译者注：
2004年，在Google IPO的时候，Google创始人仿照巴菲特股东信形式，撰写了创始人信。其关于长期价值、双重股权结构、投资经营理念等部分引起了华尔街的极大不安。本文最精彩之处在于，它不是在描述一家公司，而是在展示一个精心设计的系统如何通过一系列自我强化机制来实现其使命。每个机制都经过深思熟虑，既能独立运作，又能相互配合，最终指向"让世界更美好"这个终极目标。这种长期主义的系统机制设计思维，正是 Google 能够保持长期成功的关键。
原文链接：https://www.sec.gov/Archives/edgar/data/1288776/000119312504143377/d424b4.htm#toc59330_1
译文：
创始人信
给Google股东的使用手册"【1】
【原文注1】本文的很多内容都受到沃伦·巴菲特在其年度报告中的文章和他给伯克希尔·哈撒韦股东的"使用手册"的启发。
引言（INTRODUCTION）
Google不是一家传统公司。我们也无意成为一家传统公司。在Google作为非上市公司的发展过程中，我们一直采用与众不同的管理方式。强调创造力和挑战氛围，这帮助我们为全球用户提供无偏见、准确和免费的信息访问。
现在，是公司走向上市的时候了。这一改变将为我们的员工、现有和未来的股东、客户，最重要的是Google用户带来重要利益。但标准上市公司结构可能会危及独立性和客观专注，这些是我们过去成功的最重要基石，也是对未来最为根本的东西。因此,我们实施了一种公司结构，旨在保护Google创新的能力并保持其最独特的特征。我们相信从长远来看，这将有利于Google及其新老股东。我们想要清楚地解释计划及其背后的理念和价值观。很高兴您考虑投资Google并阅读这封信。
Sergey和我打算每年都在年度报告中写这样一封信。我们会轮流写信，这样您就能直接听到我们两个人的声音。我们请您将这封信与招股说明书的其他部分一起阅读。
服务最终用户（SERVING END USERS）
Sergey和我创立了Google，是因为我们相信我们能为世界提供一项重要服务 - 即时提供几乎任何主题的相关信息。服务最终用户是我们工作的核心,也始终是我们的首要任务。
我们的目标是开发能显著改善尽可能多人生活的服务。在追求这一目标的过程中,即使短期财务回报并不明显，我们也可能会做一些我们认为能对世界产生积极影响的事情。例如，我们支持90多种语言并免费提供大多数服务，尽可能使我们的服务广泛可用。广告虽然是我们的主要收入来源，但我们提供的广告力图相关、有用，而不具有侵扰性和令人烦恼。我们努力为用户提供优质的商业信息。对已有产品我们感到很自豪,也希望未来创造的产品能对世界产生更大、更积极的影响。
长期主义（LONG TERM FOCUS）
在没上市前，我们一直践行长期主义，这种做法对我们很有帮助。作为一家上市公司，我们将继续保持这种做法。我们认为，外部压力往往诱使公司为了满足季度市场预期而牺牲长期机会。有时这种压力导致为了"完成季度目标"而操纵财务数据。用沃伦·巴菲特的话说：“我们不会‘平滑’季度或年度业绩：如果报告到公司总部的收益数字是不平滑的，那给您的数字也会是不平滑的。”
如果出现可能导致我们牺牲短期业绩但符合股东长期利益的机会,我们会抓住这些机会。我们将有勇气如此行事，也恳求我们的股东采纳长期视角。
您可能会问，长期究竟是多长？通常我们期望项目在一两年内能实现一些收益或取得进展。但我们正努力尽可能的再往远处看。尽管商业和技术环境变化迅速，我们仍试图通过考虑三到五年的情景来决定当前行动。我们努力在这些多年期情景中实现总体收益最大化。虽然我们坚定支持这一战略，但在技术领域做出准确的多年预测确实很困难。
（译者注：“长期”在这里从不可预测的焦虑，转为一种善用不确定性的能力）
很多公司都面临着要让收益数据符合分析师预期的压力。因此，他们往往接受较小但可预测的收益，而不是较大但不太可预测的回报。Sergey和我认为这种做法有害，并打算反其道行之。
Google一直有充足的现金支持业务运营，并通过经营产生额外现金。这种灵活性使我们能够承受成本波动，抓住市场机遇，并实现长期收益的最优化。例如，在广告系统中我们进行许多会双向影响收入的改进。这些改进涉及最终用户相关性和满意度、广告主满意度、合作伙伴需求和定向技术等领域。我们会立即发布这些改进而不是推迟发布，尽管延后可能带来更"平滑"的财务结果。我们承诺会快速执行以实现长期价值，而不是让季度业绩更可预测。
我们的长期主义策略确实存在风险。市场可能难以评估长期价值，从而可能降低公司价值。长期主义本身可能就是错误的商业战略。竞争对手可能因短期策略而受益并由此变得更强大。作为潜在投资者，您应该考虑我们长期主义所涉及的风险。
我们将基于公司和股东的长期福祉而非会计考量来做出商业决策。
尽管我们可能会讨论业务的长期趋势，但并不打算以传统方式提供收益指引。我们无法对每个季度的业务做出范围狭窄的预测。我们深知自己的职责是促进股东利益，但人为制造短期目标数字反而会损害股东利益。我们希望不要被要求做出此类预测，如果被问及也会礼貌地拒绝。管理团队被一系列短期目标分散注意力，就如同节食者每半小时就要称一次体重一样毫无意义。
（译者注：每个小时看一次净资产变化同样毫无意义）
长期风险收益（RISK VS REWARD IN THE LONG RUN）
我们的商业环境变化迅速，并且需要长期投资。对于有前景的新机遇，我们会毫不犹豫的做出重大投入。
我们不会因短期收益压力而回避高风险高回报的项目。过去的投入，有的取得了极大成功，有的没有。我们认识到追求这类项目是实现长期成功的关键，因此会继续寻找这样的机会。例如,我们会投资那些有10%机会在长期获得十亿美元回报的项目。如果我们在一些与当前业务相比，看似非常投机甚至奇怪的领域，进行小规模投资，请不要感到惊讶。虽然我们无法量化具体的风险承担水平，但随着回报与风险比率的提高，我们会接受更多超出当前业务范围的项目，特别是当初始投资相对于现有业务的投资规模较小时。
