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Friday, May 21, 2004 - Page updated at 12:00 A.M.
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Northwest stock contest 2004 | Consumer affairs

Bezos got in on Google for six cents a share

By Miles Weiss
Bloomberg News

Jeff Bezos
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WASHINGTON — Amazon.com Chairman Jeff Bezos, ranked by Forbes magazine in February as the world's 82nd-richest person, stands to move up a notch or two when Google holds its initial public offering later this year.

Google, operator of the most widely used search engine on the Internet, disclosed in a securities filing that Bezos was one of the company's first five outside investors. The group, which also includes former Amazon.com executive Ram Shriram, paid 6 cents a share for Google stock in late 1998, according to the documents.

Bezos, 40, already has built a personal fortune of $5.1 billion, according to Forbes, by turning Seattle-based Amazon.com into the world's largest online retailer. He is set to reap further rewards as Google prepares to raise $2.7 billion through its IPO, a record first-time stock sale for an Internet company.

"You have to give Bezos credit for vision," said Benjamin Horowitz, the chief executive of Opsware, a software provider he set up with Marc Andreessen, one of the co-founders of Netscape. "Who would have thought in 1998 that the next big thing would be Internet search?"

Google officials declined comment and Amazon officials declined to make Bezos available for an interview.

Mountain View, Calif.-based Google sold 15.36 million Series A shares, for a total of $960,000, shortly after the company incorporated in September 1998, according to documents filed with the Securities and Exchange Commission (SEC) on April 29. Bezos was cited in an exhibit to the SEC filing as one of five investors who owned the Series A preferred stock. The document doesn't disclose the number of shares that Bezos holds.

Based on data in the filing, Google has a current stock-market value of as much as $25 billion, or about $91 a share, according to estimates provided to the Wall Street Journal by Jack Ciesielski, publisher of Analyst's Accounting Observer.

That would represent a 1,500-fold return for Series A investors, who will be able to convert their preferred stock into an equivalent number of common shares, according to the SEC filing.

Google said in notices submitted to the California Department of Corporations that $760,000 of the Series A proceeds came from Stanford University, where Google founders Sergey Brin and Larry Page attended school; David Cheriton, a Stanford computer-science professor; and Andreas Bechtolsheim, a founder of Sun Microsystems.

Silicon Valley start-ups such as Google often raise seed money from technology entrepreneurs such as Bezos and Bechtolsheim who have already established their own companies. In addition to cash, these so-called angel investors sometimes provide advice to the start-up and lend credibility when the new venture goes to raise additional funds.

"Once you get the name, it always makes the second sale easier," said Sanjay Shirodkar, a securities attorney at Sutherland Asbill & Brennan in Washington, who helps companies sell shares to the public.

Bezos and Shriram also bought some of Google's Series B preferred shares, which also convert into an equivalent number of common shares, according to the SEC filing. Google raised $24.7 million in 1999 by selling 49.8 million Series B preferred shares at 49.5 cents each to 19 investors, including the venture firm Kleiner Perkins Caufield & Byers and a fund run by Ronald Conway for clients such as Henry Kissinger and Tiger Woods.

Shriram, who owns 5.3 million Google shares and serves on the company's board, declined comment. He left Amazon, where he was a vice president, in 1999.

Copyright © 2004 The Seattle Times Company

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