Daniel Parker
Computer Science 49s
Professor Babu
Chapter 9: Google Goes Public
Google’s fast rise to fame sparked rumors that the company would soon go
public. By the end of 2003, it was believed that Google’s initial public offering (IPO)
would be valued at approximately $16 billion. This was in the range of established
companies such as Amazon.com
For years Google was adamant about never going public as a company. However,
a little know SEC rule required companies who gave stock options to more than 1,000
employees to report as a public company. The fact that Google did this and had begun
taking money from venture capitalists pretty much guaranteed that Google had to go
public.
On April 29, 2004 Google filed its formal public offering document, declaring it
would sell $2,718, 281,828 worth of shares. This number was equal to the mathematical
concept of e, which is similar to pi. Google handled going public different from most
companies. Instead of allowing an investment bank to handle the process, Google used a
public auction to set the price of its stock. Google also had a “dual class” shareholding
structure
This meant that the founders and senior executives would hold a lot more control than
common shareholders.
Google experienced a few problems once it decided to go public. The SarbanesOxley Act: tightened rules on companies when it came to accounting for revenue and
because Google made their money by the penny, they had to restructure its advertising
reporting system. Google was also reprimanded by the SEC for offering millions of
shares to employees without registering them.
On August 18, 2004, Google officially went public with shares going at $85. By
then end of the day, the stock had raised to $100 a share. By the next day shares were
selling at $108.31. By November of that same year, shares had reached $200 per.
Chapter 10: Google Today, Google Tomorrow
After officially going public, Google had to do a complete overview of their
company in order to prepare for the future. Google hired Shona Brown as vice president
of business operations to ensure they were performing as a big time company. Google
was essentially becoming a new company. Google is now organized into core groups by
function- core search, advertising products, and products known as “20 percent” and “10
percent”. These products came from Google’s “imaginary” product development process,
where engineers are encouraged to take on additional projects. Examples of this are Gmail and Google News.
In 2004, Google dropped its Top 100 list, choosing instead to have different
segments of the company its own list of projects. Having achieved a revenue growth
of over 400,000 percent in five years, Google was named the fastest growing
company ever by the accounting firm Deloitte Touche.
In 2001, Google’s main competitor, Yahoo, was hurt by the markets and almost
went out of business. Yahoo had to lay off hundreds of workers and merge its cost
base. Because of this, their stock dropped from highs of $500 to lows of $10. Google
and Yahoo differ as far as their search goes. Using the example of the search term
“usher”, one can see that Google gives some Google News stories on the singer, with
AdWords on the right, with the majority of the page showing the top 10 results.
Yahoo on the other hand gives organic results along with an “also try” feature; this
allows Yahoo to watch what users are searching for. There are also two sponsor
results at the top of the page. Yahoo is more aggressive when it comes to
commercializing on their site. Yahoo also has a search shortcut to bring all important
information about a topic to one place. Google tries to solve things by strictly using
technology, without the need for humans. Yahoo, on the other hand, approaches
problems with the idea that humans are needed to find solutions.