（译者注：虽然文中说是高风险高回报，但手握巨量现金牛，做长期正确的事，尤其是初始投资不大的情况下，这就是Dhandho中所提到的，“低风险、高不确定性”投资，风险有限，回报无上限。
参考：【读书心得】《The Dhandho Investor》低风险高回报的财富之道）
除了常规项目外，我们鼓励员工将20%的时间用于他们认为最能让Google受益的工作。这赋予他们更多创造力和创新能力。我们许多重要进展都是通过这种方式实现的。例如，AdSense内容广告和Google新闻都是在"20%时间"内完成原型开发。大多数风险项目都会失败，但常常能让我们学到一些东西。其他项目则获得成功，发展成有吸引力的业务。
在追求长期价值最大化的过程中，由于新项目有盈有亏，我们的季度业绩可能会出现波动。我们希望能更好地量化风险和回报水平，这确实很困难。尽管我们对风险项目充满热情，但预计公司仍将把绝大部分资源用于改进主营业务(目前是搜索和广告)。原因是大多数员工自然会倾向于在核心领域进行渐进式改进，所以自然而然会形成这种情况。
管理层角色（EXECUTIVE ROLES）
我们以三人组的形式管理Google。Sergey和我已经密切合作了八年，其中五年在Google。我们的CEO Eric于三年前加入Google。我们三人以协作方式管理公司，Sergey和我担任总裁。这种结构虽不寻常，但我们一直运作良好。
为了及时做出决策，Eric、Sergey和我每天都会会面，互相更新业务情况，并集中讨论最重要和紧急的问题。决策通常由我们其中一人做出，之后向其他人通报。这种方式之所以有效，是因为我们彼此高度信任和尊重，思维方式也很接近。由于长期密切的工作关系，我们往往能预见彼此的分歧。我们知道当出现分歧时，正确的决定往往并不明显。对于重要决策，我们会与合适的更大团队一起讨论。分歧通过讨论、分析和达成共识来解决。Eric、Sergey和我在管理公司时从未出现过重大内部冲突，又保持了良性辩论。当出现不同议题时,我们经常将决策权委托给其中一人。
（译者注：芒格回忆是否与巴菲特有过重大冲突，似乎从来没有过。即使有不一致意见，决策权也可完全委托给其中一人。大家都是在共同一致的底线之上行动，无非是好和更好的区别。而强行磨平这一点差异的收效，可能远不及损失的多样性、浪费的时间和彼此的信任）
我们聘请Eric是为了给Sergey和我这两个缺乏经验的人提供补充，帮助我们管理公司。Eric曾是Sun Microsystems的CTO。他还担任过Novell的CEO，拥有计算机科学博士学位，三人组合对于具有科学和技术文化的Google来说非常独特且重要。这种伙伴关系运作得很好，我们也期望这种合作能够持续。三人共同的判断力和额外投入的精力为Google带来了显著收益。
Eric承担CEO的法律责任，主要负责管理我们的副总裁团队和销售组织。Sergey专注于工程和商务合作。我专注于工程和产品管理。我们三人都投入大量时间在公司的整体管理和其他临时性需求上。我们还有一个杰出的董事会来监督Google的管理。我们拥有一支优秀的管理团队，负责财务、销售、工程、人力资源、公共关系、法务和产品管理等领域的日常运营。非常幸运能有这样一支富有才能的管理团队，正是他们把公司发展到今天的规模 - 他们在运营公司,理应得到赞誉。
公司结构（CORPORATE STRUCTURE）
我们正在创建一个旨在保持长期稳定的公司结构。投资Google就是对团队，特别是对Sergey和我，以及我们创新方式的一个不寻常的长期押注。
我们希望Google成为一个重要且有影响力的机构。这需要时间、稳定性和独立性。我们连接着媒体和技术两个行业，这两个行业都经历过大量整合和恶意收购。
为应对上市，我们设计了一个能有效防范外部接管和干预的公司架构。这种结构，或称为双重股权结构，将使我们的管理团队更容易遵循前面强调的长期创新方式，在本招股说明书其他部分亦有详细描述。我们提供的A类普通股每股有一票表决权，而许多现有股东持有的B类普通股每股有10票表决权。
这种结构的主要影响可能是，随着Google股份易手，我们的团队，特别是Sergey和我，将获得越来越多对公司决策和命运的控制权。IPO之后，Sergey、Eric和我将控制Google 37.6%的表决权，执行管理团队和董事会成员作为一个整体将控制61.4%的表决权。新投资者将完全分享Google的长期经济前景，但他们的表决权几乎无法影响战略决策。
虽然这种结构在科技公司中并不常见，但在媒体行业却很普遍，并且发挥了重要作用。《纽约时报》、《华盛顿邮报》和《华尔街日报》的出版商道琼斯都采用了类似的双重股权结构。媒体观察家指出，双重股权让这些公司能够专注于严肃新闻报道这一核心长期利益，而不受季度业绩波动的影响。伯克希尔·哈撒韦也出于类似原因采用了双重股权结构。从推进公司核心价值的长期成功角度来看，这种结构显然是有利的。
一些学术研究表明，从纯经济角度看，双重股权结构并未损害公司股价。其他研究则得出结论认为双重股权结构对股价产生了负面影响，我们不能保证Google不会出现这种情况。我们两类股票具有相同经济权利，仅在投票权上有所不同。
Google在没上市时运作良好。我们相信，双重股权结构将使Google作为上市公司能保持非上市时期的诸多积极特征。我们理解一些投资者不喜欢双重股权结构。有人可能认为，这种结构让我们能够采取有利于自己但不利于Google整体股东的行动。我们和董事会已经认真考虑了这种观点，这个决定并非轻率做出。我们确信，与Google有关的所有人-包括新投资者-都将从这种结构中受益。不过，您也应该意识到，Google及其股东也有可能无法实现这些预期的好处。
此外，我们最近扩充了董事会，增加了三位新成员。John Hennessy是斯坦福大学校长，拥有计算机科学博士学位。Art Levinson是Genentech公司的CEO，拥有生物化学博士学位。Paul Otellini是英特尔公司的总裁兼首席运营官。对于这些董事的才能和经验，我们感到无比兴奋。
