Google co-founders Larry Page and Sergey Brin posted a founder's letter today along with their earning results, giving the reasons behind the unusual way they're going about a stock split and saying they intend to stay with the company for the long-term.
They also devote a lot of ink to their aim of maintaining their "founder-led" approach to the company, saying that they won't be swayed from the long-term view they're taking on products like Android and Chrome, and that they've structured the company to prevent "outside parties from taking over or unduly influencing our management decisions."
In our experience, success is more likely if you concentrate on the long term. Technology products often require significant investment over many years to fulfill their potential. For example, it took over three years just to ship our first Android handset, and then another three years on top of that before the operating system truly reached critical mass. These kinds of investments are not for the faint-hearted.
We have protected Google from outside pressures and the temptation to sacrifice future opportunities to meet short-term demands. Long-term product investments, like Chrome and YouTube, which now enjoy phenomenal usage, were made with a significant degree of independence.
And here's what they have to say about the decision to do a stock-split that creates a new class of non-voting shares, to be traded under a yet-to-be-named ticker on the NASDAQ.
These shares will be distributed via a stock dividend to all existing stockholders: the owner of each existing share will receive one new share of the non-voting stock, giving investors twice the number of shares they had before. It’s effectively a two-for-one stock split—something many of our investors have long asked us for. These non-voting shares will be available for corporate uses, like equity-based employee compensation, that might otherwise dilute our governance structure.
We recognize that some people, particularly those who opposed this structure at the start, won’t support this change—and we understand that other companies have been very successful with more traditional governance models. But after careful consideration with our board of directors, we have decided that maintaining this founder-led approach is in the best interests of Google, our shareholders and our users. Having the flexibility to use stock without diluting our structure will help ensure we are set up for success for decades to come.
As for their progress, since taking Google public in 2004:
We have always managed Google for the long term, investing heavily in the big bets we hope will make a significant difference in the world. Some of these bets have been tremendous, funding our activities and generating significant gains for our shareholders. Others have been less successful. But the ability to take these kinds of risks has been crucial to Google’s overall success and we aim to maintain this pioneering culture going forward.
For more thoughts on Google's progress, its strategy going forward and the changes it's been making since Page took over as CEO a year ago, you can check out the public letter Page wrote last week about the "big clean up" he's been working on.
