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Twenty years ago, as Morgan Stanley Banker Michael Grimes was helping lead the IPO of the startup behind Google Michael was one of the first people offered the new email service, and he could choose any ID he wanted, so he asked for michael@gmail.com.
Sergey Brin, co-founder of Google, stepped in. Grimes recalls Brin saying, “No, you don’t want that. Gmail is going to be famous. You’re going to get spam forever.”
Grimes told CNBC he regretted not giving the email address. But the IPO helped cement his reputation as “Silicon Valley’s Wall Street whisperer,” at a time when the tech industry was reshaping investment worldwide.
He describes Google's IPO, which has risen 7,600% over the past two decades, as “historic.”
The companies Grimes has taken public have a combined market value of trillions of dollars. Some have been more troubled, such as FacebookApple went public in 2012, and some of the leading companies in the field of innovative new structures, such as SpotifyThe direct listing was by 'S' in 2018. But Google's listing was groundbreaking.
“It was the beginning of the next era,” Grimes said. “Google [and other megacaps that followed] “These companies have changed the way we work, live and play. They have done so in ways bigger than we could have imagined, and now these trillion-dollar companies are at the top of their game.”
Now under the umbrella of parent company Alphabet, the company is worth more than $2 trillion. It’s no longer just in search and advertising, but also includes YouTube, Pixel smartphones, cloud computing, self-driving cars, and generative artificial intelligence among its many business units. It’s a tech company so huge that the Justice Department may be looking to break it up.
Alphabet could not immediately be reached 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 wary. Instead of going with a traditional offering, Google decided to go with a process called a Dutch auction, which aimed to democratize the IPO process by allowing a broader group of investors to participate.
The founders' IPO letter began: “Google is not a traditional company. And we don't plan to be one.” It also introduced Google's philosophy: “Don't be evil.”
Grimes said Brin and Larry Page wanted to level the playing field in their IPO: “Their point was, ‘Wait, if a young engineer sells some of her shares acquired from Cisco “Or wherever she is and she wants to put $10,000 into Google, why is she told she’ll only get $500 or nothing? Especially if she’s willing to pay the organization $1 more.”
“The auction allocations will be determined based on price and volume, not who you are, and that's the fun,” Grimes said. “That was the fundamental breakthrough.”
Grimes added that some banks and institutions warned Google’s co-founders about the unusual process and told them it wasn’t the way things were done. But others, like his team, said they would work with them to build.
Winning the “first place” IPO was, and still is, a competitive race. The Morgan Stanley team embraced this format, built a prototype and tested it against a billion bidders.
For the road show, they split into three different teams. Co-founders Brin and Page each led their own team, 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 achieve strong first-day returns and a market cap of more than $27 billion. From there, the stock continued to rise.
But it took more than a decade for the principles behind Google’s IPO to take off. Consumer tech companies like Facebook (now Meta), Twitter (now X), and LinkedIn (now owned by Microsoft) have gone the traditional IPO route. But several notable listings between 2019 and 2021 included elements consistent with Google’s democratic intent. Airbnb Hosts were offered the opportunity to buy shares at the IPO price. Uber and Lift Robinhood made the stock available to its drivers, giving customers access to its initial public offering.
Assessing the impact of Google’s “Don’t be evil” slogan—and how outdated it is—is more complicated. Grimes declined to discuss Google today, saying he couldn’t talk about customers.
Google is now facing accusations of stifling innovation from regulators in the US and Europe, and while the company is at the forefront of the shift to a generative AI platform, search and advertising — still its core — face their biggest existential threat in decades.
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