30 Apr 2004 | Benjy said...

I agree that if Google can stick to their guns and focus on the long-term rather than the short-term, they'll be much better off. Working for a company that was once part of a high-profile public company and that's since been sold to a private company, I've seen the dramatic difference in how a business operates when it can look out over a year or more rather than simply doing anything necessary to hit this quarter's number. Man, I don't miss those days!

In the past, Wall St. may have nicked Google for looking long-term, but I think that the rash of corporate scandals has pulled back the curtain a bit on the short-term midset of companies. It's like drug addiction, where when they are able to hit numbers this quarter then they need to do the same next quarter even though it takes more work to do so, and the vicious cycle continues until they end up like Enron, MCI, HealthSouth, etc.

Slow & steady wins the race...

30 Apr 2004 | Don Schenck said...

Perhaps perhaps perhaps (Cake!) this will start a trend.

One can hope.

30 Apr 2004 | Gordon said...

Fingers crossed they hold out. I'm sure there are many companies who would love to think the same way but aren't in the position to do so at present - it's a frustrating time, but will take one of the 'big players' to start changing that mindset of now now now.

30 Apr 2004 | Michael said...

Google's move is also a collective middle finger to some of the shareholder activism that's been growing post-bubble. It's an interesting thought to consider. Isn't it "Evil" (to use their term) to essentially give themselves permanent power over shareholders to prevent any coup by proxy? I realize it's "their" company and they are trying to protect their interests, but it's not exactly user-friendly.

Overall, though, I like their refreshing talk. When you hear CNBC's commentators breathlessly talking about the Google IPO as they wait with baited breath for the "new bubble" to come, it's truly scary. Have they not learned their lessons? Google's founders are basically saying, "Look, we don't want to be the start of another bubble."

More power to them.

01 May 2004 | Ian said...

But isn't societys' near-sightedness so engrained into our culture that a single company trying to break out of the mold wont do a thing?

It seems most people are living in the day-to-day mindset and that everything they do, including investing, is a reflection of this. You can see this in the way people smoke for the quick hit to get them through the day or how Governments focus purely on swaying the voters to win the next election. The repercusions for the decisions made now don't need to be thought about til the issues arrise years down the track so they're able to get away with so much now. Its just that the corporate world tends to be so extreme in its reflection (and guideance?) of societies values/perspective that the problems are much more magnified and obvious. So perhaps this is where the change needs to be. I hope Google is able to initate this much needed change.

Of course, if you don't agree with the conditions, you don't have to buy it. Lets wait and see who does.

01 May 2004 | Anthony said...

I am also hoping this starts a trend. I was part of a company that went from private to public and the change in the focus of the business and the culture following the IPO was amazing.

Whatever kind of vision thing we had going went out the door as upper management focused on what Wall Street thought was important, not what we did. Making the quarterly numbers -- by hook or crook -- became the name of the game. It was really about looking good for your investors. I saw bad business deals made, deals that we had no hope of implementing, etc.

Everyone in the company was content to tow the line so long as their stock was doing well. When everything started to go south in the market, you'd see people looking for the Vision Thing again, but it wasn't there any longer.

While the West Coast / Silicon Valley has been at the lead of a lot of innovation, maybe this will be when one of our companies brings that kind of foresight and entrepreneurial spirit to shifting the context by which Wall Street investors live and breath.

Anyhow, it's fun enough to listen to traditional Wall Street reporters scoff at Google for this sort of thing...

01 May 2004 | Derek said...

Google is taking an interesting position, and we'll have to see how long it will persist. Some years down the line, will the votes of general shareholders (whether institutional investors or individuals) have enough sway to fire the Google board of directors and executives if they don't go along with the then-current desires of the majority, however short-term or ill-thought-out?

Or will Google be such a success by then that shareholders will trust the key team to know what they're doing? Or will current shareholders (that same key team) manage to engineer things so that they maintain majority voting control indefinitely? Might, as occasionally happens, Google go private again if things don't go so well with public shareholders?

In essence, to be blunt, will long-term greed be able to win out over short-term greed forever?

01 May 2004 | Tomas said...

Google's not doing this for the money, but because they have the responsibilities of an IPO anyway, due to their massive revenue, but none of the advantages of being an IPO. That, combined with their idea of not doing evil, makes their choices, their attitude if you will, very motivated and just.

01 May 2004 | Brian Andersen said...

From what I've heard, Google is practically taking over the world.

And now they're making common sense? Gasp! What's next, I wonder.

Google is where everything is happening right now, that's obvious, and if they can have a positive influence on other companies, so much the better. Google appears to have learned all the valueable lessons, because noone wants another "bubble" that bursts in a few years anyway. Exciting stuff.

02 May 2004 | Derek said...

By the way, the value of Google's IPO, US $2,718,281,828, is set at exactly a million times the mathematical constant e, the natural logarithm base (rounded to the nearest dollar). Neat.

02 May 2004 | Derek said...

Sorry. Make that a billion times. What are a few orders of magnitude between friends?

02 May 2004 | Brian Andersen said...

A company that's economically responsible, thinking outside the box AND having a sense of humour?

Am I dreaming?

03 May 2004 | pb said...

Berkshire's been around for awhile.

03 May 2004 | One of several Steves said...

Just to play devil's advocate - if Google thinks the current regieme of public financing is so screwed up, why rush to join the party? There's nothing that says you have to be a public company. Some very large, very successful companies have never gone public (one of the largest agribusinesses in the world, Cargill, comes immediately to mind; there are many others).

If you don't like the way the game is played, perhaps you shouldn't play the game.

And, a few of the elements of their IPO strike me as being nowhere near as altruistic as they paint them, such as the dual-class voting structure. I have no problems with them wanting to maintain internal control. Just be upfront about it instead of trying to present it as some other goal.

And, honestly, I start getting really wary when companies start going on about having a "responsibility to the world." Your responsibility is to do your business and do it ethically. That's it.

04 May 2004 | Don Schenck said...

Steve makes a good point.

"We want to give back to the community".

What? You ALREADY DO, by giving people meaningful and gainful employment. Ayn Rand.

04 May 2004 | pb said...

I have no problems with them wanting to maintain internal control. Just be upfront about it instead of trying to present it as some other goal.
They are crystal celar about Page and Brin wanting to retain control!!
Your responsibility is to do your business and do it ethically. That's it.
No, it's not.

05 May 2004 | One of several Steves said...

PB, if they're crystal-clear about that, why present this dual-class voting structure as anything other than a mechanism for doing just that? The stated reasons strike me as so much double-speak.

And, if a company's responsiblity isn't to do its business and do it ethically, what is it? I don't need a search engine to save the world. And, I've noticed that most people who deliberately set out to change the world end up doing nothing, at best, and usually mess it up. The people who truly change the world end up doing it without focusing on doing just that. They just go about doing what they do.

07 May 2004 | Andreas said...

Does anybody understand that a Google making 100 million a year is estimated as a 25 billion company? That would be a price earning ration of 250. Back into year 1998?

07 May 2004 | One of several Steves said...

That's why, as much as I like the company, I won't be buying any Google stock for a while, Andreas. Investing should not be done on an emotional basis, and that's what seems to be happening with Google. Not only does it seem unlikely that it would ever start generating income commensurate with that sort of stock price, it faceds some serious medium- and long-term challenges that it's by no means assurred of meeting.