我们相信我们拥有一支充满激情的世界级管理团队，他们对Google的使命充满责任感，也是Google成功的关键。我们相信，双重股权结构带来的稳定性将使我们能够保持独特的企业文化，继续吸引和留住这些优秀人才，他们是Google的生命线。我们的同事们将能够相信，他们自己以及他们付出的辛勤劳动、热爱和创造力，都将得到一个注重稳定性和长远发展的公司的妥善照顾。
作为投资者，您是在对我们团队，特别是对 Sergey 和我进行一个潜在有风险的长期押注。我们两人、Eric 以及整个管理团队都认识到，我们个人以及集体的利益与选择支持 Google 的新投资者的利益是深度一致的。Sergey 和我将长期致力于 Google 的发展。更广泛的 Google 团队也已经展现出对我们长期成功的非凡承诺。通过持续的努力和好运，这份承诺将持续并蓬勃发展。
当 Sergey 和我创立 Google 时，我们希望但并未预期它能达到现在的规模和影响力。我们持久而强烈的兴趣在于客观地帮助人们高效获取信息。我们也相信，搜索和组织全世界的信息是一项异常重要的任务，这项任务应该由一个值得信赖且关注公共利益的公司来执行。我们相信一个运转良好的社会应该拥有充分、免费且无偏见的优质信息获取渠道。因此，Google 对世界负有责任。双重股权结构有助于确保这一责任得到履行。我们相信，履行这一责任将为股东带来更大的价值。
IPO 定价和分配（IPO PRICING AND ALLOCATION）
对我们来说，既要让 IPO 过程公平地包容大小投资者，也要确保为 Google 及其现有股东取得良好的成果，这一点至关重要。这促使我们为整个发行采用基于拍卖的 IPO 方式。我们的目标是使股票价格能够反映 Google 的有效市场估值，并基于我们的业务和股市变化而理性波动。（拍卖流程在本招股说明书其他部分有更详细的讨论。）
在美国，对于 IPO 来说拍卖并不寻常。我们在基于拍卖的广告系统方面的经验，对设计 IPO 拍卖流程很有帮助。就像在股票市场一样，如果人们出高价且需求量超过可用股份，IPO 价格就会更高。当然，如果竞价者不够多或出价较低，IPO 价格就会更低。这是一个简化的说法，但抓住了基本要点。我们的目标是让 IPO 时和后市的股价反映有效的市场价格-换句话说，就是由理性和知情的买卖双方设定的价格。我们希望让买卖双方在 IPO 时获得有效的市场价格，在 IPO 后的日子里也有相对稳定的价格。我们会努力实现这个目标，但当然可能不会成功。为了实现相对稳定的市场价格这一目标，Google 可能会与承销商协商将首次公开发行价格设定在拍卖结算价格以下。
我们正在努力创造足够的股票供应，以满足 IPO 时及之后的投资者需求。我们鼓励现有股东考虑在发行中出售部分股份。这些股份将补充公司出售的股份，为投资者提供更多供应，并有望提供更稳定的价格。包括 Sergey 和我在内的一些人目前计划在 IPO 中出售部分股份。现有股东出售的股份越多，就越说明他们认为价格并非不公平地低。可用股份的供应量可能会影响拍卖的结算价格。由于在高价时出售的股份数量可能更多，低价时更少，投资者可能需要考虑现有股东在 IPO 中的参与程度。我们可能会不时传达在某些价格下我们是卖方而非买方的信息。
虽然我们设计的 IPO 旨在包容大小投资者，但由于"拍卖流程"中描述的各种原因，并非所有感兴趣的投资者都能在我们的 IPO 中获得股份分配。
我们希望您进行长期投资，而不要期望在 Google IPO 后不久就能获利卖出。如果投资者认为价格从长期来看不可持续，我们建议他们不要在 IPO 时或之后的一段时间内投资 Google。即使从长期来看，Google 的股票交易价格也可能下跌。
我们打算采取措施确保股东获得充分信息。我们建议你阅读本招股说明书，特别是风险因素部分。我们认为，不关注价格的短期投机很可能会让你亏钱，特别是在我们的拍卖结构下。特别要提醒的是，通过我们的拍卖投资 Google 后，你的投资价值可能会在 IPO 后出现显著下跌。
GOOGLERS（谷歌人）
我们的员工，他们自称为"Googlers"，就是一切。Google 的组织核心是吸引和利用杰出技术人才和商业人才的能力。我们很幸运招募到了许多富有创造力、有原则且勤奋的优秀人才。我们希望未来能招募更多这样的人才。我们会好好奖励和对待他们。
我们为员工提供许多与众不同的福利，包括免费餐饮、医生和洗衣机。我们仔细考虑了这些福利对公司的长期优势。预计我们会随时间推移增加而不是削减这些福利。我们认为，对于那些能为员工节省大量时间并提高其健康和生产力的福利，过分计较成本是一种得不偿失的做法。
凭借我们员工的才能，Google几乎在计算机科学的每个领域都在开展令人兴奋的工作。我们所处行业竞争激烈，产品质量至关重要。有才能的人被Google吸引，因为我们赋予他们改变世界的能力；Google拥有大规模计算资源和分发能力，使个人能够产生影响。我们最主要的优势在于提供一个充满重要项目的工作环境，员工可以在这里贡献才智并成长。我们致力于打造这样一个环境：才华横溢、努力工作的人能够因其对Google的贡献和让世界变得更好而得到回报。
不作恶（DON'T BE EVIL）
不作恶。我们坚信从长远来看，即使放弃一些短期收益，一个为世界做好事的公司也会让我们-作为股东和其他各个方面-受益更多。这是我们文化的重要方面，在公司内部得到广泛认同。
Google 用户信任我们的系统帮助他们做出重要决策：医疗、金融等诸多方面。我们的搜索结果是我们所知最好的。它们是无偏见和客观的，我们不接受任何付费来影响结果或更频繁地更新。我们也展示广告，我们努力使其相关，并清晰标注。这类似于一份管理良好的报纸，广告清晰可见，文章不受广告商付费的影响。我们相信每个人都应该能获取最好的信息和研究，而不仅仅是付费可见的信息。
让世界变得更好（MAKING THE WORLD A BETTER PLACE）
