Ten years ago today, Google went public at $85 a share via underwriters Morgan Stanley and Credit Suisse. At the last minute, the price was actually cut down a bit and people were very skeptical of the company’s then-massive valuation, even if enamored with their stranglehold on the search and ad game online.
Keep in mind, this is before the smartphone explosion and there weren’t any tablets either – Google was a desktop play to capture all the surfing and clicking. There wasn’t even Gmail at the time.
It’s interesting to find commentary from around the day of the deal ten years ago, a lot of it sounds like it could have ben written this year about Facebook, Tesla, Twitter and the like. Some sample comments from a New York Times piece published in August 2004. Yes, we get to laugh, because hindsight is 20/20:
Add that to a widespread perception among the valley’s best and brightest that Google’s trajectory has more than a passing resemblance to Netscape Communications, the company whose rapid rise and fall came to exemplify the boom-and-bust era of the late 1990’s in Silicon Valley. No wonder a lot of the valley’s smart money seems to see Google stock as a sucker’s bet.
“I’m not buying,” said the Apple Computer co-founder Stephen Wozniak, who has been involved in several start-up efforts since leaving Apple in the early 1980’s. “Past experience leaves the taste that a few people – never ourselves – will make out the first day, but that it’s not likely to appreciate a lot in the near future or maybe even the long future.”
The price range – stunning even by Silicon Valley standards – is based on the assumption of continued rapid growth by Google, whose revenue has soared from $439.5 million in 2002 to $1.46 billion last year and which had a profit of $105.6 million in 2003. But Google’s dazzling growth has lately shown signs of slowing. And the popularity of its search service has attracted a range of competitors, with others, including Microsoft , soon to follow.
“I wouldn’t be buying Google stock, and I don’t know anyone who would,” said Jerry Kaplan, a longtime technologist. Mr. Kaplan made his name at the software company Lotus Development back in the 1980’s and has since been a Silicon Valley entrepreneur, taking two small companies public. Mr. Kaplan said he had warned his mother not to buy Google stock.
Poor Mrs. Kaplan! I always knew Jerry was no good!
Okay that was fun.
The stock did well right out of the gates, eventually peaking out at $700 per share in October of 2007, before you-know-what happened. The credit crisis had practically zero impact on Google’s underlying business and so both the company and its stock bounced back hard and never looked back. Google’s market value now hovers somewhere around $400 billion and its doing roughly $65 billion in sales this year – a number almost equivalent to its first-day valuation! Shareholders who took the ride made approximately 1,038% on their money, one of the biggest winners of all time.
Congrats to Sergey, Larry and Eric – lots of people talk about changing the world, very few actually do it.