Founders' IPO Letter

Key ideas

Page and Brin tell prospective shareholders why Google will manage for the long term, make risky bets and keep control through dual-class stock, and warn of the risks.

1. 1

   Set investor expectations before they set yours

   Page and Brin write that pressure to meet quarterly expectations too often tempts companies to give up long-term opportunities, and they decline to give earnings guidance in the traditional sense. They spell out the risks as well: markets may struggle to value this approach, competitors may gain from short-term tactics, and the strategy may simply be wrong.

2. 2

   Place small bets on strange projects

   The founders say they will keep funding high-risk projects, and warn that some may look speculative next to the current businesses. They describe 20% time as the origin of products such as Google News, while noting that most risky projects fizzle and the vast majority of resources still go to search and advertising.

3. 3

   Protect independence through the share structure

   Page and Brin explain a dual-class structure that gives new investors the same economic rights but little say through voting, and they expect it to make outside takeover or influence harder. They point to media companies and Berkshire Hathaway as precedents. They also acknowledge that academic studies are mixed, some investors object, and the intended benefits may not arrive.

4. 4

   Spell out how the top team works

   The founders describe running Google as a triumvirate with Eric, the CEO, meeting daily and often letting one of the three decide and brief the others later. They say this rests on trust and on thinking alike, and they lay out who handles what, with Eric covering vice presidents and sales. They call the arrangement unconventional.

5. 5

   Make a plain promise to users

   Page and Brin believe they, as shareholders and otherwise, will be better served over the long term by a company that does good things for the world, even if they give up some short-term gains. They turn this into a concrete rule: no payment for search results or for inclusion, and advertising clearly labelled, as in a well-run newspaper.

In Larry’s words

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