The flotation of Google is in many ways a betrayal of the company's philosophy, writes Victor Keegan
Friday October 24, 2003 The Guardian
Oh dear. The world's favourite search engine is going to sell its shares and become a publicly quoted company.
Nothing wrong in that of course. The vast majority of successful companies are quoted. Why then does one have this sinking feeling that that it won't be a sell-off but a sell-out?
The scenario in which Google changes from one of us to one of them is all too easy to chart. It has been a brilliantly successful company so far, one of the most successful of all time. It started as a second mover during the dotcom boom (thereby cocking a snook at the prevailing business school model that you had to be a first mover to secure your territory) and hasn't looked back since.
With hardly any marketing beyond word-of-mouth it became a highly profitable firm while charging nothing to the consumer for whom it has become the gateway to the information revolution. That is a unique status that can't be counted in dollars and cents.
The reasons given for the sale - the need to raise capital and motivate staff with stock options are, of course, poppycock. It has plenty of money of its own and the staff has proved highly motivated so far without needing the kind of incentives that did so well for the likes of Enron. If it thinks they are underpaid, pay them more.
The only reason it really needs publicly quoted shares is to make acquisitions. That would go completely against the philosophy of largely organic growth that has made the company what it is today. Once it is quoted, it will have to meet Wall Street pressures to improve quarterly earnings instead of doing its own thing at its own pace. When you sell your soul, don't expect to retain your freedom.
Relentless pressure from investors alone may prove an irresistible force to make takeover bids for the wrong reason. Hasn't anyone learned from the disastrous media marriage of Time Warner and AOL?
There is, of course, a powerful tactical reason for floating now. It is a good time to do it. Memories of the dotcom collapse are fading and there is no better company to capitalise on that at a time of reviving stock market values than Google, one of the great survivors of the era.
Google will almost certainly be sold at a ludicrous multiple of its earnings because of all the surrounding hype despite the experience of the dotcom era. This will pile yet more pressure on it to meet expectations. There is another more practical reason why it is good to get out now.
Although Google is the pre-eminent brand, other search engines are getting better and better and snapping at its heels. In a few years time Google may not command the same stock market premium.
In an ideal world, the founders of Google would have sold out in a way that gave them the riches they deserved while keeping Google as a mutual company dedicated to preserving the universal access to knowledge that the founding fathers of the internet and web envisaged.
This is not to say that Google is going to disappear overnight. Far from it. But in ten year's time when we search the web to see what Google is up to, it we may be using a different search engine to do so.
· Victor Keegan is editor of Guardian Online