Google Prospectus Pdf
“An Owner’s Manual” for Google’sShareholders 1IntroductionGoogle is not a conventional company. We do notintend to become one. Throughout Google’s evolutionas a privately held company, we have managed Googledifferently. We have also emphasized an atmosphereof creativity and challenge, which has helped usprovide unbiased, accurate and free access toinformation for those who rely on us around theworld.Now the time has come for the company to move topublic ownership. This change will bring importantbenefits for our employees, for our present andfuture shareholders, for our customers, and most ofall for Google users.
But the standard structure ofpublic ownership may jeopardize the independenceand focused objectivity that have been mostimportant in Google’s past success and that weconsider most fundamental for its future.Therefore, we have implemented a corporatestructure that is designed to protect Google’sability to innovate and retain its most distinctivecharacteristics. We are confident that, in the longrun, this will benefit Google and its shareholders,old and new. We want to clearly explain our plansand the reasoning and values behind them. We aredelighted you are considering an investment inGoogle and are reading this letter.Sergey and I intend to write you a letter like thisone every year in our annual report.
We’ll taketurns writing the letter so you’ll hear directlyfrom each of us. We ask that you read this letterin conjunction with the rest of this prospectus.Serving end usersSergey and I founded Google because we believed wecould provide an important service to theworld-instantly delivering relevant information onvirtually any topic. Serving our end users is atthe heart of what we do and remains our number onepriority.Our goal is to develop services that significantlyimprove the lives of as many people as possible. Inpursuing this goal, we may do things that webelieve have a positive impact on the world, evenif the near term financial returns are not obvious.For example, we make our services as widelyavailable as we can by supporting over 90 languagesand by providing most services for free.Advertising is our principal source of revenue, andthe ads we provide are relevant and useful ratherthan intrusive and annoying. We strive to provideusers with great commercial information.We are proud of the products we have built, and wehope that those we create in the future will havean even greater positive impact on the world.Long term focusAs a private company, we have concentrated on thelong term, and this has served us well. As a publiccompany, we will do the same.
In our opinion,outside pressures too often tempt companies tosacrifice long term opportunities to meet quarterlymarket expectations. Sometimes this pressure hascaused companies to manipulate financial results inorder to “make their quarter.” In Warren Buffett’swords, “We won’t ‘smooth’ quarterly or annualresults: If earnings figures are lumpy when theyreach headquarters, they will be lumpy when theyreach you.”If opportunities arise that might cause us tosacrifice short term results but are in the bestlong term interest of our shareholders, we willtake those opportunities. We will have thefortitude to do this.
We would request that ourshareholders take the long term view.You might ask how long is long term? Usually weexpect projects to have some realized benefit orprogress within a year or two.
THE GOOGLE IPO keywords within a Web page.6 To provide users with a more relevant selection of search results, Page and Brin developed a methodology that analyzed the 'back links' pointing to a given Web site.7 That idea evolved into the PageRankT technol.
But, we are tryingto look forward as far as we can. Despite thequickly changing business and technology landscape,we try to look at three to five year scenarios inorder to decide what to do now. Mirolin showers installation. We try to optimizetotal benefit over these multi-year scenarios.While we are strong advocates of this strategy, itis difficult to make good multi-year predictions intechnology.Many companies are under pressure to keep theirearnings in line with analysts’ forecasts.Therefore, they often accept smaller, predictableearnings rather than larger and less predictablereturns. Sergey and I feel this is harmful, and weintend to steer in the opposite direction.Google has had adequate cash to fund our businessand has generated additional cash throughoperations.
This gives us the flexibility toweather costs, benefit from opportunities andoptimize our long term earnings. For example, inour ads system we make many improvements thataffect revenue in both directions. These are inareas like end user relevance and satisfaction,advertiser satisfaction, partner needs andtargeting technology. We release improvementsimmediately rather than delaying them, even thoughdelay might give “smoother” financial results. Youhave our commitment to execute quickly to achievelong term value rather than making the quartersmore predictable.Our long term focus does have risks.