我们希望将 Google 打造成一个让世界变得更好的机构。在追求这个目标的过程中，我们将始终铭记对股东、员工、客户和商业伙伴的责任。通过我们的产品，Google 免费连接全球的人们和信息。我们正在添加其他强大服务，如 Gmail，它免费提供一个高效的 1GB 邮箱账户。我们知道有些人提出了隐私担忧，主要是关于 Gmail 的定向广告，这可能导致对 Google 的负面看法。然而，我们相信 Gmail 保护了用户的隐私。通过发布 Gmail 等免费服务，我们希望帮助弥合数字鸿沟。AdWords 高效地连接用户和广告主，帮助双方。AdSense 帮助为大量在线网站提供资金支持，使原本无法出版的作者能够发布内容。去年我们创建了 Google Grants-一个不断发展的项目，数百个致力于环境、贫困和人权等问题的非营利组织通过该项目获得免费广告。现在，我们正在建立 Google Foundation。我们计划向基金会投入重要资源，包括员工时间和大约 1% 的 Google 股权和利润。我们希望有朝一日这个机构通过创新地将重要资源用于解决世界最大的问题，在整体世界影响力方面可能超越 Google 本身。
总结和结论
Google 不是一家传统公司。Eric、Sergey 和我打算以不同寻常的方式经营 Google，将其作为非上市公司发展出的价值观应用于其上市后的未来。我们的使命和业务描述在本招股说明书的其他部分有详细说明；我们建议你仔细阅读这些信息。我们将优化长期价值而不是试图每个季度都产生平滑的收益。我们将支持精选的高风险高回报项目并管理我们的项目组合。我们将与 CEO Eric 一起作为三人团队协作经营公司。我们意识到作为股东受托人的职责，并将履行这些责任。我们将继续努力吸引富有创造力、忠诚的新员工，也欢迎新股东的支持。我们将通过保持用户信任和拒绝接受搜索结果付费来坚持"不作恶"原则。我们采用双重股权结构，这种结构倾向于稳定性和独立性，需要投资者押注于团队，特别是 Sergey 和我。
在这封信中，我们讨论了IPO拍卖方式，以及希望为所有投资者提供稳定和公平的参与机会。阐述了吸引长期投资者的目标。最后，我们还讨论了打造理想工作环境的愿景，通过留住和吸引优秀的Google人才，最终推动Google的成功。
我们尽力预见您可能会有的疑问。但由于发行过程中的法律限制，我们很难回应这些问题。期待与您，我们的新投资者，建立长期且互惠的关系。我们写这封信是为了帮助您了解Google。
我们对全球用户、他们的社区、我们网络中的网站、我们的广告客户、投资者，当然还有我们的员工都有坚定的承诺。Sergey 和我，以及整个团队将尽最大努力使 Google 取得长期成功并让世界变得更好。
LETTER FROM THE FOUNDERS
“AN OWNER’S MANUAL” FOR GOOGLE’S SHAREHOLDERS1
INTRODUCTION
Google is not a conventional company. We do not intend to become one. Throughout Google’s evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world.
Now the time has come for the company to move to public ownership. This change will bring important benefits for our employees, for our present and future shareholders, for our customers, and most of all for Google users. But the standard structure of public ownership may jeopardize the independence and focused objectivity that have been most important in Google’s past success and that we consider most fundamental for its future. Therefore, we have implemented a corporate structure that is designed to protect Google’s ability to innovate and retain its most distinctive characteristics. We are confident that, in the long run, this will benefit Google and its shareholders, old and new. We want to clearly explain our plans and the reasoning and values behind them. We are delighted you are considering an investment in Google and are reading this letter.
Sergey and I intend to write you a letter like this one every year in our annual report. We’ll take turns writing the letter so you’ll hear directly from each of us. We ask that you read this letter in conjunction with the rest of this prospectus.
SERVING END USERS
