Fortune has named Google “The Best Company to Work For” in its 2007 list of the top 100 Best Companies to Work For. Google made it to the top (and in its first year of eligibility!) because of its commitment to its employees and the many perks that go along with that, including such things as free on-site laundry facilities, free gourmet meals, free on-site check-ups as well as on-site dry-cleaning, hair-cuts and massage services. The Fortune list was generated based on responses from 446 companies. Companies then received a score associated with their employment environment: two-thirds of the score stemmed from surveys of 400 randomly selected employees from each company and one-third of the score was based on each company’s responses about its culture. I take it part of the survey aimed to determine the extent to which a company’s rhetoric about its culture was consistent with the reality as perceived by its employees.

On the one hand, Google’s first place rank should not come as a surprise. After all, it touts itself as the “do no evil company,” and all of its corporate documents are replete with rhetoric about its commitment to employees and maintaining a fun work environment. On the other hand, I have been doing a lot of research on rhetoric and that research demonstrates that lots of companies—indeed almost all of the Fortune 100 companies—tout their commitment to employees and their welfare. But in this area, in particular, very few companies live up to their hype. In fact, last year only eight of the more than 90 Fortune 100 companies that expressed a commitment to employees appeared on the list. Thus, Google is distinct not only because of its apparently great employment environment, but also because its talk about that environment is reflected in its actions.

Permalink | Corporate Law| Google | Comments (0) | TrackBack (0) | Bookmark

According to the WSJ, Google is giving nonexecutive employees the opportunity to sell vested stock options via an online auction, managed by Morgan Stanley.  Prospective buyers are probably financial institutions and other institutional investors.  Google is advising employees that they will be able to sell options that are both in the money and out of the money -- once the transferable stock option (TSO) is transferred, the new holder gets a new expiration date, which may be as far away as two years from the transfer date.

I will leave it to Vic to tell us if there are any tax implications.  The WSJ article describes the move as primarily a recruiting/compensation one.

Permalink | Google | Comments (6) | TrackBack (0) | Bookmark

The NYT reports today that Google will convert unused rooftop space on its headquarters' buildings and parking structures into a solar power system that will provide 30% of the electricity to the company.  Google will still be a customer of PG&E, but hopes to see its electricity bill shrink over time as the system pays for itself.  As we talk about here, very few acts that we term "corporate social responsibility" are undertaken with the notion that they will create a net loss for the company.  Either the action will create good publicity and attract customers, increase employee morale and assist in recruiting, or at the very least create a tax deduction and an opportunistic benefit for a decisionmaker and the decisionmaker's charity.  Here, Google states that not only will the system pay for itself over time, and perhaps generate a profit if excess capacity can be resold to PG&E, but this move to solar power will also attract "smart, high-level engineers" to the company.

Large companies, particularly companies with manufacturing facilities, have experimented with ways to cut electricity costs.  Some facilities, such as petrochemical plants and even Anheuser-Busch have taken to generating their own electricity by way of cogeneration facilities.  Google can't buid a co-gen because it just generates search results, not heat, and it can't harness the power of steam the way a manufacturing plant can.  Is solar the New Economy's co-gen?

Permalink | Google | Comments (0) | TrackBack (0) | Bookmark

Gordon's post below asks the ultimate question:  Why do this?  The "this" of course is acquire YouTube, the unspoken "who" is Google.  Reports this week have been criticial of this alliance, remarking on the future legal problems inherent in YouTube's business plan and the heavy reliance on advertisers for revenue.  Here's a cynical view of "why":

Google has 11 board members.  One of those board members is Michael Moritz, a big partner at Sequoia Capital.  Sequoia Capital owns approximately 30% of YouTube and stands to turn an $11 million investment into a $495 million take-home.  This NYT article explains how Google may be emulating a Japanese business custom of "interlocking relationships" (keiretsu) where "friends sell to friends."  Of course, in the U.S., friends may sell to friends, but at some point we have to consider whether these interlocking relationships turn an acquisition into a related-party transaction.

