Frank Quattrone: King of Tech IPOs Reclaims Tarnished Crown

Silicon Valley's money machine rebooted

By OWEN THOMAS

Updated 1:13 PM PDT, Wed, Feb 10, 2010

Print Share

An Internet company is going public, and an investment banker stands to make a mint.

What is this, the '90s?

People hearing about this week's IPO of QuinStreet, a Foster City, Calif.-based Internet marketing company, could be forgiven if they're having flashbacks -- especially when they hear about the moneyman behind it. Frank Quattrone, who helped take companies like Netscape, Amazon.com, and VA Linux public at Morgan Stanley and Credit Suisse during the dotcom boom, is back in business.

The comeback is all the more astonishing given Quattrone's past. As prosecutors looked to pin the dotcom bust on Wall Street bankers, Quattrone sent Credit Suisse employees an email with the subject line "Re: Time to clean up those files" -- an instruction which led to two charges of obstruction of justice.

At one point, Quattrone looked like he was on his way to becoming the "Michael Milken of Silicon Valley," Business 2.0 columnist John Heilemann wrote in 2003. He went through two trials, one ending in mistrial and the second in a conviction. But an apeals court overturned that conviction, and ultimately, the government ended up dropping all charges in 2007. (Bob Chlopak, a lawyer who represented Quattrone, notes that a colleague of Quattrone's wrote the original "Time to clean up those files" subject line, and Quattrone merely replied-all to that email.)

Since then, he's started a new company, Qatalyst Partners; worked as a mergers and acquisitions advisor to Google; and most recently, gotten back into the IPO game.

The name is the same, but the game isn't. Taking companies public was a great business in the '90s, with Wall Street banks typically taking a 7 percent cut of the money raised, and often benefitting from shares they'd taken in companies while they were still private. With investors snapping up shares after an offering, it was easy money -- and Quattrone was among the best at it.

The dotcom bust and Enron and Worldcom's scandals put an end to all that. Public companies face much more scrutiny today, and tech startups increasingly look to being acquired rather than go through the agonizing process of a public offering.

Wall Street's banks, which once had armies of bankers in Silicon Valley, have largely abandoned the cradle of technology, leaving a void for Qatalyst to fill. Indeed, Qatalyst is teaming up with Quattrone's former employer, Credit Suisse, in the QuinStreet deal.

“There is more friction these days to taking a high-quality company public than there has been in most of the last 25 years,” Quattrone told the New York Times in August.

Quattrone's return, in other words, doesn't mean the market for tech stocks will instantly regain its bubbliness.

Until Qatalyst takes a zeitgeist-defining company public -- say, Facebook or Twitter -- his comeback will remain incomplete.

And when he does, people will forget the trials of his past decade. Money, as always, has an obliviating effect on memory.