Sergey and I founded Google because we believed we could provide an important service to the world—instantly delivering relevant information on virtually any topic. Serving our end users is at the heart of what we do and remains our number one priority.
Our goal is to develop services that significantly improve the lives of as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near term financial returns are not obvious. For example, we make our services as widely available as we can by supporting over 90 languages and by providing most services for free. Advertising is our principal source of revenue, and the ads we provide are relevant and useful rather than intrusive and annoying. We strive to provide users with great commercial information.
We are proud of the products we have built, and we hope that those we create in the future will have an even greater positive impact on the world.
LONG TERM FOCUS
As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same. In our opinion, outside pressures too often tempt companies to sacrifice long term opportunities to meet quarterly market expectations. Sometimes this pressure has caused companies to manipulate financial results in order to “make their quarter.” In Warren Buffett’s words, “We won’t ‘smooth’ quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.”
If opportunities arise that might cause us to sacrifice short term results but are in the best long term interest of our shareholders, we will take those opportunities. We will have the fortitude to do this. We would request that our shareholders take the long term view.
1 Much of this was inspired by Warren Buffett’s essays in his annual reports and his “An Owner’s Manual” to Berkshire Hathaway shareholders.
You might ask how long is long term? Usually we expect projects to have some realized benefit or progress within a year or two. But, we are trying to look forward as far as we can. Despite the quickly changing business and technology landscape, we try to look at three to five year scenarios in order to decide what to do now. We try to optimize total benefit over these multi-year scenarios. While we are strong advocates of this strategy, it is difficult to make good multi-year predictions in technology.
Many companies are under pressure to keep their earnings in line with analysts’ forecasts. Therefore, they often accept smaller, predictable earnings rather than larger and less predictable returns. Sergey and I feel this is harmful, and we intend to steer in the opposite direction.
