Google vs. Evil

from the so-tricky dept

For a long time now, I've been impressed at what a good job Google has done doing the "right" thing. Whether its avoiding pop ups, or just improving their technology, they seem to consistently do a good job. There are some concerns, certainly, and at last week's Supernova conference a lot of people were wondering about the "great power" of the Google monopoly. Sergey Brin spoke at the conference and pointed out that, Google just wanted to provide the best search possible. Now, Wired Magazine has an article looking at the challenges that Brin, specifically, faces in keeping Google on the "good" side. The author suggests that the bigger Google gets, the more difficult it is for them to remain good. First, there's the general distrust of anything that gets too "big" in the techie world (as evidenced by the fear of monopoly power). Second, there's economic pressures. The author of the article suggests that when the inevitable IPO comes for Google, shareholders will force the company to change its policies. While there is certainly a threat that pressure could change Google's course, I think Brin (along with Larry Page and Eric Schmidt) realize this would be a dangerous course to take. They've worked so hard to keep the company doing "good", and that's not an accident. Hopefully, they'll be able to convince shareholders that their strategy is the proper one.

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  • identicon
    Dmitry, 17 Dec 2002 @ 9:42am

    Why would a company really need to go IPO?

    If a company is doing well, making money, and has the funds to support growth, why would they do an IPO? Pure greed?

    One of the tech companies I worked for had the opportunity to go IPO when the market was great, and one of the smartest things they had ever done was NOT to do it. Now they are still around, unlike other companies.

    The whole IPO thing is very silly in my opinion; the whole stock market is a silly concept. Once you go IPO, your company is taken out of your control, and is driven by nothing but short-term profit targets.

    If there was a publicly funded loan system this would be a much better idea. A company offers people to invest into it through a public loan, which has a start period and a payback (end) period. The company uses the money in the middle and based on the company performance the loan pays out at the end, with possible growth if the company did well. Then the whole thing starts all over if the company feels it needs more money. That to me seems more sane then this never ending stock concept.

    But Iím just a coder, what do I know about financial markets. :)

    reply to this | link to this | view in chronology ]

    • icon
      Mike (profile), 17 Dec 2002 @ 9:55am

      Re: Why would a company really need to go IPO?

      Those are good points. In a sane world, an IPO is used as a way to raise more money for expansion purposes. It's the same thing as raising money from a venture capitalist, except that you're now raising money from the public.

      Most companies believe that in order to grow at the best rate, at some point they need to go public in order to have access to public capital markets. That isn't always true, of course...

      There certainly are bond markets as well, which let people do something similar to what you're talking about. However, your plan would still require the same sorts of public disclosure that drive short term thinking.

      Of course, in reality, it seems that IPOs have taken on a slightly different purpose than they were really intended to: and that's that they let early investors "cash out". I agree that companies that are public are forced to have a view that is extremely short term (and in many cases, dangerous).

      I also agree that not all companies should go public, but the pressure from early investors often make it so that companies have no choice. This is one of the reasons why I don't think our current VC system is the greatest for building some types of companies.

      There are examples of large companies that have stayed private (such as SC Johnson, the consumer products company), but they are few and far between.

      reply to this | link to this | view in chronology ]

      • identicon
        Tim, 17 Dec 2002 @ 10:07am

        Re: Why would a company really need to go IPO?

        As well as being a vehicle for letting VC's cash out, they are also a vehicle for founders and employees to cash out. Look at the story of Microsoft's IPO. Microsoft has always financed itself from retained earnings - as far as I know it has never raised money from the capital markets. It went public for two reasons: to increase its credibility with corporate America, and to allow employees to convert their wealth in Microsoft stock to a liquid form.

        reply to this | link to this | view in chronology ]

        • identicon
          Steve, 18 Dec 2002 @ 12:46pm

          Re: Why would a company really need to go IPO?

          I don't remember if it was Cringely or some one else where I read this, but they talked about how it's often the case in IPOs that the founders are often trying to cash out--make money, turn the company over to some one else (a , and maybe work on a new idea--yet to really do this, they need to convince investors that they're in for the long haul, which is often not the case. Ah, here it is from June 1, 2000 I, Cringely:
          "And the IPO exit 7strategy is fading, too. There will still be successful IPOs, but other exit strategies are looking better. After all, at the heart of the IPO is a lie, that the founder really intends to do this lousy job until he dies and that the company even intends to be around three to five years from now. Market realities are forcing founders to admit that they really want to retire and buy expensive toys and that the logical place for most startups is within more established organizations. Look for fewer IPOs, then, and more mergers. "
          I like that IPOs have slowed down and founders are looking for another way to cash out. Companies that have only one good product/idea really don't create any value by going public.

          In regards specifically to Google, while I don't envy all of the difficult decisions they have and will continue to make to not be evil, the fact that they've held out this long is a great sign. I really can't see how going public would not ultimately hurt the things that I love about it. The interests of shareholders will ultimately be counter to those of the users and a publicly traded Google would have to answer to it's shareholders first. But the thing to keep in mind is that Google wasn't always on top--it came from some really smart people who saw an opportunity. And there are competitors who are working really hard as well. While I've been a very loyal user from the very beginning, it's only for selfish reasons--the minute Google's results aren't as good as Teoma's or any of their other competitors just itching to knock them off, I'm gone.

          reply to this | link to this | view in chronology ]


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