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Google plans to raise Google's choice to raise \$2,718,281,828. From Peter Kaminski's blog: It turns out that 2.718281828… (…and an infinite number of digits after that) is 'e', the base of the natural logarithm. Because it can't be expressed as a ratio of two numbers, it's known mathematically as "irrational"…

It turns out that 2.718281828… (…and an infinite number of digits after that) is ‘e’, the base of the natural logarithm. Because it can’t be expressed as a ratio of two numbers, it’s known mathematically as “irrational” — something some bankers might say about the way Google is going public. However, ‘e’ also happens to be “transcendental,” another fancy property of a number that means it can’t be expressed by a finite number of algebraic operations. Maybe Google is making a little wordplay — saying they expect to transcend expectations — to overcome or notably exceed ordinary limits.

The NYT has some insights on Google's true margins, which were depressed in the S1 due to stock option grants: Google can behave with so little regard for shareholders' wishes because its business is so attractive that investors will be clamoring to buy stock no matter what conditions the company…

The NYT has some insights on Google’s true margins, which were depressed in the S1 due to stock option grants:

Google can behave with so little regard for shareholders’ wishes because its business is so attractive that investors will be clamoring to buy stock no matter what conditions the company sets. The company’s sales and profits are increasing at a spectacular rate, at least for now, and its profit margins appear to be among the highest in corporate America.

In 2003, Google reported an operating profit of \$340 million on sales of \$960 million. But the 2003 figure appears to understate the company’s cash profit margin, since it includes very high expenses related to stock options that will probably decline in future years. On a cash basis, Google had an operating profit of \$570 million in 2003, and an operating margin of 62 percent.

## Now That The Other Shoe Has Dropped

What does it all mean? Well, to be honest it was nice to be at the game, even if my team lost, while the first wave of coverage broke. I was with a great group of guys, all of whom care about the industry and who have opinions, some of…

What does it all mean? Well, to be honest it was nice to be at the game, even if my team lost, while the first wave of coverage broke. I was with a great group of guys, all of whom care about the industry and who have opinions, some of them even informed, on the Google IPO. When I got home, I read through the S 1 . So herewith my first impressions, and they are only that, for I have not had time to really sit with the document, that will take days, if not weeks to really grok.

First the stuff you probably already know. Google filed for a prospective \$2.7 billion (Wall St estimates) sale, valuing the company in the \$20-25 billion range. Unusual aspects: There will be two classes of stock, one with supervoting rights (ten times those of regular shareholders), which keeps power squarely in the founders’ hands. The symbol was not identified (ie, it’s not “GOO”, yet), nor was the market (NYSE or Nasdaq). There are only two banks, Morgan on the left in the power slot, and Credit Suisse on the right. Hambrecht did not make the cut, but their ideas did. Google will auction all of its shares.

Having seen how the quest for IPO glory can ruin a company, it’s good to remember that an IPO is just the beginning of something, not an end in itself, though sometimes folks caught up in it can forget that. It certainly happened to us at Wired, for a while we thought we were reinventing the entire IPO process – we even redesigned the prospectus to look like our magazine. But high-minded claims of reinventing how the business world will work rarely come to pass, and it’s never in anyone’s interest to make such claims in the first place. I’ve seen it, trust me.

That thought came to mind as I read the five-page, Warren Buffet-inspired letter which opens Google’s S1, entitled “An Owner’s Manual” for Google Shareholders, which was written in the first person by Larry Page (full text in extended entry below). I can only imagine the eyes rolling at Kleiner Perkins, Morgan Stanley, and the rest of the veterans as the founders insisted on this, and I can imagine this letter is what broke the camel’s back last week and engendered the “let’s not get too cute” comment in the New York Times. The letter, which is unusual for an S1, borders on hubris. It’s personal, discursive, and rather defensive in tone, and it attempts to address an investor’s most pressing questions about the company. It claims, several times over, that Google is different, special, and remarkable. It also acts as something of a caveat, a pardon for future sins, claiming that going forward, Google will not act like public companies are supposed to act, because it is unique and long-term focused. “We’re different, and better than others,” is the tone. “Don’t ask why we do things the way we do them. We know best.” To be honest, the letter made me cringe a bit. “Yow,” I said to myself (and now to you…). “Do they really want to set themselves up like this?”

Well, yes they do. The letter states, among other things, that 1. We don’t need to do this for the money; 2. We have no plans to run our business to satisfy Wall Street’s need for smooth earnings predictability; 3. We plan to give no earnings guidance, not at least as it’s understood on Wall St.; 4. Don’t ask us to do so, we’ll simply decline the request; 5. We’ll do odd things that you won’ t understand; 6. We will make big bets on things that may not work out; 7. We run the company as a triumvirate, so there will not be clear leadership from one person like most other companies; 8. We bridge the media and tech industries (interesting), which are in flux, so we’ve chosen a two-class stock structure similar to the NYT, WashPost, and WSJ that helps us avoid being taken over by those forces; 9. We plan using an auction model, as it feels fairer and we understand auctions from AdWords; 10. Don’t invest in us if this scares you at all, or the price feels too high; 11. Don’t even think about asking us to cut expenses with regard to our employees; 12. We believe in the idea of Don’t Be Evil; 13. It’s evil to pay for placement or inclusion (a swipe at Yahoo); 14. We hope to bridge the digital divide through Gmail type free services and a foundation with at least 1% of profits and equity to help make the world a better place; 17. Betting on Google is a bet on Sergey and Larry (this was said multiple times, making me wonder if there wasn’t some odd future blame being assigned here by the VCs or bankers); 18. This letter is our way of answering the questions we can’t answer in the coming months due to the IPO quiet period.