Google has had adequate cash to fund our business and has generated additional cash through operations. This gives us the flexibility to weather costs, benefit from opportunities and optimize our long term earnings. For example, in our ads system we make many improvements that affect revenue in both directions. These are in areas like end user relevance and satisfaction, advertiser satisfaction, partner needs and targeting technology. We release improvements immediately rather than delaying them, even though delay might give “smoother” financial results. You have our commitment to execute quickly to achieve long term value rather than making the quarters more predictable.
Our long term focus does have risks. Markets may have trouble evaluating long term value, thus potentially reducing the value of our company. Our long term focus may simply be the wrong business strategy. Competitors may be rewarded for short term tactics and grow stronger as a result. As potential investors, you should consider the risks around our long term focus.
We will make business decisions with the long term welfare of our company and shareholders in mind and not based on accounting considerations.
Although we may discuss long term trends in our business, we do not plan to give earnings guidance in the traditional sense. We are not able to predict our business within a narrow range for each quarter. We recognize that our duty is to advance our shareholders’ interests, and we believe that artificially creating short term target numbers serves our shareholders poorly. We would prefer not to be asked to make such predictions, and if asked we will respectfully decline. A management team distracted by a series of short term targets is as pointless as a dieter stepping on a scale every half hour.
RISK VS REWARD IN THE LONG RUN
Our business environment changes rapidly and needs long term investment. We will not hesitate to place major bets on promising new opportunities.
We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long term success, we will continue to seek them out. For example, we would fund projects that have a 10% chance of earning a billion dollars over the long term. Do not be surprised if we place smaller bets in areas that seem very speculative or even strange when compared to our current businesses. Although we cannot quantify the specific level of risk we will undertake, as the ratio of reward to risk increases, we will accept projects further outside our current businesses, especially when the initial investment is small relative to the level of investment in our current businesses.
We encourage our employees, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit Google. This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner. For example, AdSense for content and Google News were both prototyped in “20% time.” Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses.
As we seek to maximize value in the long term, we may have quarter-to-quarter volatility as we realize losses on some new projects and gains on others. We would love to better quantify our level of risk and reward for you going forward, but that is very difficult. Even though we are excited about risky projects, we expect to devote the vast majority of our resources to improvements to our main businesses (currently search and advertising). Most employees naturally gravitate toward incremental improvements in core areas so this tends to happen naturally.
EXECUTIVE ROLES
We run Google as a triumvirate. Sergey and I have worked closely together for the last eight years, five at Google. Eric, our CEO, joined Google three years ago. The three of us run the company collaboratively with Sergey and me as Presidents. The structure is unconventional, but we have worked successfully in this way.
To facilitate timely decisions, Eric, Sergey and I meet daily to update each other on the business and to focus our collaborative thinking on the most important and immediate issues. Decisions are often made by one of us, with the others being briefed later. This works because we have tremendous trust and respect for each other and we generally think alike. Because of our intense long term working relationship, we can often predict differences of opinion among the three of us. We know that when we disagree, the correct decision is far from obvious. For important decisions, we discuss the issue with a larger team appropriate to the task. Differences are resolved through discussion and analysis and by reaching consensus. Eric, Sergey and I run the company without any significant internal conflict, but with healthy debate. As different topics come up, we often delegate decision-making responsibility to one of us.
We hired Eric as a more experienced complement to Sergey and me to help us run the business. Eric was CTO of Sun Microsystems. He was also CEO of Novell and has a Ph.D. in computer science, a very unusual and important combination for Google given our scientific and technical culture. This partnership among the three of us has worked very well and we expect it to continue. The shared judgments and extra energy available from all three of us has significantly benefited Google.
Eric has the legal responsibilities of the CEO and focuses on management of our vice presidents and the sales organization. Sergey focuses on engineering and business deals. I focus on engineering and product management. All three of us devote considerable time to overall management of the company and other fluctuating needs. We also have a distinguished board of directors to oversee the management of Google. We have a talented executive staff that manages day-to-day operations in areas such as finance, sales, engineering, human resources, public relations, legal and product management. We are extremely fortunate to have talented management that has grown the company to where it is today—they operate the company and deserve the credit.
CORPORATE STRUCTURE
We are creating a corporate structure that is designed for stability over long time horizons. By investing in Google, you are placing an unusual long term bet on the team, especially Sergey and me, and on our innovative approach.
We want Google to become an important and significant institution. That takes time, stability and independence. We bridge the media and technology industries, both of which have experienced considerable consolidation and attempted hostile takeovers.
In the transition to public ownership, we have set up a corporate structure that will make it harder for outside parties to take over or influence Google. This structure will also make it easier for our management team to follow the long term, innovative approach emphasized earlier. This structure, called a dual class voting structure, is described elsewhere in this prospectus. The Class A common stock we are offering has one vote per share, while the Class B common stock held by many current shareholders has 10 votes per share.
