Twenty years ago, when Morgan Stanley Banker Michael Grimes helped to plan the IPO of the young company behind the Google search engine, one of the crucial eagerly awaited IPOs of the last decade, he was one in every of the primary to be offered a brand new email service. He could select the identifier he wanted, so he asked for michael@gmail.com.
Sergey Brin, co-founder of Google, intervened. Grimes remembers Brin telling him, “Oh no, you don't want that. Gmail is going to be big. You're going to be bombarded with spam forever.”
Grimes told CNBC he regretted giving out the e-mail address, however the IPO helped cement his popularity as “Wall Street's Silicon Valley whisperer” just because the tech industry was starting to reshape global investing.
He describes the IPO of Google, whose shares have grown 7,600 percent over the past 20 years, as “significant.”
The cumulative market value of the businesses Grimes has taken public is within the trillions of dollars. Some have been more turbulent, like on facebook.in 2012, and a few have pioneered revolutionary latest structures, equivalent to Spotify's direct listing in 2018. But Google's was groundbreaking.
“It was the beginning of a new era,” said Grimes. “Google [and other megacaps that followed] have changed the way we work, live and play. They've done it on a larger scale than any of us realized, and now these trillion-dollar companies are at the forefront.”
The company, now operating under parent company Alphabet, is price greater than $2 trillion. The tech giant now not offers only engines like google and promoting, but additionally includes YouTube, Pixel smartphones, cloud computing, self-driving cars and generative artificial intelligence amongst its many business areas. The technology company is so expansive that the Justice Department could also be considering a split.
Alphabet was initially unavailable for comment.
When Google went public 20 years ago, the tech industry was still combating the fallout from the dot-com bubble of the early 2000s and investors were cautious. Instead of a conventional IPO, Google opted for a process called a “Dutch auction” that was intended to democratize the IPO and permit a wider range of investors to participate.
The founders' letter began with the words: “Google is not a conventional company. Nor do we intend to become one.” It also introduced Google's “Don't be evil” philosophy.
Grimes said Brin and Larry Page wanted equal conditions for his or her IPO: “Their position was: Wait a minute, if a young engineer sells a few of her vested shares, Cisco or wherever, and she wants to invest $10,000 in Google, why tell her she's only getting $500 or nothing at all? Especially if she's willing to pay a dollar more than the institution.”
“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 breakthrough.”
Grimes added that some banks and institutions had warned Google's co-founders concerning the unusual move, telling them it was not the method to do things, but others, including his team, said they’d work with them.
Winning the coveted “left lead” in an IPO was and is a troublesome battle. The Morgan Stanley team took on this format, built a prototype and tested a billion bids.
For the roadshow, they split into three different teams. Co-founders Brin and Page each led their very own and CEO Eric Schmidt led the third.
By most accounts, the IPO was successful. Google defied a weak IPO market and an untested offering model to post a solid first-day return and a market capitalization of over $27 billion. From there, the stock continued to rise in value.
But it could take greater 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 (now owned by Microsoft) took the normal IPO route. But a few of the high-profile IPOs between 2019 and 2021 included elements that aligned with Google's democratization intent. Airbnb offered the hosts the chance to purchase shares on the IPO price. Above And Lyft provided shares to its drivers and Robinhood gave customers access to its IPO.
Assessing the impact of Google's “don't be evil” credo and its aging is harder. Grimes declined to speak about today's Google because he can't speak about customers.
Google is now being accused by US and European regulators of stifling innovation. And while the corporate is leading the shift to generic AI platforms, its search and promoting business – still its bread and butter – is facing its biggest existential threat in a long time.
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