Markets mayhave trouble evaluating long term value, thuspotentially reducing the value of our company. Ourlong term focus may simply be the wrong businessstrategy.
Competitors may be rewarded for shortterm tactics and grow stronger as a result. Aspotential investors, you should consider the risksaround our long term focus.We will make business decisions with the long termwelfare of our company and shareholders in mind andnot based on accounting considerations.Although we may discuss long term trends in ourbusiness, we do not plan to give earnings guidancein the traditional sense.
We are not able topredict our business within a narrow range for eachquarter. We recognize that our duty is to advanceour shareholders’ interests, and we believe thatartificially creating short term target numbersserves our shareholders poorly. We would prefer notto be asked to make such predictions, and if askedwe will respectfully decline. A management teamdistracted by a series of short term targets is aspointless as a dieter stepping on a scale everyhalf hour.Risk vs reward in the long runOur business environment changes rapidly and needslong term investment. We will not hesitate to placemajor bets on promising new opportunities.We will not shy away from high-risk, high-rewardprojects because of short term earnings pressure.Some of our past bets have gone extraordinarilywell, and others have not.
Because we recognize thepursuit of such projects as the key to our longterm 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 longterm. Do not be surprised if we place smaller betsin areas that seem very speculative or even strangewhen compared to our current businesses. Althoughwe cannot quantify the specific level of risk wewill undertake, as the ratio of reward to riskincreases, we will accept projects further outsideour current businesses, especially when the initialinvestment is small relative to the level ofinvestment in our current businesses.We encourage our employees, in addition to theirregular projects, to spend 20% of their timeworking on what they think will most benefitGoogle. This empowers them to be more creative andinnovative. Many of our significant advances havehappened in this manner. For example, AdSense forcontent and Google News were both prototyped in“20% time.” Most risky projects fizzle, oftenteaching us something. Others succeed and becomeattractive businesses.As we seek to maximize value in the long term, wemay have quarter-to-quarter volatility as werealize losses on some new projects and gains onothers.
University Of Pretoria Prospectus Pdf
We would love to better quantify our levelof risk and reward for you going forward, but thatis very difficult. Even though we are excited aboutrisky projects, we expect to devote the vastmajority of our resources to improvements to ourmain businesses (currently search and advertising).Most employees naturally gravitate towardincremental improvements in core areas so thistends to happen naturally.Executive rolesWe run Google as a triumvirate. Sergey and I haveworked closely together for the last eight years,five at Google. Eric, our CEO, joined Google threeyears ago. The three of us run the companycollaboratively with Sergey and me as Presidents.The structure is unconventional, but we have workedsuccessfully in this way.To facilitate timely decisions, Eric, Sergey and Imeet daily to update each other on the business andto focus our collaborative thinking on the mostimportant and immediate issues. Decisions are oftenmade by one of us, with the others being briefedlater. This works because we have tremendous trustand respect for each other and we generally thinkalike.
Because of our intense long term workingrelationship, we can often predict differences ofopinion among the three of us. We know that when wedisagree, the correct decision is far from obvious.For important decisions, we discuss the issue witha larger team appropriate to the task. Differencesare resolved through discussion and analysis and byreaching consensus. Eric, Sergey and I run thecompany without any significant internal conflict,but with healthy debate. As different topics comeup, we often delegate decision-makingresponsibility to one of us.We hired Eric as a more experienced complement toSergey and me to help us run the business. Eric wasCTO of Sun Microsystems.
He was also CEO of Novelland has a Ph.D. In computer science, a very unusualand important combination for Google given ourscientific and technical culture. This partnershipamong the three of us has worked very well and weexpect it to continue. The shared judgments andextra energy available from all three of us hassignificantly benefited Google.Eric has the legal responsibilities of the CEO andfocuses on management of our vice presidents andthe sales organization. Sergey focuses onengineering and business deals.
I focus onengineering and product management. All three of usdevote considerable time to overall management ofthe company and other fluctuating needs. We alsohave a distinguished board of directors to overseethe management of Google. We have a talentedexecutive staff that manages day-to-day operationsin areas such as finance, sales, engineering, humanresources, public relations, legal and productmanagement.
