consultant; he'd end up dead center in the pod.

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Thomas Scoville

Thomas Scoville is either an Information Age savant or an ex-Silicon Valley programmer with a bad attitude. He is the author of the Silicon Valley Tarot.

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