4/24/2004 06:47:00 PM

Rich to Get Richer if Google Goes Public

Tiger Woods has his small stake. So do Shaquille O'Neal, Henry A. Kissinger and Arnold Schwarzenegger. All can be counted among that small club of people lucky enough to own a sliver of Google, one of the hottest companies in Silicon Valley and what could be the hottest deal on Wall Street this year.

...The list of institutions that stand to make a small fortune from Google includes two of its potential rivals, America Online, now part of Time Warner, and Yahoo.

"People made fun of Yahoo for its licensing deal," said an executive at a search-related start-up company that is a partner with Yahoo and Google, who insisted on anonymity to avoid spoiling his relationships. "They helped to create a big competitor. But this deal that hurts them strategically will make the company a lot of money."

Yahoo invested $10 million several years ago, when Google was the search engine powering Yahoo's operations on its Web portal. Yahoo owns a small stake, a person who has seen the terms of the deal said.

Under a different deal struck in 2002, America Online has the right to buy nearly two million shares of Google for roughly $22 million, according to Time Warner.

A list of the others who stand to be enriched should Google go public seems to prove that the rich get richer. It reads like a "Who's Who" of Silicon Valley insiders, including Frank P. Quattrone, the former investment banker now on trial in Manhattan on charges of obstruction of justice and witness tampering.

It includes some of Silicon Valley's greatest entrepreneurial successes, including Marc Andreessen, the founder of Netscape; Pierre M. Omidyar, a founder of eBay; Shawn Fanning, the creator of Napster; and Bill Joy, the software innovator who recently left Sun Microsystems.

...Stanford, one of the country's richest universities, also stands to add considerably to its bottom line. Mr. Brin and Mr. Page, who met in 1995 at a party for incoming computer science graduate students, worked together on a university-funded data-mining project. During that collaboration, the pair invented the search technology that would eventually be Google's core technology.

"The university owns the technology," said Katharine Ku, the director of Stanford's Office of Technology Licensing. "We license it to Google, which back then was just these two kids. They pay Stanford royalties annually. We also took a bit of stock in the deal."

Under the terms of that deal, the royalties are evenly split three ways among Mr. Brin and Mr. Page, the computer science department and the university's engineering school. That deal was struck in 1996.

..."There's been no almost no dilution of financing. The founders did a first round, they basically did a deal with the C.E.O., there's the deal with Yahoo, and that's it."

Andrew Anker, an entrepreneur and former venture capitalist, said: "This is the deal of the century as far as I'm concerned. No matter how you cut it, this will make a lot of people very happy."