Is anyone else sick of the Google IPO hype? It’s been about 48 hours since Google filed their S-1 with the SEC and already Yahoo and Ask Jeeves have shed about 10-12% of their stock price. Can anyone tell me what’s changed? Did Google’s $1 billion in revenue double last night? Did Yahoo and Ask Jeeves suddenly fall into the ocean?
I believe that going public will ultimately be Googles great undoing and be better for Yahoo and Ask. Google’s culture is very unique; one example is the engineers are given one day per week to work on “personal projects” such as open source projects or creating new services like Orkut. This means that roughly 20% of their development staff payroll is not contributing to the bottom line. This kind of activity will not last as a public company and slowly but surely, Google will lose their edge as a place for great minds to work.
In addition, Google founders Brin and Page have created two classes of stock – a managerial class that has 10 times the voting power of the common class that you or I can purchase. Effectively, they’ve said they don’t want to be public – they just want to take the public’s money on IPO day.
Lastly, with the pledge to deliver financial results as they come and invest in high-risk ventures, employees are going to be subject to a volatile stock price that makes investing time at Google risky. Some people will appreciate that, but many will not. I believe we will see a slow drain of key personnel at Google as employees vest and take their riches to go do something else. And with that change, the “do no evil” culture will change as well and not for the better.
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