Twenty years ago, as Morgan Stanley banker Michael Grimes was helping lead the public offering for the young company behind the Google search engine, one of the most anticipated of the decade, he was among the first people offered a new email service. He had his pick of any identifier he wanted, so he asked for michael@gmail.com.
Sergey Brin, Google’s cofounder, chimed in. Grimes remembers Brin telling him, “Oh no, you don’t want that. Gmail is going to be big. You’ll be spammed forever.”
Grimes told me he does regret passing up the email address. But the IPO helped cement his reputation as “Wall Street’s Silicon Valley whisperer,” just as the tech industry began to reshape investing globally.
He calls the IPO of Google, which has increased by 7,600% over the last two decades, “momentous.”
The cumulative market value of companies Grimes has taken public is in the trillions of dollars. Some were more tumultuous, like Facebook‘s IPO in 2012, and some pioneered innovative new structures, like Spotify‘s direct listing in 2018. But Google’s was groundbreaking.
“It was the start of the next era,” Grimes said. “Google [and other megacaps that followed] changed the way that we work, live and play. They did it in bigger ways than we all thought and now these are trillion-dollar companies right up at the top.”
Twenty years after its 2004 IPO, Google, now operating under parent company Alphabet, is worth more than $2 trillion. No longer just search and advertising, the tech giant counts YouTube, Pixel smartphones, cloud computing, self-driving cars and generative artificial intelligence among its many business units. It’s a technology company so expansive that the Department of Justice may be looking to split it up.
Alphabet was not immediately available to comment.
Twenty years ago, the tech industry was still reeling from the dot-com burst of the early 2000s and investors were cautious — especially as Google decided on an unconventional IPO process, called a Dutch auction, intended to democratize the IPO process by allowing a broader range of investors to participate.
The founders’ IPO letter began, “Google is not a conventional company. We do not intend to become one.” It also introduced Google’s “Don’t be evil” philosophy.
Grimes said Brin and Larry Page wanted a level playing field for their IPO: “Their point of view was: Wait, if a young engineer sold some of her vested stock from Cisco or wherever and she wants to put $10,000 into Google, why should she get told she only gets $500 worth or none? Especially if she’s willing to pay one dollar more than the institution.”
“The auction allocations,” Grimes said, “would be determined by price and size. Not by who you are, and that was the fun. That was the fundamental breakthrough.”
Grimes added that some banks and institutions cautioned Google’s cofounders against the unusual process and told them it wasn’t the way things were done, but others, like his own team, said they’d build with them.
Winning the coveted “left lead” on the IPO was and still is a competitive race. His team embraced the format, built a prototype and tested for a billion bids.
For the road show, they split into three different teams. Cofounders Brin and Page each led their own, and CEO Eric Schmidt led the third.
By most accounts, the IPO was successful. Google overcame a weak IPO market and an unproven offering model to generate a solid first-day return and a market capitalization of over $27 billion. From there, the stock kept appreciating.
But it would take more than a decade for the principles behind Google’s IPO to take off. Consumer technology brands like Facebook (now Meta), Twitter (now X) and LinkedIn would go the traditional IPO route. But several of the high-profile listings between 2019 and 2021 did incorporate elements that aligned with Google’s democratizing intent. Airbnb offered hosts the opportunity to buy shares at the IPO price. Uber and Lyft made shares available to its drivers, and Robinhood gave customers access to its IPO.
Assessing the impact of Google’s “don’t be evil” philosophy — and how it’s aged — is more complicated. Grimes declined to reflect on the Google of today, saying he cannot comment on clients.
Today, Google is accused of stifling innovation by U.S. and European regulators, and although the company is at the forefront of the generative AI platform shift, search and advertising — still its bread and butter — is facing its biggest existential threat in decades.