Twenty years ago, like Morgan Stanley Banker Michael Grimes was helping lead the public offering for the new company behind the Google search engine, one of the most anticipated IPOs of the decade, was among the first to offer a new email service. He had chosen whatever ID he wanted, so he asked for michael@gmail.com.
Sergey Brin, the co-founder of Google, participated. Grimes remembers Breen telling him, “Oh, no, you don’t want that. Gmail is going to be big. They’re going to spam you forever.”
Grimes told CNBC he regrets giving out the email address. But the IPO helped cement his reputation as “Silicon Valley’s Wall Street whisperer,” just as the tech industry began to reshape investment worldwide.
He calls Google’s IPO, which has grown 7,600% over the past two decades, “significant.”
The cumulative market value of the companies Grimes has made public is in the trillions of dollars. Some were more tumultuous, such as Facebookof the IPO in 2012, and some pioneering innovative new structures such as Spotifydirect import of 2018. But Google was innovative.
“It was the beginning of the next era,” Grimes said. “Google [and other megacaps that followed] changed the way we work, live and play. They did it in bigger ways than we all thought and now these are trillion dollar companies at the top.”
Now operating under parent Alphabet, the company is valued at more than $2 trillion. It’s no longer just about search and advertising, but the tech giant counts YouTube, Pixel smartphones, cloud computing, self-driving cars and productive artificial intelligence among its many business units. It’s a tech company so sprawling that the Justice Department might want to break it up.
Alphabet was not immediately available for comment.
At the time of Google’s IPO 20 years ago, the tech industry was still reeling from the dot-com boom of the early 2000s, and investors were cautious. Instead of going through a traditional offering, Google decided on a process called a Dutch auction, with the aim of democratizing the IPO process by allowing a wider range of investors to participate.
The founders’ IPO letter began: “Google is not a conventional company. We don’t intend to be.” 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 view was: Wait, if a young engineer sold some of her stock from Cisco or wherever she wants to put $10,000 into Google, why should she be told she only gets $500 or nothing at all? Especially if she’s willing to pay a dollar more than the foundation.”
“Auction allocations,” Grimes said, “would be determined by price and size. Not by who you are, and that was the fun part. That was the fundamental discovery.”
Grimes added that some banks and institutions warned Google’s co-founders about the unusual process and told them it wasn’t done that way. But others, like his team, said they would build with them.
Winning the coveted “left lead” in the IPO was and still is a competitive race. The Morgan Stanley team embraced the format, built a prototype, and tested it for a billion deals.
For the road show they were divided into three different groups. Co-founders Brin and Page each led their own, and CEO Eric Schmidt led the third.
By most accounts, the IPO was a success. Google overcame a weak IPO market and an unproven offering model to build a solid first-day performance and a market capitalization of more than $27 billion. From then on, the stock continued to appreciate.
But it would take more than a decade for the principles behind Google’s IPO to take off. Consumer tech brands like Facebook (now Meta), Twitter (now X) and LinkedIn (now owned by Microsoft) would follow the traditional IPO route. However, several of the high-profile lists between 2019 and 2021 incorporated elements that align with Google’s democratization intent. Airbnb offered the hosts the opportunity to buy shares at the IPO price. Uber and Lyft issued shares to its drivers and Robinhood gave customers access to its IPO.
Assessing the impact of Google’s “don’t be evil” creed — and how it’s aging — is more complicated. Grimes declined to comment on Google today, saying he can’t talk about customers.
Google is now accused of stifling innovation by U.S. and European regulators, and although the company is at the forefront of the AI platform shift, search and advertising — even its bread and butter — face its biggest existential threat. threat for decades.
