Good for Google for going public — and for being confident to call the shots themselves (instead of Wall Street tradition) about their initial public offering. (See the New York Times' story today for all the details.) In particular, note that according to the Times:
"Google evidently does not trust shareholders to think long term. Under the dual-class voting structure, the new shares it sells to the public will have only a tenth as much voting power as the shares current investors own."But isn't this a bit ironic?
That is, look at it this way: the strength of Google's search technology is that it harnesses the collective wisdom of the Web as a whole in order to evaluate the significance of any given site. If lots of sites link to you, Google likes you. Indeed — Google has taken the concept of "the collective wisdom of the Web" and, instead of laughing at it, has incarnated it into the core of its technology.
Similarly, this is how the stock market is supposed to work, too: turn enough people seeking their own interests loose, and they will find and be willing to pay for true value. Just as Google can trust that a site should appear at the top of your search results because other people are after it too, so does the market trust that sought-after companies are worth more.
It will be interesting to see how Google's IPO goes, and whether in the long term it's right about the Web or the market or both.
Posted by Jon on April 30, 2004 07:29 AMWell, I think that the dual class of stock tells more about the founders and their high opinion of their own ideas (and their low opinion of others) than it does about Google's corporate view of the web. Larry Page and Sergey Brin are wearing pretty big britches right now, and let's hope they fit. It's one thing for Warren Buffet to write inoclastic letters to the shareholders and it's quite another for two 30 year old dot com billionaires to do so.
The choices that Google made (Dutch Auction for the IPO price, two classes of stock, unwillingness to provide earnings guidance, etc.) are very anti-shareholder. It will be interesting to see how their distrust (and even distain) for the shareholder play out. My guess is that the market will forgive them as long as they make a lot of money, but should they stumble; the fall could be especially hard and swift.