Here, probably not.  Although the three Google board members (Schmidt, Brin, and Page) may feel obligated to Sequoia Partners for past investments, a court would probably not look to a historical economic relationship to find dependence.  Two of the board members are presidents of Stanford and Princeton.  Although both schools' endowments invest in venture capital, unless the schools are current investors in Sequoia Partners (and I can't find any evidence of that), then they will be independent as well. 

Permalink | Google | Comments (3) | TrackBack (0) | Bookmark

It's official: Google is buying YouTube. The price is $1.65 billion in Google stock.

Is this a good deal? People are saying that the price looks steep, but the opportunity for selling ads seems pretty enticing. YouTube has a high garbage-to-fun ratio, so I never go there, unless I know what I am seeking. For people like me, the bigger news today may be that YouTube will be getting more high-quality content legitimately:

In a prelude to the acquisition announcement, YouTube early Monday announced agreements with Vivendi SA's Universal Music Group and Sony Corp. and Bertelsmann AG joint venture Sony BMG to make their music videos available through YouTube and to allow consumers to use music from the two companies as soundtracks for their own videos on YouTube. The video site also signed a content and ad-revenue-sharing agreement with CBS Corp. related to video from CBS Television Network, Showtime Networks Inc. and CSTV Networks Inc. Google separately announced agreements with Warner Music Group Corp. and Sony BMG to make music videos and other content available for free through its video service and on partner sites.

By the way, this looks like a home run for Sequoia, the VC firm that owns 30% of YouTube's stock.

UPDATE: Paul Kedrosky is all over this story. My favorite line from Paul's liveblogging of the conference call is in italics below:

Why do this when you have Google Video? My answer. Google Video is going nowhere. Eric puts it differently, saying it has "lots of interesting partnerships", possible the most tepid recommendation I have ever heard.

Permalink | Google | Comments (0) | TrackBack (0) | Bookmark

Froogle emerged shortly before Google's IPO. It was part of a flurry of new services designed to show that the company was about more than general search. Well, general search has been pretty good to Google, but Froogle has not. It was removed from the Google front page last month, and now it will be "de-emphasized" further as Google turns its energies to the development of Google Base.

Listing a product on Google Base means that it is retrievable through a Google search, according to a Bear Stearns report: "When users conduct a product search on Google.com, they will be [presented] with an additional search box where they can refine their search. When the user refines the search, Google takes the user to a second page, which will be filled with product results only from Google Base."

I like this idea for a number of reasons, but mainly because Google has partnered with Intuit to integrate QuickBooks and Base. Small business users will be able to upload directly from their inventory records in QuickBooks to Google Base. Here is a press release describing the plan.

Permalink | Google | Comments (0) | TrackBack (0) | Bookmark

Yahoo! and Google stock are plunging today after Terry Semel, Yahoo!'s CEO told investors at a Goldman Sachs conference, online advertising revenues from automotive and financial services companies are "still growing but they're not growing as quickly as we might have hoped at this point in time."

Is this the beginning of a broader retrenchment in advertising revenues? Too early to tell. But it isn't too early to second-guess a business strategy that depends entirely on the growth of internet advertising.

Permalink | Google| Internet | Comments (0) | TrackBack (0) | Bookmark

Google announced its for-profit charity today, Google.org, which will be run by Executive Director Larry Brilliant.  In Brand New Deal, I argued that when Google structured its IPO as an open auction rather using a traditional book-building method, it was using deal structure to achieve a branding effect.  More recently, I've looked at the branding impact of Mastercard's use of a charitable foundation in its IPO. 

The structure of Google.org obviously has some branding implications for the firm as a whole.  It's an innovative and creative structure, consistent with the overall Google brand.  It frees up the "charity" to engage in more deals, perhaps with Kleiner Perkins' "green" venture fund, and to lobby Congress.  It blurs the line between profit and charity, consistent with the Don't Be Evil motto. 

