For companies, going public is a fundraising event. For the cultures of those companies, it changes everything.
—Marc Andreessen, who participated in the initial public offerings of Netscape and LoudCloud (now Opsware)
The initial public offering (IPO) has become a Silicon Valley ritual, but like some ritualistic events (Christmas, for example) it can get out of hand.
Larry and Sergey knew that a public stock offering would change their personal lives. The world would know how profitable Google had become and how wealthy they had become as well. Their parents' and their own lives would be in the spotlight, along with the attendant pleasures and dangers of fame and wealth.
As Andreessen noted, everything the company does—every quarterly and annual earnings statement, every news release—will be scrutinized, and when actual information isn't available, gossip prevails. Additionally, many early, key employees become so wealthy that they gradually leave the company. They either don't need to work and go off to pursue personal dreams or they now can afford to start their own companies. In Google's IPO, more than half of the 1,000 mostly youthful employees were sure to become millionaires.
The freedom and fun of being privately owned is gone. Jeff Skoll, eBay's former president, recalls:
Before we went public, I used to send out a company-wide joke each day, just as a way of loosening things up. The day after the IPO, I sat down at my computer to write that ...