Three Cheers for Google
Well, let me start of with full disclosure. My sister now works for Google. But she is incredibly tight lipped about it--in my entire life she has never been so darn secretive about stuff. She won't even tell me what they serve in that famous cafeteria.
This AP article on the IPO letter pans Google based mainly on the opinion of "Tom Taulli, an author and lecturer at the University of Southern California's Marshall School of Business." But I think it sums up the griping of naysayers pretty well.
The gist of the "problems" seems to be that a) with two classes of stock, Brin, Page and Schmidt intend to retain directorial control of the company, and b) they have layed out a list of ways they will defy Wall Street convention, the most notable of which is getting rid of quarterly reports.
The first part is not that revolutionary, and I first heard about the practice regarding a company where it both makes good sense and provides some context for Google's choices as well: The New York Times. The New York Times has supervoting shares that are controlled by the Sulzberger family, though the family has some kind of internal agreement as to their administration. Many see this as the key to the Times maintaining its integrity, credibility, and gravitas. If you buy New York Times stock public stock, you buy it knowing that this is the case.
Which also reflects on the second "problem." By attaching all kinds of riders to how their company will operate and how much control stockholders can expect to have, regardless of their size, Google risks having a somewhat less than astronomical IPO. If their goal was to cash out and leave, that goal will be foiled. If they're goal was to raise as much cash as possible without any mitigating concerns, that goal will also be foiled. Wall Street tends to think of things primarily in terms of that last idea. But because of its health Google can afford to have a more complex goal.
I think their goal is to raise as much cash as possible while maintaining the don't be evil policy and ensuring the long term health of the company as an institution. What a concept! Multivariable thinking! By saying from the get go that owning a piece of Google is fraught with more possibility and responsibility than merely owning a piece of paper that earns some dividents every month, Google revives the idea of stock ownership being a more permanent relationship and begins to create the possibility of corporations that are about more than just profit.. I do not think this is naive. I think this is the key to a sustainable future.
Sorry about the infrequency of postings, the end of the semester is really catching up with me. I'm going to DC this afternoon for several days and possibly won't get a chance to post again for as much as a week. But if I have time, I'll see what I can do. Be well, all.