We are extremely fortunate to havetalented management that has grown the company towhere it is today-they operate the company anddeserve the credit.Corporate structureWe are creating a corporate structure that isdesigned for stability over long time horizons. Byinvesting in Google, you are placing an unusuallong term bet on the team, especially Sergey andme, and on our innovative approach.We want Google to become an important andsignificant institution. That takes time, stabilityand independence. We bridge the media andtechnology industries, both of which haveexperienced considerable consolidation andattempted hostile takeovers.In the transition to public ownership, we have setup a corporate structure that will make it harderfor outside parties to take over or influenceGoogle. This structure will also make it easier forour management team to follow the long term,innovative approach emphasized earlier. Thisstructure, called a dual class voting structure, isdescribed elsewhere in this prospectus. The Class Acommon stock we are offering has one vote pershare, while the Class B common stock held by manycurrent shareholders has 10 votes per share.The main effect of this structure is likely toleave our team, especially Sergey and me, withincreasingly significant control over the company’sdecisions and fate, as Google shares change hands.After the IPO, Sergey, Eric and I will control37.6% of the voting power of Google, and theexecutive management team and directors as a groupwill control 61.4% of the voting power.
Newinvestors will fully share in Google’s long termeconomic future but will have little ability toinfluence its strategic decisions through theirvoting rights.While this structure is unusual for technologycompanies, similar structures are common in themedia business and has had a profound importancethere. The New York Times Company, The WashingtonPost Company and Dow Jones, the publisher of TheWall Street Journal, all have similar dual classownership structures. Media observers have pointedout that dual class ownership has allowed thesecompanies to concentrate on their core, long terminterest in serious news coverage, despitefluctuations in quarterly results. BerkshireHathaway has implemented a dual class structure forsimilar reasons.
From the point of view of longterm success in advancing a company’s core values,we believe this structure has clearly been anadvantage.Some academic studies have shown that from a purelyeconomic point of view, dual class structures havenot harmed the share price of companies. Otherstudies have concluded that dual class structureshave negatively affected share prices, and wecannot assure you that this will not be the casewith Google. The shares of each of our classes haveidentical economic rights and differ only as tovoting rights.Google has prospered as a private company. Webelieve a dual class voting structure will enableGoogle, as a public company, to retain many of thepositive aspects of being private. We understandsome investors do not favor dual class structures.Some may believe that our dual class structure willgive us the ability to take actions that benefitus, but not Google’s shareholders as a whole.
Wehave considered this point of view carefully, andwe and the board have not made our decisionlightly. We are convinced that everyone associatedwith Google-including new investors-will benefitfrom this structure. However, you should be awarethat Google and its shareholders may not realizethese intended benefits.In addition, we have recently expanded our board ofdirectors to include three additional members.
JohnHennessy is the President of Stanford and has aDoctoral degree in computer science. Art Levinsonis CEO of Genentech and has a Ph.D. Paul Otellini is President and COO ofIntel.
We could not be more excited about thecaliber and experience of these directors.We believe we have a world class management teamimpassioned by Google’s mission and responsible forGoogle’s success. We believe the stability affordedby the dual class structure will enable us toretain our unique culture and continue to attractand retain talented people who are Google’s lifeblood. Our colleagues will be able to trust thatthey themselves and their labors of hard work, loveand creativity will be well cared for by a companyfocused on stability and the long term.As an investor, you are placing a potentially riskylong term bet on the team, especially Sergey andme. The two of us, Eric and the rest of themanagement team recognize that our individual andcollective interests are deeply aligned with thoseof the new investors who choose to support Google.Sergey and I are committed to Google for the longterm. The broader Google team has also demonstratedan extraordinary commitment to our long termsuccess. With continued hard work and good fortune,this commitment will last and flourish.When Sergey and I founded Google, we hoped, but didnot expect, it would reach its current size andinfluence. Our intense and enduring interest was toobjectively help people find informationefficiently.
We also believed that searching andorganizing all the world’s information was anunusually important task that should be carried outby a company that is trustworthy and interested inthe public good. We believe a well functioningsociety should have abundant, free and unbiasedaccess to high quality information.
