If I had seen more significant digits in the earlier news articles, I might have noticed:
The exact offering, $2,718,281,828, is the product of "e" and $1 billion, where "e" is the base of the natural logarithm--a logarithm especially useful in calculus--and equals 2.718281828.... [CNN]
I am geek enough to enjoy that. Hell, it's at least as logical as any other IPO valuation I've heard of in the Internet age. Actually it's deeply logical, in that it recognizes the fundamental irrationality of IPO prices. There's no pretense. And is it an accident that e is, technically, an irrational number? ;)
Frankly, the document they released today dubbed "An Owner's Manual' for Google's Shareholders" makes me feel more positively about Google's prospects than anything I have ever heard from or about them. It says things like:
"Many companies are under pressure to keep their earnings in line with analysts' forecasts. Therefore, they often accept smaller, but predictable, earnings rather than larger and more unpredictable returns. Sergey and I feel this is harmful, and we intend to steer in the opposite direction." [Another CNN article; definitely worth reading]
And, about their decision to have two voting classes:
"While this structure is unusual for technology companies, it is 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 frequently point 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." [Same CNN page]
I find this very interesting. They seem to be trying to engineer a solution to the corporate problems other companies have experienced, just as a good engineer addresses technical problems that earlier projects have experienced.
And the best engineers recognize that sometimes, they have to fly by the seat of their pants. And the very best engineers know when they have no choice but to do so; they don't pretend they know exactly what they are doing in such a case. They have integrity. They don't hide the facts. Is the choice of an irrational number for the IPO valuation a conscious wink to those who might care, saying this is one such case? Is it a statement: "We have the integrity to act according to our principles, even to the extent of making choices that are not what Wall St. would necessarily understand or approve of in the short-term"? I hope so.
Maybe this will turn out to be as interesting an experiment as it seems it has the potential to be. Cool!
You're still at it, huh, Gary?
God bless you.
FYI - I finally finished the book I told you about years and years ago. Our many conversations were a great inspiration for it.
Best wishes to you.
Posted by: Jonathan Linscott | February 25, 2005 at 06:33 PM