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The Other Shoe Finally Drops: Google Files S-1

By - April 01, 2004

IPOIf Google published its S-1 in book form, it’d be #1 on Amazon for weeks. But you can read it for free here, because today, Google filed for the IPO of the decade. The details:

– Big News: Larry Page, Sergey Brin, and VCs Sequoia and KPCB together own 95% of the company. The remaining 5% is split between early angels and a lava lamp wholesaler who “management admits got a pretty good barter deal back in 1998.”

– The employee stock option plan, long believed to be the impetus to a public filing, has been dumped in favor of a private shadow equity plan modeled after the Economist magazine. “It’s the only magazine we read that hasn’t put us on the cover,” Page explained. “We kind of hoped this hat tip might change that.”

– Google will be taken public by Morgan Stanley (no surprise there) but with a twist: To win the Google business (and estimated fees of $300 million), Morgan has agreed to purchase Dutch auction innovator WR Hambrecht for an undisclosed sum (wags estimate it at nearly $150 million), to be paid in pre-IPO shares (apparently the ability to “sell on the pop” was a deal clincher). Morgan and WR Hambrect, in a joint release, have promised to “incorporate WRH’s innovative approach to fair market valuation” in the secondary market at some point in the “near future.”

– Eric Schmidt, while participating in the Economist-style plan, also has options to buy up to 20% of the company directly from the founders at a strike price 20% above the opening trade “should certain conditions occur.” A close reading of these conditions include: 1. Upon a tender offer for the company by Microsoft which values Google at no less than $100 billion (such a transaction would net Schmidt $15 billion, conservatively) 2. Upon a “reasonable” tender offer for the company by AOL (literally, AOL, the offer is void if tendered by Time Warner) 3. Whenever a quorum of Google VPs stipulate under oath that Larry and Sergey have become distracted and are no longer interested in the business 4. The day Google accepts paid inclusion or 5. The moment Sales has input into Product Management. One can only imagine that a sixth condition may as well be: Should hell freeze over, an option to exercise his shares forty five days thereafter, assuming that, in fact, hell remains frozen on the forty-sixth day. One senses this portion of Eric’s compensation is some kind of elaborate joke between the three famously tight-knit leaders.

– Google lists as its main market competitors Microsoft, Yahoo, AOL, that pesky butler in Emeryville, neighborhood garage sales, and, interestingly, Udi Manber.

– The S-1 lists an extraordinary cavalcade of “material pending legal matters.” Of note: An ongoing dispute with Stanfurd University, holder of the PageRank patent, on the exact definition of “in perpetuity” and a slow burning lawsuit brought by Overture Inc., the gist of which seems to be “Material and Adverse Damages Related to Generally Getting Credit For Our Idea, Goddammit.”

More as the press wakes up to this extraordinary news…

Light posting today, as I am out in meetings…Happy April Fools!

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3 thoughts on “The Other Shoe Finally Drops: Google Files S-1

  1. Richard says:

    Uh, am I reading this right? The employees (ballpark 900 I hear) hold some single digit percentage of the stock? My condolences to the staff.

  2. Benjamin says:

    GMail has been confirmed as NOT being a hoax though…