While my summary of the letter may sound negative, it’s my honest and initial response: to me, the letter comes off pretty strong, and likely will anger many on Wall Street. But I have to commend the founders for sticking to their beliefs, and using the IPO as something of a megaphone/soapbox. It is brave, unique, and rather commendable to very publicly state that the founders are controlling the company, and the founders will decide what is best for Google, not Wall Street. They’ve set themselves a very high long-term bar, claiming they will best the system, in essence. I think it will be very interesting to see how Wall Street responds. There is a chance, in the end, that the Street will feel slighted, and turn its back on the company.

However, as something of a present proof, the financials are quite impressive, though not as impressive as some had claimed. Profits are on track to break \$250 million or so this year, they hit more than \$100 million last year. The company has been profitable since 2001 (scroll down).

Three directors, all impressive, have been added to make the board looks robust and public facing: John Hennessy, President of Stanford, Paul Otellini, President of Intel, and Arthur Levinson, CEO of Genentech. More grist for the chip in brain conspiracy theorists, no doubt.

Also interesting: Google has an exclusive license to the PageRank patent from Stanford, but only through 2011. Then it becomes non-exclusive. And, as of March 31, Google had 1,907 employees. If you added in contractors, my guess is that’d go well past 2500. The articles of incorporation and bylaws have anti-takeover clauses, among other things. More on these details later.

As with all S1s, there is a very lengthy section on risks, with the first and foremost one labeled Microsoft and Yahoo. The risk sector reads like a response to all the criticisms of Google we’ve heard over the past year, from the Gmail privacy storm to index spamming.

There are tidbits throughout that will give all sorts of insights to competitors, the percent of revenues that are in the Google Network (ie not on the site itself, like AdSense), for example (18% last year, rising to past 20% this year). There are details on how they structure some deals with partners, on some accounting/regulation issues with stock options, on legal issues, and many other things. In reading through the entire thing, I realize it’d take me all night to report it all. I won’t try. More as time goes by. For now, it’s nice to know, the other damn shoe has dropped. Now, on with business.

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## Time Out

Taking off the rest of the day for meetings and…a ball game. Posting to resume Friday. By then, perhaps, we'll have news on the IPO whose name I dare not speak….

Taking off the rest of the day for meetings and…a ball game. Posting to resume Friday. By then, perhaps, we’ll have news on the IPO whose name I dare not speak.

## Time to Rethink the Adwords Policy

Just a thought, but when Google starts shutting down a t-shirt company's right to advertise its politically charged wares, something feels rotten in the state of paid search. (The company is Y-Que, the controversy was first reported by boing boing). This reminds me of the cruise line issue, but for…

Just a thought, but when Google starts shutting down a t-shirt company’s right to advertise its politically charged wares, something feels rotten in the state of paid search. (The company is Y-Que, the controversy was first reported by boing boing).

This reminds me of the cruise line issue, but for some reason, it feels worse. This is no conspiracy, lord knows I’m not claiming Google is playing politics (I’d feel the same way if the t-shirts made fun of Democrats, and in fact they do have an “anti-Kerry” shirt), but I suggest that Google review their policy w/r/t “advocacy” and “anti-” sites, and drop the whole damn thing, leaving it up to the market and the FCC nannies to figure out what is and what is not appropriate. After all, Google essentially punted in trademarks. Why not here?

## Privacy, Gmail, and Unintended Consequences

The email below comes to me via Dave Farber's IP list. I quote it in full with permission of the author, I think the story he tells is quite interesting as it relates to our communications and intentions moving from the ephemeral to the eternal (the title of a chapter…

The email below comes to me via Dave Farber’s IP list. I quote it in full with permission of the author, I think the story he tells is quite interesting as it relates to our communications and intentions moving from the ephemeral to the eternal (the title of a chapter in my book). This email was written by JA Terranson, who is on Dave’s IP list, in response to this article by Declan McCullagh on issues of privacy and GMail.

Subject: Opposing view of Gmail issues (Cypherpunk tie in)

Good Afternoon Declan,

## Why I Love Craigslist

I met with Craig Newmark , founder of craigslist, a while back, but I don't think I posted about it. But this crossed my desk recently, and I wanted to share it with you. Can't say how I got it, but damn, it's powerful stuff. Top Web Entities (English-language traffic),…

I met with Craig Newmark , founder of craigslist, a while back, but I don’t think I posted about it. But this crossed my desk recently, and I wanted to share it with you. Can’t say how I got it, but damn, it’s powerful stuff.

Top Web Entities (English-language traffic), with employee data

Rank # Employees Company