SAN FRANCISCO -- Talking with Frank Quattrone, the grand pooh-bah of Silicon Valley investment banking, is a lot like shooting the breeze with Oracle (ORCL:Nasdaq - news - boards) CEO Larry Ellison. Each has made gazillions on the decade-long drunken orgy of Silicon Valley success, each is one of the recognized leaders in his field with an ego to match, and each is willing to speak his mind and leave his well-paid acolytes to mop up later with politesse.

Quattrone runs Credit Suisse First Boston's technology practice, one of the rare Wall Street shops that allows the research department to report directly to the head of investment banking. No artifice here: Quattrone's outfit unabashedly combines aggressive banking with supportive research. Never one to miss an opportunity for publicity, Quattrone gathered some new-media scribes to a sit-down Friday at the Sheraton Palace Hotel to coincide with a get-together of his worldwide team. The agenda was some good old-fashioned chest thumping with a dollop of insight on tech stocks. The insight won't necessarily make you money, but it may help you understand this craziness a little better.

As the banker who took Cisco Systems (CSCO:Nasdaq - news - boards) public in 1990, Quattrone justifiably likes to equate his success with that of Silicon Valley. He worked his way up at Morgan Stanley, ultimately becoming the first banker with a bulge-bracket firm (the giant, full-service, global New York kind) to establish a Valley-based practice. Every other bank followed his lead -- several years later. His team managed the initial public offering of Amazon.com (AMZN:Nasdaq - news - boards) in 1997, after the group had jumped the previous year to what then was known as Deutsche Morgan Grenfell. In what could become the team's latest signature deal, CSFB led the recent $1.1-billion offering for Corvis (CORV:Nasdaq - news - boards), a communications equipment company that hasn't recorded any revenue and yet already is worth $36 billion.

So, given that it took Cisco years and years to get to that valuation, how, pray tell, could Corvis and companies like it ever be more than trading opportunities for investors?

"I think people have seen how big these companies can become, especially if you become the category leader," says Quattrone. "I think investors want call options on that." He pointed out that when Cisco went public, nobody was convinced a new equipment company could achieve $200 million in annual revenue. Corvis, according to the filings with the Securities and Exchange Commission, already has several orders from network service providers of at least $200 million.

But then Quattrone's truth gene kicks in. He points out that when Cisco went public a decade ago, Morgan Stanley priced the deal at 18 times the company's 1990 earnings estimates. Corvis, in contrast, priced its IPO at 49 times expected revenue -- two years out.

Why this all makes sense for Quattrone is evident on the accompanying slide -- it's about profits in mergers and acquisitions. Quattrone's M&A guru, George Boutros -- wasn't present Friday ... hmmm -- is widely acknowledged to be one of Wall Street's shrewdest negotiators. He's the guy hotly pursued companies turn to when they want to sell their companies for top dollar. And tech-oriented dealmaking is on fire. As the chart shows, there have been more deals worth nearly as much money so far this year than all of last year. And each year since 1993 has made the previous year look paltry.

Technology M&A, 1993- 2000 First you take them public, then you merge them.

Source: Securities Data Corp., as of 7/31/00

Asked if CSFB has been a part of taking too many ill-prepared companies public, Quattrone allows that "we've been searching our souls about that." Never mind that Quattrone's assertion would be predicated on the assumption that investment bankers have souls. The answer is in the numbers. Too many public companies leads ineluctably to outsized opportunities for M&A. That's how it works.

Quattrone acknowledges that "everyone is looking to see if the venture guys will repeat their mistakes of the 1980s, when they made lots of me-too investments and returns went to the single digits. We're monitoring that carefully and seeing no evidence yet."

I've seen evidence: the online pet sector, online weddings, business-to-business anything -- even the hottest of the hot, optical networking. This is the beauty of being a full-service investment bank. "If somebody explains their business to us once, we don't want to make them go through that painful process again," quips Quattrone. Translation: We'll arrange the funding when it's an idea, take them public as soon as we can, do a secondary if the markets allow and sell them when they've crapped out.

The bottom line is that top bankers like Quattrone are playing a numbers game. They do a volume business, but they also deliver. Among the companies they've taken public that would not have been funded according to the old rules are Commerce One (CMRC:Nasdaq - news - boards) and Phone.com (PHCM:Nasdaq - news - boards). Those two have made both institutional and plain old retail investors gobs of money.