CHAPTER SEVENGoogleAn EntrepreneurialJuggernautIn 1998 Sergey Brin
CHAPTER SEVEN
Google—An Entrepreneurial
Juggernaut
I
n 1998 Sergey Brin and Larry Page dropped out of the Ph.D program at Stanford to start Google in a friend’s garage. Along the way, they discovered a powerful marketing tool that would revolutionize advertising. Six years later, on August 19, 2004, they took this Internet search and advertising firm public at a price of $85 a share. One year after the initial public offering (IPO), Google stock closed at $280. By 2007, the stock had gone over $700, and lots of people had become very rich. But this was to cause some serious concerns for the firm.
BRAIN DRAIN
Craig Silverstein, a fellow Stanford Ph.D student, was the first hire of Page and Brin.
He helped them move their equipment out of Page’s dorm room and into a place with more space and, more importantly, a garage. In early 1999, five months later, the enterprise had grown enough to move into offices on University Avenue in downtown
Palo Alto. The firm’s fortunes continued to improve, and Craig became director of technology in charge of product development. Before many years, Craig realized he had become very rich indeed.
From the beginning, Google gave its employees stock options in lieu of competitive salaries that in those days it could ill afford. These options gave employees the right to purchase a given number of shares of stock at a certain price, called a vested price, some years in the future. Even before going public in 2004, it had granted two big batches of such options. A 2002 grant that was priced at 30 cents a share vested in
2006. Another, priced at $4 a share in 2003, also vested in 2006. In May 2008, another round of options would be exercisable at $35, far more costly than the 30 cent option, but the way the stock was going up since the IPO, this higher price was of little consequence. By 2007, Craig was worth well over $100 million in Google stock and was becoming richer with every passing day.
99
100 • Chapter7: Google—An
Google—An Entrepreneurial
Juggernaut
I
n 1998 Sergey Brin and Larry Page dropped out of the Ph.D program at Stanford to start Google in a friend’s garage. Along the way, they discovered a powerful marketing tool that would revolutionize advertising. Six years later, on August 19, 2004, they took this Internet search and advertising firm public at a price of $85 a share. One year after the initial public offering (IPO), Google stock closed at $280. By 2007, the stock had gone over $700, and lots of people had become very rich. But this was to cause some serious concerns for the firm.
BRAIN DRAIN
Craig Silverstein, a fellow Stanford Ph.D student, was the first hire of Page and Brin.
He helped them move their equipment out of Page’s dorm room and into a place with more space and, more importantly, a garage. In early 1999, five months later, the enterprise had grown enough to move into offices on University Avenue in downtown
Palo Alto. The firm’s fortunes continued to improve, and Craig became director of technology in charge of product development. Before many years, Craig realized he had become very rich indeed.
From the beginning, Google gave its employees stock options in lieu of competitive salaries that in those days it could ill afford. These options gave employees the right to purchase a given number of shares of stock at a certain price, called a vested price, some years in the future. Even before going public in 2004, it had granted two big batches of such options. A 2002 grant that was priced at 30 cents a share vested in
2006. Another, priced at $4 a share in 2003, also vested in 2006. In May 2008, another round of options would be exercisable at $35, far more costly than the 30 cent option, but the way the stock was going up since the IPO, this higher price was of little consequence. By 2007, Craig was worth well over $100 million in Google stock and was becoming richer with every passing day.
99
100 • Chapter7: Google—An
Links: Raymond Sokolov, “Googling Lunch,” Wall Street Journal, December 1–2, 2007, pp. W1 and W5. Example cited in Seth Godin, “Your Product, Your Customer,” Forbes, May 7, 2007, p. 52.