Why Wall Street Tech Star Mary Meeker Is Moving to Silicon Valley

Mary Meeker
Mary Meeker

Mary Meeker is the Morgan Stanley (MS) technology analyst who rode the dot-com bubble to media stardom then survived the crash to remain among the most-followed seers on Wall Street. But on Nov. 29, she officially announced that she'll join Silicon Valley venture capital superfirm Kleiner Perkins as a partner.

After ruling over Lower Manhattan's tech analysis minefields for nearly 15 years, she's arriving in a venture capital world that many have described as being under siege. Kleiner Perkins most likely hired Meeker because of her ability to pick winning companies in hot sectors. But her move is also a symptom of far more than one high-powered investment queen decamping for greener pastures and a warmer climate.

Rather, Meeker's move is indicative of the declining role that Wall Street is playing in Internet and mobile technology markets and the diminished impact the Street has on this lucrative, fast-growing field. Wall Street has traditionally been the conduit for initial public offerings that were the ultimate exit strategy of tech companies. But the number of tech IPOs has remained stubbornly low, even as tech spending has rebounded and mobile and social media startups have prospered.

Part of the reason for this: It's simply much easier to get bought than to go public.

A Diminished Role for Wall Street

With the exception of the mega-startups like Facebook or Zynga or LinkedIn, most other fledglings' CEOs and their investors look at the rough road and unpredictable nature of the current IPO market and are far more likely to take the fat check and hand over the reins to a buyer.

This isn't to say that boutique banks and Wall Street firms don't have a financing role. But the blockbuster IPOs of yore are few and far between, so Wall Street now is charged more with mergers and acquisitions, public investment in private equity and other financings. Meeker, always a tech-industry heat-seeker, likely realized that her coverage roster would remain stagnant for the forseeable future and that prospects for Morgan Stanley and other big investment banks to earn big money from tech IPOs were unlikely, thereby diminishing the importance of her role.

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A second, and perhaps less recognized theme, is the decline in Nasdaq's importance versus other international markets. Most Silicon Valley VCs acknowledge that listing on Nasdaq has become expensive, unwieldy and far less preferable as a place to take money off the table -- particularly compared to emerging exchanges in Brazil, Singapore and other locales.

Some of this is due to the uncomfortable burden of Sarbanes-Oxley regulations on smaller companies. And some of Nasdaq's diminished importance is due to the new ability of companies with privately held shares to buy and sell them on secondary markets. Most notably, this provides much-appreciated liquidity for employees of tech companies with illiquid shares.

Meeker, a wise woman, must have recognized these trends. She also saw that, despite the general woes of the VC sector, Kleiner Perkins had managed to keep its head nicely above water and hold onto its prized spot at the IPO trough for the most sought-after issues. What's more, Meeker has always enjoyed the bully pulpit (in a benevolent way) -- and she'll get far more of that from a Silicon Valley perch.