The main effect of this structure is likely to leave our team, especially Sergey and me, with increasingly significant control over the company’s decisions and fate, as Google shares change hands. After the IPO, Sergey, Eric and I will control 37.6% of the voting power of Google, and the executive management team and directors as a group will control 61.4% of the voting power. New investors will fully share in Google’s long term economic future but will have little ability to influence its strategic decisions through their voting rights.
While this structure is unusual for technology companies, similar structures are common in the media business and has had a profound importance there. The New York Times Company, The Washington Post Company and Dow Jones, the publisher of The Wall Street Journal, all have similar dual class ownership structures. Media observers have pointed out that dual class ownership has allowed these companies to concentrate on their core, long term interest in serious news coverage, despite fluctuations in quarterly results. Berkshire Hathaway has implemented a dual class structure for similar reasons. From the point of view of long term success in advancing a company’s core values, we believe this structure has clearly been an advantage.
Some academic studies have shown that from a purely economic point of view, dual class structures have not harmed the share price of companies. Other studies have concluded that dual class structures have negatively affected share prices, and we cannot assure you that this will not be the case with Google. The shares of each of our classes have identical economic rights and differ only as to voting rights.
Google has prospered as a private company. We believe a dual class voting structure will enable Google, as a public company, to retain many of the positive aspects of being private. We understand some investors do not favor dual class structures. Some may believe that our dual class structure will give us the ability to take actions that benefit us, but not Google’s shareholders as a whole. We have considered this point of view carefully, and we and the board have not made our decision lightly. We are convinced that everyone associated with Google—including new investors—will benefit from this structure. However, you should be aware that Google and its shareholders may not realize these intended benefits.
In addition, we have recently expanded our board of directors to include three additional members. John Hennessy is the President of Stanford and has a Doctoral degree in computer science. Art Levinson is CEO of Genentech and has a Ph.D. in biochemistry. Paul Otellini is President and COO of Intel. We could not be more excited about the caliber and experience of these directors.
We believe we have a world class management team impassioned by Google’s mission and responsible for Google’s success. We believe the stability afforded by the dual class structure will enable us to retain our unique culture and continue to attract and retain talented people who are Google’s life blood. Our colleagues will be able to trust that they themselves and their labors of hard work, love and creativity will be well cared for by a company focused on stability and the long term.
As an investor, you are placing a potentially risky long term bet on the team, especially Sergey and me. The two of us, Eric and the rest of the management team recognize that our individual and collective interests are deeply aligned with those of the new investors who choose to support Google. Sergey and I are committed to Google for the long term. The broader Google team has also demonstrated an extraordinary commitment to our long term success. With continued hard work and good fortune, this commitment will last and flourish.
When Sergey and I founded Google, we hoped, but did not expect, it would reach its current size and influence. Our intense and enduring interest was to objectively help people find information efficiently. We also believed that searching and organizing all the world’s information was an unusually important task that should be carried out by a company that is trustworthy and interested in the public good. We believe a well functioning society should have abundant, free and unbiased access to high quality information. Google therefore has a responsibility to the world. The dual class structure helps ensure that this responsibility is met. We believe that fulfilling this responsibility will deliver increased value to our shareholders.
IPO PRICING AND ALLOCATION
It is important to us to have a fair process for our IPO that is inclusive of both small and large investors. It is also crucial that we achieve a good outcome for Google and its current shareholders. This has led us to pursue an auction-based IPO for our entire offering. Our goal is to have a share price that reflects an efficient market valuation of Google that moves rationally based on changes in our business and the stock market. (The auction process is discussed in more detail elsewhere in this prospectus.)
Many companies going public have suffered from unreasonable speculation, small initial share float, and stock price volatility that hurt them and their investors in the long run. We believe that our auction-based IPO will minimize these problems, though there is no guarantee that it will.
An auction is an unusual process for an IPO in the United States. Our experience with auction-based advertising systems has been helpful in the auction design process for the IPO. As in the stock market, if people bid for more shares than are available and bid at high prices, the IPO price will be higher. Of course, the IPO price will be lower if there are not enough bidders or if people bid lower prices. This is a simplification, but it captures the basic issues. Our goal is to have the price of our shares at the IPO and in the aftermarket reflect an efficient market price—in other words, a price set by rational and informed buyers and sellers. We seek to achieve a relatively stable price in the days following the IPO and that buyers and sellers receive an efficient market price at the IPO. We will try to achieve this outcome, but of course may not be successful. Our goal of achieving a relatively stable market price may result in Google determining with our underwriters to set the initial public offering price below the auction clearing price.
We are working to create a sufficient supply of shares to meet investor demand at IPO time and after. We are encouraging current shareholders to consider selling some of their shares as part of the offering. These shares will supplement the shares the company sells to provide more supply for investors and hopefully provide a more stable price. Sergey and I, among others, are currently planning to sell a fraction of our shares in the IPO. The more shares current shareholders sell, the more likely it is that they believe the price is not unfairly low. The supply of shares available will likely have an effect on the clearing price of the auction. Since the number of shares being sold is likely to be larger at a high price and smaller at a lower price, investors will likely want to consider the scope of current shareholder participation in the IPO. We may communicate from time to time that we are sellers rather than buyers at certain prices.
