Google Tells Wall Street to Shove It
by Perry Marshall
Will going public ruin a great search engine? I've been concerned
about that. And you should be too.
A public company could never come up with something as
elegant as Google AdWords. Most public companies would
bastardize it and ruin it.
So I have some interesting news to share.
Just two weeks ago, I met Patrick Keane, Google's Head of Sales
Strategy. I asked him a question:
"Patrick, I think Google AdWords is the most important development
in advertising this decade. But now there's all this
hoopla about Google going public, and I'm afraid that
if Google has to cater to the whims of shareholders and
quarterly reports, a really really smart company will
turn into a really dumb company."
He said, "I can't say whether we will or whether we
won't. What I can say is 1) we don't need to go public;
we've been profitable for the last 14 quarters and
we've got plenty of cash. And 2) If we did choose go
public, our mission would be to be a different kind of
public company - to stick to the original values of our
founders, Larry and Sergei.
"Our policy is to have all our employees spend 20% of their
time coming up with "cool sh*t" and to have a culture
of technology and innovation - to make all the world's
information instantly available."
Well, okay Mr. Keane, that sounds good. But I've heard that
kind of talk before. I was a key player in a private company
that was bought by a public company, and the best business
decision I've ever made was not taking the job they
offered me at the new company!
In fact here's an
email I sent to Google last summer:
Dear Google AdWords staff:
I don't know if the rumors are true -- Google PR says they're
not -- but just in case the rumors are valid, please
permit me to give you my two cents.
You guys literally built a better mousetrap and the world beat
a path to your door. That is an exceedingly rare thing in
today's business world. Congratulations on making a great
search engine.
Now Wall Street wants Google. No question about it. And I'm
sure the founders can collect at least a few hundred million
of they go public.
But.... please listen.
19 months ago I helped sell a small private company to a
publicly held firm. In anticipation of chaos, dismemberment
and destruction, I bailed. I took the money and RAN as
fast as I could.
Everyone else stayed.
The biggest shareholder, who got 80% of his money in a stock
trade, subsequently lost $5 million in the space of a
month as the share prices plummeted.
It was horrible, and everyone who stayed was probably envious
of me because I got out, and because they found themselves
reporting to a bunch of idiots.
Then those idiots gutted the company and it basically doesn't
exist anymore.
So... please listen, if you go public, the world's greatest
search engine will be cannibalized and sold for parts.
All you wonderful people will suddenly be in a
quarterly cycle of indentured slavery to quarterly reports.
All the visionaries will be replaced by slave drivers.
In regards to the AdWords program: Wall Street will toss
out your "relevancy requirement" in AdWords so they
can make their numbers. The 0.5% minimum CTR will become
0.25% and then 0%. They'll also get rid of your bid
price multiplier that rewards good CTR's and eventually
you'll be like Overture --- just a big bunch of surly
bidding war whores.
Please understand - It won't happen because YOU are evil,
it's will happen because Wall Street is so insatiably
greedy. Within two years Google will become merely a
shell of its old self. And it will lose its popularity
and someone else will be king.
So --- keep AdWords intact, it really is a brilliant system.
And don't sell out to the dark side.
(Do you think I distrust public companies?)
Well... it was only this week that I started to hear some
things that make me think they'll actually stay smart.
Here's what's going on.
Google Gives Wall
Street the Finger
I intensely distrust Wall Street. Apparently, so do the folks
at Google. So yes, they're doing their IPO, but it's
going to be different this time. Here's how:
They're bypassing the usual Good-Ol-Boy network for issuing
the stock and doing a dutch auction instead. That keeps
all the investment bankers from limiting the
availability, lining their pockets as the stock price
runs up, and then driving the price up to insane levels
so the unsuspecting public swallows all the risk.
Bravo.
They're issuing two kinds of stock: One kind to the founders,
which gets 10 votes per share, another kind to the
public, which only has 1 vote per share. The public
doesn't get to run the company. That's good.
Shareholders are stupid. They make stupid decisions. They
hold smart people hostage, and eventually kill them.
Larry and Sergei are not going to issue quarterly earnings
forecasts. If they have a good quarter, they have a
good quarter. If they have to invest heavily and the
profits aren't so good in a different quarter, so be
it.
They say they're investing $250 million of the money they
raise into new infrastructure. Wall Street thinks they're
crazy. But that can't be a bad thing! They fired their
investment banking firm Goldman Sachs for playing the
usual Good-Ol-Boy network game. The Goldman guys are
really hacked off now. Go Google. So... maybe Mr. Keane
is right, maybe Google will be
a different kind of public company. I sure hope so. Because
great companies are built on Elegant Ideas, not
wheelbarrows full of money.
Oh yeah - you're probably wondering: "Should I buy some
Google stock?"
Don't ask me. I'm not an investment advisor. It's just not
a question I'm willing or qualified to answer.
Meanwhile I hope to personally shake your hand in Chicago
at Fred Gleeck's Publicity Seminar, it's going to be a
killer experience for you. And I'll be covering the
latest developments and strategies for Google AdWords
there, including the implications of the new Google
IPO. Come to Chicago in June -
http://publicity.makeyourwebsitepay.com.
Sincerely,
Perry Marshall
Author, The
Definitive Guide to Google AdWords
|