After IPO, Google Founders Plan to Remain in Control

Sergey Brin, left, and Lawrence Page said in a letter to investors that they believe Google "has a responsibility to the world." (Ben Margot -- AP)

For all the high-tech wizardry described in Google Inc.'s $2.7 billion stock offering filed on Thursday, some of the most striking ideas were revealed in a rather old-fashioned way: through a letter, from co-founders Sergey Brin and Lawrence Page, that one expert described yesterday as their "declaration of independence."

Google's filing begins with an unorthodox manifesto from the technologists, who describe the enterprise they founded in 1998 less as a conventional business than as a 21st-century agent for social change. And they are determined, the letter said, to maintain their sense of missionary zeal and privacy, even after the company sells billions of dollars of stock to the public and they become among the nation's wealthiest people.

"When Sergey and I founded Google, we hoped, but did not expect, it would reach its current size and influence," the letter said. "We also believed that searching and organizing the world's information was an unusually important task that should be carried out by a company that is trustworthy and interested in the public good. We believe a well-functioning society should have abundant, free and unbiased access to high quality information. Google therefore has a responsibility to the world."

So how might potential shareholders evaluate such lofty language?

The founders have an answer. They will retain voting control over all major decisions after the offering is completed, and warn potential investors to stay away unless they are willing to trust the founders and hold onto Google stock for the long term. The company, the letter said, won't pay attention to swings in quarterly earnings and has no intention of providing Wall Street with guidance about its financial outlook or business strategy.

"A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half hour," the letter said.

The letter said their attitude toward Wall Street was inspired by investor Warren Buffett's essays in Berkshire Hathaway Inc.'s annual reports.

Brin and Page, in their early 30s, will oversee the company in an unorthodox manner as "co-presidents" and may also invest its resources in unpredictable ways.

"We would fund projects that have a 10 percent chance of earning a billion dollars over the long term," the letter said. "Don't be surprised if we place smaller bets in areas that seem very speculative or even strange."

Danny Sullivan, editor of Search Engine Watch, said the letter struck some as being filled with hubris, while others sensed a refreshing message from a highly profitable company -- Google earned more than $100 million last year -- whose leaders have long said they want to do the right thing more than they want to make money.

"The letter was a declaration of independence," Sullivan said, adding that the message to potential shareholders is, "We dare you to invest in us."

But Sullivan also said the letter reminded him a bit of Ben & Jerry's, the Vermont ice cream company that eventually stumbled after operating unconventionally for years. He said Google's "ivory tower" mentality means that it can stumble and seem out of touch, as it did recently with the introduction of Gmail, its free e-mail service with ads that was attacked by privacy advocates.

"They think nobody will have a problem since they think they are this lovely company out to do good," Sullivan said. "The real crunch will happen to them when the money is not rolling in."

While Google derives 95 percent of its revenue from ads, Brin and Page said Google will not accept payment in return for a promise to include Web sites in online searches. (The ads appear to the right of search results.)

"Google users trust our systems to help them with important decisions: medical, financial and many others," the letter said. "We will live up to our 'Don't Be Evil' principle by keeping user trust and not accepting payment for search results."

Yahoo Inc., which the was identified as Google's biggest competitor, says it allows companies to pay for inclusion in a search but does not guarantee they will appear in search results.

Brin and Page also emphasized the approach that has enabled them to attract and retain highly motivated computer scientists and others -- something that may become more difficult once many employees find themselves millionaires, at least on paper, after the public offering.

"Talented people are attracted to Google because we empower them to change the world; Google has large computational resources and distribution that enables individuals to make a difference," the letter said.

Among other things, they encourage employees to spend 20 percent of their work week pursuing their own ideas rather than assigned projects. The letter said Google's electronic news alerts were created this way: "Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses."

Andy Beal, vice president of Websourced Inc. -- a firm that advises companies on how to advertise online -- said a quick survey of 100 customers revealed that 27 percent doubted Google could stick to the founders' principles after going public, while 20 percent thought they could. The rest were unsure.

"They are not prepared for the pressures of their shareholders and from Wall Street," Beal said. "At some point, the two sides are going to clash, and something has to give."