Googletherefore has a responsibility to the world. Thedual class structure helps ensure that thisresponsibility is met. We believe that fulfillingthis responsibility will deliver increased value toour shareholders.IPO pricing and allocationIt is important to us to have a fair process forour IPO that is inclusive of both small and largeinvestors.
It is also crucial that we achieve agood outcome for Google and its currentshareholders. This has led us to pursue anauction-based IPO for our entire offering. Our goalis to have a share price that reflects an efficientmarket valuation of Google that moves rationallybased on changes in our business and the stockmarket. (The auction process is discussed in moredetail elsewhere in this prospectus.)Many companies going public have suffered fromunreasonable speculation, small initial sharefloat, and stock price volatility that hurt themand their investors in the long run.
We believethat our auction-based IPO will minimize theseproblems, though there is no guarantee that itwill.An auction is an unusual process for an IPO in theUnited States. Our experience with auction-basedadvertising systems has been helpful in the auctiondesign process for the IPO. As in the stock market,if people bid for more shares than are availableand bid at high prices, the IPO price will behigher.
Of course, the IPO price will be lower ifthere are not enough bidders or if people bid lowerprices. This is a simplification, but it capturesthe basic issues. Our goal is to have the price ofour shares at the IPO and in the aftermarketreflect an efficient market price-in other words, aprice set by rational and informed buyers andsellers.
We seek to achieve a relatively stableprice in the days following the IPO and that buyersand sellers receive an efficient market price atthe IPO. We will try to achieve this outcome, butof course may not be successful. Our goal ofachieving a relatively stable market price mayresult in Google determining with our underwritersto set the initial public offering price below theauction clearing price.We are working to create a sufficient supply ofshares to meet investor demand at IPO time andafter.
We are encouraging current shareholders toconsider selling some of their shares as part ofthe offering. These shares will supplement theshares the company sells to provide more supply forinvestors and hopefully provide a more stableprice. Sergey and I, among others, are currentlyplanning to sell a fraction of our shares in theIPO. The more shares current shareholders sell, themore likely it is that they believe the price isnot unfairly low. The supply of shares availablewill likely have an effect on the clearing price ofthe auction. Since the number of shares being soldis likely to be larger at a high price and smallerat a lower price, investors will likely want toconsider the scope of current shareholderparticipation in the IPO.
We may communicate fromtime to time that we are sellers rather than buyersat certain prices.While we have designed our IPO to be inclusive forboth small and large investors, for a variety ofreasons described in “Auction Process” not allinterested investors will be able to receive anallocation of shares in our IPO.We would like you to invest for the long term, andyou should not expect to sell Google shares for aprofit shortly after Google’s IPO. We encourageinvestors not to invest in Google at IPO or forsome time after, if they believe the price is notsustainable over the long term. Even in the longterm, the trading price of Google’s stock maydecline.We intend to take steps to help ensure shareholdersare well informed.
We encourage you to read thisprospectus, especially the Risk Factors section. Wethink that short term speculation without payingattention to price is likely to lose you money,especially with our auction structure. Inparticular, we caution you that investing in Googlethrough our auction could be followed by asignificant decline in the value of your investmentafter the IPO.GooglersOur employees, who have named themselves Googlers,are everything.
Google is organized around theability to attract and leverage the talent ofexceptional technologists and business people. Wehave been lucky to recruit many creative,principled and hard working stars. We hope torecruit many more in the future.
We will reward andtreat them well.We provide many unusual benefits for our employees,including meals free of charge, doctors and washingmachines. We are careful to consider the long termadvantages to the company of these benefits. Expectus to add benefits rather than pare them down overtime. We believe it is easy to be penny wise andpound foolish with respect to benefits that cansave employees considerable time and improve theirhealth and productivity.The significant employee ownership of Google hasmade us what we are today. Because of our employeetalent, Google is doing exciting work in nearlyevery area of computer science.
