Question

List three sources of financing that Google used during their startup. When (at which stage) did Google use the financing strategies? Was it proper? Why?

Answer 1

Three sources of financing that Google used during their startup

1)The first funding for Google as a company was secured in August 1998 in the form of a US$100,000 contribution from Andy Bechtolsheim, co-founder of Sun Microsystems, given to a corporation which did not yet exist.

2)On June 7, 1999, a round of equity funding totalling $25 million was announced,the major investors being rival venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital. While Google still needed more funding for their further expansion, Brin and Page were hesitant to take the company public, despite their financial issues. They were not ready to give up control over Google.

Following the closing of the $25 million financing round, Sequoia encouraged Brin and Page to hire a CEO. Brin and Page ultimately acquiesced and hired Eric Schmidt as Google's first CEO in March 2001.

In October 2003, while discussing a possible initial public offering of shares (IPO), Microsoft approached the company about a possible partnership or merger.The deal never materialized. In January 2004, Google announced the hiring of Morgan Stanley and Goldman Sachs Group to arrange an IPO.

3) The IPO was projected to raise as much as $4 billion.

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.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.Many of Google's employees became instant paper millionaires. Yahoo!, a competitor of Google, also benefited from the IPO because it owned 2.7 million shares of Google.

The stage at which  Google use the financing strategies:

Google firsly used their financing strategies during their growth phase.

The first funding of google was made in the year 1998.During 1998, Google had an index of about 60 million pages.The home page was still marked "BETA", but an article in Salon.com already argued that Google's search results were better than those of competitors like Hotbot or Excite.com, and praised it for being more technologically innovative than the overloaded portal sites (like Yahoo!, Excite.com, Lycos, Netscape's Netcenter, AOL.com, Go.com and MSN.com) which at that time, during the growing dot-com bubble, were seen as "the future of the Web", especially by stock market investors.

FINANCIAL DEALINGS OF GOOGLE

Google's initial public offering (IPO) took place five years later, on August 19, 2004. At that time Larry Page, Sergey Brin, and Eric Schmidt agreed to work together at Google for 20 years, until the year 2024.^[55] At IPO, the company offered 19,605,052 shares at a price of $85 per share.Shares were sold in an online auction format using a system built by Morgan Stanley and Credit Suisse, underwriters for the deal.The sale of $1.67 billion gave Google a market capitalization of more than $23 billion.

In October 2006, Google announced that it had acquired the video-sharing site for $1.65 billion in Google stock, and the deal was finalized on November 13, 2006. On April 13, 2007, Google reached an agreement to acquire DoubleClick for $3.1 billion, transferring to Google valuable relationships that DoubleClick had with Web publishers and advertising agencies.

In 2005, The Washington Post reported on a 700 percent increase in third-quarter profit for Google, largely thanks to large companies shifting their advertising strategies from newspapers, magazines, and television to the Internet. In May 2011, the number of monthly unique visitors to Google surpassed one billion for the first time.By 2011, Google was handling approximately 3 billion searches per day. To handle this workload, Google built 11 data centers around the world with some several thousand servers in each. These data centers allowed Google to handle the ever changing workload more efficiently.

On August 15, 2011, Google made its largest-ever acquisition to date when it announced that it would acquire Motorola Mobility for $12.5 billion. This purchase was made in part to help Google gain Motorola's considerable patent portfolio on mobile phones and wireless technologies, to help protect Google in its ongoing patent disputes with other companies, mainly Apple and Microsoft,and to allow it to continue to freely offer Android.

• I think that the financial strategies used by google was proper so that they became one of the big four technology companies alongside Amazon, Apple, and Microsoft.Google follows a different set of rules than most other companies. Google's orchestra is unique because of three factors: corporate culture, governance, and personal politics.Google, works at a fundamentally different pace.
• In its behaviour and vocabulary, Google oozes scientific method. A couple of times recently we have heard Google executives say in public, "if you can't measure it, you can't improve it". It's an old quote, dating back at least to Lord Kelvin in the 1800s. It's also a subtle twist on the traditional mantra used in web design: "that which you measure, you can improve." The web design version says you should measure everything you can; the Google executive version implies that nothing really matters unless you can measure it.

• If you look at the world through the eyes of the scientific method, every Google project is an experiment, and experiments must be periodically reviewed. When an experiment is completed, you either choose to follow up on it, or you terminate it and move on to something else. A scientist doesn't get emotional about this; it's the way the system works, and everyone knows that it's all for the best.

  By announcing its terminated experiments, I think Google isn't admitting failure, it's proudly demonstrating that scientific principles are in use. I think Google's management views the cancellations as proof that it's being focused and logical.

• The second unusual aspect of Google is its ownership structure. Google is not really a public company. Sure, it has stock and all the other attributes of a normal public company, but 56.7% of Google's voting shares are held by cofounders Sergey Brin and Larry Page. As long as they remain friends, they can do whatever they want with the company, and they cannot be fired.

• Google  has a short, unpredictable planning cycle in pursuit of very long-term objectives. It's likely to pursue those objectives relentlessly, but its near term actions will look random, because they're just Darwinian experiments along the way.