Chapters 9 and 10 Daniel Parker. Chapter 9 Google Goes Public.

Chapters 9 and 10Chapters 9 and 10

Daniel Parker Daniel Parker

Chapter 9Chapter 9

Google Goes PublicGoogle Goes Public


Google’s fast rise to fame sparked Google’s fast rise to fame sparked rumors that the company would soon rumors that the company would soon go publicgo public

Reports in 2003 showed that Reports in 2003 showed that Google’s revenue was almost $1 Google’s revenue was almost $1 billion, and their profits reaching billion, and their profits reaching over $300 millionover $300 million


By the end of 2003, it was believed By the end of 2003, it was believed that Google’s initial public offering that Google’s initial public offering (IPO) would be valued at (IPO) would be valued at approximately $16 billionapproximately $16 billion

This was in the range of established This was in the range of established companies such as Amazon.comcompanies such as Amazon.com


For years Google was adamant about For years Google was adamant about never going public as a companynever going public as a company

However, a little know SEC rule required However, a little know SEC rule required companies who gave stock options to companies who gave stock options to more than 1,000 employees to report as a more than 1,000 employees to report as a public companypublic company

The fact that Google did this and had The fact that Google did this and had begun taking money from venture begun taking money from venture capitalists pretty much guaranteed that capitalists pretty much guaranteed that Google had to go publicGoogle had to go public


On April 29, 2004 Google filed its On April 29, 2004 Google filed its formal public offering documentformal public offering document

Google declared it would sell $2, Google declared it would sell $2, 718, 281,828 worth of shares718, 281,828 worth of shares

This number was equal to the This number was equal to the mathematical concept of mathematical concept of ee, which is , which is similar to pisimilar to pi


Google handled going public different Google handled going public different from most companiesfrom most companies

Instead of allowing an investment bank to Instead of allowing an investment bank to handle the process, Google used a public handle the process, Google used a public auction to set the price of its stockauction to set the price of its stock

Google also had a “dual class” Google also had a “dual class” shareholding structureshareholding structure

This meant that the founders and senior This meant that the founders and senior executives would hold a lot more control executives would hold a lot more control than common shareholdersthan common shareholders


Google experienced a few problems going Google experienced a few problems going publicpublic

The Sarbanes-Oxley Act: tightened rules on The Sarbanes-Oxley Act: tightened rules on companies when it came to accounting for companies when it came to accounting for revenuerevenue

Because Google made their money by the Because Google made their money by the penny, they had to restructure its advertising penny, they had to restructure its advertising reporting system reporting system

Google was also reprimanded by the SEC for Google was also reprimanded by the SEC for offering millions of shares to employees offering millions of shares to employees without registering them without registering them


On August 18, 2004, Google officially On August 18, 2004, Google officially went public with shares going at $85went public with shares going at $85

By then end of the day, the stock rose By then end of the day, the stock rose to $100 a share to $100 a share

By the next day shares were selling at By the next day shares were selling at $108.31$108.31

By November of that same year, By November of that same year, shares had reached $200 per shares had reached $200 per

Chapter 10Chapter 10

Google Today, Google Google Today, Google TomorrowTomorrow


After officially going public, Google had After officially going public, Google had to do a complete overview of their to do a complete overview of their company in order to prepare for the company in order to prepare for the futurefuture

Google hired Shona Brown as vice Google hired Shona Brown as vice president of business operations to president of business operations to ensure they were performing as a big ensure they were performing as a big time companytime company

Google was essentially becoming a new Google was essentially becoming a new companycompany


Google is now organized into core Google is now organized into core groups by function- core search, groups by function- core search, advertising products, and products advertising products, and products known as “20 percent” and “10 percent”known as “20 percent” and “10 percent”

These products came from Google’s These products came from Google’s “imaginary” product development “imaginary” product development process, where engineers are process, where engineers are encouraged to take on additional encouraged to take on additional projectsprojects

Examples of this are Gmail and Google Examples of this are Gmail and Google NewsNews


In 2004, Google dropped its Top 100 In 2004, Google dropped its Top 100 list, choosing instead to have list, choosing instead to have different segments of the company different segments of the company its own list of projectsits own list of projects

Having achieved a revenue growth Having achieved a revenue growth of over 400,000 percent in five of over 400,000 percent in five years, Google was named the fastest years, Google was named the fastest growing company ever by the growing company ever by the accounting firm Deloitte Toucheaccounting firm Deloitte Touche


In 2001, Google’s main competitor, In 2001, Google’s main competitor, Yahoo, was hurt by the markets and Yahoo, was hurt by the markets and almost went out of businessalmost went out of business

Yahoo had to lay off hundreds of Yahoo had to lay off hundreds of workers and merge its cost baseworkers and merge its cost base

Because of this, their stock dropped Because of this, their stock dropped from highs of $500 to lows of $10from highs of $500 to lows of $10


Google and Yahoo differ as far as Google and Yahoo differ as far as their search goestheir search goes

Example of the term “usher” Example of the term “usher” Google gives some Google News Google gives some Google News

stories on the singer, with AdWords stories on the singer, with AdWords on the right, with the majority of the on the right, with the majority of the page showing the top 10 resultspage showing the top 10 results


Yahoo on the other hand gives organic results Yahoo on the other hand gives organic results along with an “also try” feature; this allows along with an “also try” feature; this allows Yahoo to watch what users are searching forYahoo to watch what users are searching for

There are also two sponsor results at the top There are also two sponsor results at the top of the pageof the page

Yahoo is more aggressive when it comes to Yahoo is more aggressive when it comes to commercializing on their sitecommercializing on their site

Yahoo also has a search shortcut to brings all Yahoo also has a search shortcut to brings all important information about a topic to one important information about a topic to one placeplace


Google tries to solve things by Google tries to solve things by strictly using technology, without strictly using technology, without the need for humansthe need for humans

Yahoo approaches problems with the Yahoo approaches problems with the idea that humans are needed to find idea that humans are needed to find solutionssolutions

Chapters 9 and 10 Daniel Parker. Chapter 9 Google Goes Public.

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Transcript of Chapters 9 and 10 Daniel Parker. Chapter 9 Google Goes Public.