We are in a verycompetitive industry where the quality of ourproduct is paramount. Talented people are attractedto Google because we empower them to change theworld; Google has large computational resources anddistribution that enables individuals to make adifference. Our main benefit is a workplace withimportant projects, where employees can contributeand grow. We are focused on providing anenvironment where talented, hard working people arerewarded for their contributions to Google and formaking the world a better place.Don’t be evilDon’t be evil. We believe strongly that in the longterm, we will be better served-as shareholders andin all other ways-by a company that does goodthings for the world even if we forgo some shortterm gains. This is an important aspect of ourculture and is broadly shared within the company.Google users trust our systems to help them withimportant decisions: medical, financial and manyothers. Our search results are the best we know howto produce.
They are unbiased and objective, and wedo not accept payment for them or for inclusion ormore frequent updating. We also displayadvertising, which we work hard to make relevant,and we label it clearly. This is similar to awell-run newspaper, where the advertisements areclear and the articles are not influenced by theadvertisers’ payments.
We believe it is importantfor everyone to have access to the best informationand research, not only to the information peoplepay for you to see.Making the world a better placeWe aspire to make Google an institution that makesthe world a better place. In pursuing this goal, wewill always be mindful of our responsibilities toour shareholders, employees, customers and businesspartners. With our products, Google connects peopleand information all around the world for free.
Weare adding other powerful services such as Gmail,which provides an efficient one gigabyte Gmailaccount for free. We know that some people haveraised privacy concerns, primarily over Gmail’stargeted ads, which could lead to negativeperceptions about Google. However, we believe Gmailprotects a user’s privacy.
By releasing services,such as Gmail, for free, we hope to help bridge thedigital divide. AdWords connects users andadvertisers efficiently, helping both. AdSensehelps fund a huge variety of online web sites andenables authors who could not otherwise publish.Last year we created Google Grants-a growingprogram in which hundreds of non-profits addressingissues, including the environment, poverty andhuman rights, receive free advertising.
And now, weare in the process of establishing the GoogleFoundation. We intend to contribute significantresources to the foundation, including employeetime and approximately 1% of Google’s equity andprofits in some form. We hope someday thisinstitution may eclipse Google itself in terms ofoverall world impact by ambitiously applyinginnovation and significant resources to the largestof the world’s problems.Summary and conclusionGoogle is not a conventional company. Eric, Sergeyand I intend to operate Google differently,applying the values it has developed as a privatecompany to its future as a public company. Ourmission and business description are available inthe rest of this prospectus; we encourage you tocarefully read this information.
We will optimizefor the long term rather than trying to producesmooth earnings for each quarter. We will supportselected high-risk, high-reward projects and manageour portfolio of projects. We will run the companycollaboratively with Eric, our CEO, as a team ofthree.
We are conscious of our duty as fiduciariesfor our shareholders, and we will fulfill thoseresponsibilities. We will continue to strive toattract creative, committed new employees, and wewill welcome support from new shareholders. We willlive up to our “don’t be evil” principle by keepinguser trust and not accepting payment for searchresults. We have a dual class structure that isbiased toward stability and independence and thatrequires investors to bet on the team, especiallySergey and me.In this letter we have talked about our IPO auctionmethod and our desire for stability and access forall investors. We have discussed our goal to haveinvestors who invest for the long term. Finally, wehave discussed our desire to create an idealworking environment that will ultimately drive thesuccess of Google by retaining and attractingtalented Googlers.We have tried hard to anticipate your questions.
Itwill be difficult for us to respond to them givenlegal constraints during our offering process. Welook forward to a long and hopefully prosperousrelationship with you, our new investors.
Google Ipo
We wrotethis 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 ouremployees. Sergey and I, and the team will do ourbest to make Google a long term success and theworld a better place.
Google Prospectus
. A prospectus is a formal document that is required by and filed with the Securities and Exchange Commission (SEC) that provides details about an investment offering for sale to the public. Companies that wish to offer stock or bonds for sale to the public must file a prospectus as part of the registration process with the SEC.
A prospectus for a mutual fund contains details on its objectives, investment strategies, risks, performance, distribution policy, fees, expenses, and fund management.How a Prospectus Works.