Mary Meeker, the “queen of the net” and the best-known investment bank analyst in the technology and media world, has picked an interesting moment to become a venture capitalist.
Ms Meeker, who survived the bursting of the 1990s dotcom bubble without getting caught up in the research scandal of the time, has become a venerable figure in the tech world. She is capitalising on that by leaving Morgan Stanley to join Kleiner Perkins Caufield & Byers as a partner.
Chris Dixon, an angel investor, tweeted in response that “Wall Street sell-side research is dead”, and it never regained its influence after the dotcom meltdown. A few analysts have made their name since – in particular Meredith Whitney – but most of the action has been on the buy-side.
It is always tempting to ascribe too much meaning to someone well-known who has been at one company for a long time choosing to do something different in middle age, so we should probably be cautious about drawing too broad a lesson.
Still, the questions that have hung over investment bank research since the abolition of fixed commissions, and then a crackdown on using research to enticing corporate advisory and IPO underwriting assignments, remain.
One of the side-effects of the insider trading inquiry in the US is that it shows how much original research is now done on the buy-side by hedge funds and mutual funds. The inquiry is focussing on possible abuses by expert networks, which are often engaged by investors.
Ms Meeker clearly had a lot of value for Morgan Stanley – her periodic reports on the state of the internet and the mobile web – drew attention and reinforced the bank’s reputation for expertise. But with relatively few IPOs, that reputation was harder to monetise.
The question is leaves is: what about the Facebook IPO, which is shaping up to be the biggest thing since the Google IPO in 2004? If Morgan Stanley fails to get a prominent role in that, then Ms Meeker’s departure will be keenly felt.
On Kleiner Perkins’ side, it has partnered with Facebook and others in a $250m fund to invest in social media and apps, and it is an investor in Zynga, the online games company that is heavily reliant on the Facebook platform.
