The creators of Google risk ending up like Anita Roddick, their ideals increasingly sidelined by commercial priorities and with diminished control over their company

Larry Page and Sergey Brin have at last announced plans to float their company Google on the stock market. It is going to become one of the most closely watched financial transactions of the year.

The two men, just 31 and 30, both sons of university professors, both PhDs in computer science, have created one of the most useful tools on the planet - half of all web searches are now done through Google - and they are inviting outside investors to take a punt.

They have been compared with Bill Gates of Microsoft. Like Gates, they will certainly be technology billionaires. The pundits are already putting a tentative price tag of $30bn on Google, which means Page and Brin would be worth $4bn or so each.

They have been compared with Martha Lane Fox of lastminute.com. As in Lane Fox's case, the hype surrounding the float (or IPO, as they call these things on Wall Street) is intense and analysts are predicting a level of demand not seen since the mania of the dotcom years.

But the high-minded duo remind me above all of Anita Roddick, the founder of Body Shop International. They have the same idealism, the same evangelical fervour, the same belief that their company is not primarily about making money.

Page's letter to prospective shareholders has subheadings such as "Don't Be Evil" and "Making the World a Better Place". Google, he writes, "has a responsibility to the world". They also have the same contempt for the traditional financial markets - "the merchant wankers", as Roddick used to call the corporate financiers who brought Body Shop to the stock market.

Page and Brin are so suspicious of Wall Street that they plan to shun normal IPO procedure. Instead, they will offer shares direct to the moms and pops through a Dutch auction. The investment banks will miss out on hundreds of millions in fees. Nor will they be able to use the promise of big share allocations to sweeten influential clients - a form of bribery known as "spinning" that was rampant during the dotcom years.

Page and Brin also plan to insulate Google from the damaging short-term pressures put on most blue chips by outside investors by introducing a two-tier share structure. Their shares will carry ten times as many votes as anyone else's. "Google is not a conventional company. We do not intend to become one," they say in their introductory letter to prospective shareholders.

The message is unmistakable. They want to carry on managing Google in the same quirky, paternalistic and customer-friendly way. They want to carry on giving free washing machines to staff and special subsidies to employees who adopt children - two of the odder perks enjoyed by so-called Googlers at the Californian head office, Googleplex.

They don't want to be pressured into taking fees from advertisers to ensure that the right corporate website pings up at the head of the queue when the search button is pressed, to which their rival Yahoo! has already succumbed here.

All this is laudable. But Page and Brin need to gird themselves for an onslaught of criticism if they so much as stumble. Only a relentlessly rising share price will fend off a vicious backlash.

As Roddick quickly discovered, once her share price started heading in the wrong direction, she was billed by her City critics as preachy, sanctimonious, hypocritical and worse. She also had to make concessions - her gestures towards the environment, feminism and poor countries increasingly sidelined by short-term commercial priorities. Her influence in the company has diminished.

The moral high ground is a lonely and exposed place. Page and Brin are already being accused of trying to have their cake and eat it - soliciting other people's money, but not being prepared to take the obligations that come with this.

The float is probably a mistake. They have no need of the $2.7bn of capital being raised and could certainly get it through other means. As a result of the hype, the shares will probably be priced much too high, which means the management will be facing unachievable expectations from day one. And the two-tier share structure will inevitably cause tension and will come back to haunt them.

Differential share structures are usually created with the best of motives, but then end up shielding the most incompetent, idle and complacent of managements.

Yet Page and Brin do not have much choice. The venture capitalists and early-stage backers want "an exit", to use Wall Street parlance.

They want to realise the gains they have already made - and who can blame them? They have multiplied their money about 150 times.

Page and Brin, who talk nobly of doing no evil, will come to learn that they began supping with the devil years ago when they first invited outside investors in. There is no going back.

Post your comment

Please note: you will need to login or register before you can comment on the website