20 years ago, Morgan Stanley Banker Michael Grimes said: Google The founder of a search engine and one of the most anticipated IPOs of the decade was one of the first to be offered the new email service: He was free to choose any identifier he wanted, so he requested michael@gmail.com.
Google co-founder Sergey Brin joined in. Grimes remembers Brin saying, “No, we don’t want that. Gmail is going to get big. You’re going to get spam forever.”
Grimes told CNBC he regretted giving up his email address, but the IPO helped cement his reputation as “the Wall Street Silicon Valley whisperer” just as the tech industry was beginning to reshape investing globally.
He called Google’s IPO a “momentous event,” citing a 7,600% increase over the past 20 years.
Grimes has taken companies public with market capitalizations in the trillions of dollars, some of which have been more turbulent. FacebookSome companies went public in 2012 and pioneered innovative new structures. SpotifyThe company’s direct listing in 2018 was groundbreaking, but Google’s IPO was groundbreaking.
“It was the beginning of a new era,” Grimes said. “Google [and other megacaps that followed] It has changed the way we work, live and play. It has done so in bigger ways than we ever imagined, and now trillion-dollar companies are at the top of their game.”
Now under parent company Alphabet, the company has a market capitalization of over $2 trillion. No longer just about search and advertising, the tech giant has many divisions including YouTube, Pixel smartphones, cloud computing, self-driving cars, and generative artificial intelligence. The tech company is so big that the Department of Justice may be interested in breaking it up.
Alphabet was not immediately available for comment.
When Google went public 20 years ago, the tech industry was still reeling from the dot-com bubble of the early 2000s, and investors were cautious. Rather than a traditional public offering, Google opted for a process called a Dutch auction, which aimed to democratize the IPO process by allowing a broader range of investors to participate.
The founders’ IPO letter begins with the sentence, “Google is not a traditional company. We have no intention of becoming a traditional company.” It also introduces Google’s “don’t be evil” philosophy.
Grimes said Brin and Larry Page wanted fair terms for the IPO. “Their thinking was, young engineers, Cisco Or somewhere along the line, if she wants to invest $10,000 in Google, why is she told she can only get $500 or nothing at all, especially if she’s willing to pay $1 more than the institution?”
“The auction allocations are determined by price and size, not by who you are, and that was the fun part. That was a radical advancement,” Grimes said.
Grimes added that some banks and institutions had warned the Google co-founders about the unorthodox process and told them it wasn’t the way to do things, but others, like Grimes’ team, said they would build it with them.
Winning the coveted “left side lead” in an IPO was, and still is, a fierce competition.The Morgan Stanley team embraced the format, building a prototype to test a $1 billion bid.
For the roadshow, the company split into three different teams: co-founders Brin and Page each led their own team, and CEO Eric Schmidt led the third team.
By most standards, the IPO was a success: Google overcame a weak IPO market and an unproven offering model to generate strong first-day earnings and a market cap of more than $27 billion. The stock price continued to rise from there.
But it took more than a decade for Google’s IPO principles to take off. Consumer tech brands like Facebook (now Meta), Twitter (now X) and LinkedIn (now owned by Microsoft) went the traditional IPO route. But several of the most notable public listings of 2019 and 2021 incorporated elements that aligned with Google’s democratizing intent. Airbnb It offered hosts the opportunity to purchase shares at the IPO price. Uber and lift The company offered its shares to drivers, and Robinhood offered its customers access to the IPO.
Assessing the impact of Google’s “Don’t be evil” mantra, and how outdated it may be, is more complicated. Grimes declined to talk about Google today, saying he couldn’t speak about customers.
Google is currently under fire from U.S. and European regulators for stifling innovation, and while the company is at the forefront of the transition to a generative AI platform, its main businesses, search and advertising, remain facing their biggest existential threat in decades.