While we have designed our IPO to be inclusive for both small and large investors, for a variety of reasons described in “Auction Process” not all interested investors will be able to receive an allocation of shares in our IPO.
We would like you to invest for the long term, and you should not expect to sell Google shares for a profit shortly after Google’s IPO. We encourage investors not to invest in Google at IPO or for some time after, if they believe the price is not sustainable over the long term. Even in the long term, the trading price of Google’s stock may decline.
We intend to take steps to help ensure shareholders are well informed. We encourage you to read this prospectus, especially the Risk Factors section. We think that short term speculation without paying attention to price is likely to lose you money, especially with our auction structure. In particular, we caution you that investing in Google through our auction could be followed by a significant decline in the value of your investment after the IPO.
GOOGLERS
Our employees, who have named themselves Googlers, are everything. Google is organized around the ability to attract and leverage the talent of exceptional technologists and business people. We have been lucky to recruit many creative, principled and hard working stars. We hope to recruit many more in the future. We will reward and treat them well.
We provide many unusual benefits for our employees, including meals free of charge, doctors and washing machines. We are careful to consider the long term advantages to the company of these benefits. Expect us to add benefits rather than pare them down over time. We believe it is easy to be penny wise and pound foolish with respect to benefits that can save employees considerable time and improve their health and productivity.
The significant employee ownership of Google has made us what we are today. Because of our employee talent, Google is doing exciting work in nearly every area of computer science. We are in a very competitive industry where the quality of our product is paramount. Talented people are attracted to Google because we empower them to change the world; Google has large computational resources and distribution that enables individuals to make a difference. Our main benefit is a workplace with important projects, where employees can contribute and grow. We are focused on providing an environment where talented, hard working people are rewarded for their contributions to Google and for making the world a better place.
DON’T BE EVIL
Don’t be evil. We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.
Google users trust our systems to help them with important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating. We also display advertising, which we work hard to make relevant, and we label it clearly. This is similar to a well-run newspaper, where the advertisements are clear and the articles are not influenced by the advertisers’ payments. We believe it is important for everyone to have access to the best information and research, not only to the information people pay for you to see.
MAKING THE WORLD A BETTER PLACE
We aspire to make Google an institution that makes the world a better place. In pursuing this goal, we will always be mindful of our responsibilities to our shareholders, employees, customers and business partners. With our products, Google connects people and information all around the world for free. We are adding other powerful services such as Gmail, which provides an efficient one gigabyte Gmail account for free. We know that some people have raised privacy concerns, primarily over Gmail’s targeted ads, which could lead to negative perceptions about Google. However, we believe Gmail protects a user’s privacy. By releasing services, such as Gmail, for free, we hope to help bridge the digital divide. AdWords connects users and advertisers efficiently, helping both. AdSense helps fund a huge variety of online web sites and enables authors who could not otherwise publish. Last year we created Google Grants—a growing program in which hundreds of non-profits addressing issues, including the environment, poverty and human rights, receive free advertising. And now, we are in the process of establishing the Google Foundation. We intend to contribute significant resources to the foundation, including employee time and approximately 1% of Google’s equity and profits in some form. We hope someday this institution may eclipse Google itself in terms of overall world impact by ambitiously applying innovation and significant resources to the largest of the world’s problems.
SUMMARY AND CONCLUSION
Google is not a conventional company. Eric, Sergey and I intend to operate Google differently, applying the values it has developed as a private company to its future as a public company. Our mission and business description are available in the rest of this prospectus; we encourage you to carefully read this information. We will optimize for the long term rather than trying to produce smooth earnings for each quarter. We will support selected high-risk, high-reward projects and manage our portfolio of projects. We will run the company collaboratively with Eric, our CEO, as a team of three. We are conscious of our duty as fiduciaries for our shareholders, and we will fulfill those responsibilities. We will continue to strive to attract creative, committed new employees, and we will welcome support from new shareholders. We will live up to our “don’t be evil” principle by keeping user trust and not accepting payment for search results. We have a dual class structure that is biased toward stability and independence and that requires investors to bet on the team, especially Sergey and me.
In this letter we have talked about our IPO auction method and our desire for stability and access for all investors. We have discussed our goal to have investors who invest for the long term. Finally, we have discussed our desire to create an ideal working environment that will ultimately drive the success of Google by retaining and attracting talented Googlers.
We have tried hard to anticipate your questions. It will be difficult for us to respond to them given legal constraints during our offering process. We look forward to a long and hopefully prosperous relationship with you, our new investors. We wrote this letter to help you understand our company.
We have a strong commitment to our users worldwide, their communities, the web sites in our network, our advertisers, our investors, and of course our employees. Sergey and I, and the team will do our best to make Google a long term success and the world a better place.
～完～
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