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.