Google's initial public offering took place on August 19, 2004. A total of 19,605,052 shares were offered at a price of $85 per share.[27] Of that, 14,142,135 (another mathematical reference as √2 ≈ 1.4142135) were floated by Google and 5,462,917 by selling stockholders. The sale raised US$1.67 billion, and gave Google a market capitalization of more than $23 billion.[28]
So - assuming the market established a price of $110, and the sold at $85. Google lost out 14,142,135 x $20. Now $280M is not to be sniffed at, but for a company with a market cap of $23,000M it's little over 1% of it's value. Given the shares had risen 25% on the opening day, 1% is not really material.
Given that the company was cash flow positive, the difference between raising $1.67B and and $1.93B of would probably not have any operation affect on the business.
I'm not saying a dutch auction is necessarily a worse option. Indeed it might theoretically be the best. But they spent a vast amount of money setting it up, with all the extra legal fees and transactional costs, so let's not focus entirely on the money left on the table by the strategic error to a) pick a theoretical, rather than tested, procedure that was b) seemingly, poorly executed and c) if it yielded any lessons at all, for which there is no evidence, Schmidt refuses to share.
On a pedantic point, if my understanding is correct, google made (14m * 85) about 1.2 bil on the IPO, not 1.67 - the rest being sold by other stockholders (who, incidentally, 'lost' $136.5 mil due to the pop, and made $464m, minus fees for being involved in the IPO - not insignificant)
That means that Google made 1.2 bil, but had they 'got it right' (very difficult, of course, as other commenters point out, 14% pop is usual on IPOs) they would have made $1.55 bil. You can make it seem small compared to their market cap, but the headline is: he's proud at a messy, protracted transaction, possibly the most important in Google's history, that netted them $353m more than their 1.2 bil haul. That's 20-25% on the table, well in excess of the 14% bandied about in this thread.
And all that says nothing about the overarching questions of 'Why IPO, why then?' and 'what actually went wrong?'
From wikipedia (http://en.wikipedia.org/wiki/History_of_Google#Financing_and...)
Google's initial public offering took place on August 19, 2004. A total of 19,605,052 shares were offered at a price of $85 per share.[27] Of that, 14,142,135 (another mathematical reference as √2 ≈ 1.4142135) were floated by Google and 5,462,917 by selling stockholders. The sale raised US$1.67 billion, and gave Google a market capitalization of more than $23 billion.[28]
So - assuming the market established a price of $110, and the sold at $85. Google lost out 14,142,135 x $20. Now $280M is not to be sniffed at, but for a company with a market cap of $23,000M it's little over 1% of it's value. Given the shares had risen 25% on the opening day, 1% is not really material.
Given that the company was cash flow positive, the difference between raising $1.67B and and $1.93B of would probably not have any operation affect on the business.