I'll post separately on the tax implications, which are trickier (and better for Google) than you might think. Google has a high effective tax rate.  The operating losses of google.org will soak up income from Google, thereby achieving much the same tax effect as a charitable donation, and without the restrictions that accompany charitable donations.  I'm assuming google.org remains as part of Google's consolidated return.  I need more detail on the structure, so more to come.

The real benefit of the structure is accountability.  Suppose the Google founders gave a hundred million dollars to a traditional, separate tax-exempt charity.    Once that money leaves the hands of Google or its founders, agency costs increase, and over time it becomes steadily more difficult to monitor whether the managers of the charity are managing the charity for their own benefit or for the public interest (however defined by the founders).  With the Google.org structure, the Google founders and managers can monitor what's going on and exert more control over decision-making.

Of course, with this structure, the founders aren't using their own money, but rather money that belongs to Google shareholders.  (They did warn shareholders that they'd be doing this kind of thing when they went public.)   So while google.org will be accountable to Google, there's a question of whether Google itself is properly accountable to its shareholders.  Is google.org good for shareholder value?  Like all corporate charitable donations, it's only good if it can be properly justified in terms of a positive branding impact.  Whatever consumption value the founders may get from the organization isn't enough to justify the move.  Time will tell, and we'll need to see more detail about what the organization does (particularly regarding green tech and VC firms like Kleiner Perkins).  At first glance, I once again think Google's use of deal structure to achieve a positive branding effect is brilliant.  Or should I say, Dr. Brilliant. 

For more, see also Eric Posner's post at the U Chicago blog, which discusses his paper on for-profit charities with Anup Malani. 

Permalink | Google | Comments (0) | TrackBack (0) | Bookmark

Here.

Permalink | Google | Comments (0) | TrackBack (0) | Bookmark

Google products are a mixed bag for me. I love Search and Maps. The second version of Desktop was much better than the first, and I have just started using a customized home page, which seems nice, too. Gmail is fine, but strictly a backup email. Many other Google products have been disappointing (most recently, Checkout), and I haven't received my invitation to use Spreadsheets. But one piece of software that I am eagerly awaiting is Writely, which allows for real-time, online collaboration. I keep checking the Writely site and Google Labs for news, but things have been quiet.

Just thought I would mention it ...

Permalink | Google | Comments (4) | TrackBack (0) | Bookmark

So I signed up for Google Checkout, and I started browsing for a way to spend the $5 credit I earned for registering my Citi card. Unfortunately, I am not in the market for anything from Coffee Bean Direct, FaucetDirect, ToolsDirect, Snorkel Bob, or any of the other thousands hundreds tens of stores in the program.

Google: the not-ready-for-primetime software company.

Jeremy Wright is not so kind.

Permalink | Google | Comments (3) | TrackBack (1) | Bookmark

Bill Tancer at Hitwise offers an interesting comparative analysis of market share of three internet heavyweights: Google, Yahoo!, and MSN. Google tops the list for search (47.4%), but Yahoo! dominates email (42.4%) and business/finance (34.9%) and also leads in news (6.3%). The top mapping site is Mapquest (56.3%), with Yahoo! Maps coming in second and Google Maps lagging far behind in third. The biggest surprise to me: Gmail ranks fouth in email, with only 2.54% market share.

UPDATE: I have been writing skeptically about Google's products for a long time, and I know that I am not alone. But it seems like traffic in this genre has picked up lately. Here are a couple of recent posts from Paul Kedrosky (see also here and here) and Om Malik.

Permalink | Google| Internet | Comments (3) | TrackBack (0) | Bookmark

Unlike some people, I'm a sucker for a good shareholder's proposal.  However, Bill Sjostrom reports on a shareholder proposal that I can't get behind.  Apparently a union pension fund went to the trouble and expense of putting forth a shareholder proposal to eliminate Google's dual class common stock regime.  The proposal stated, among other things: 

We believe this disproportionate voting power presents a significant danger to shareholders. As Louis Lowenstein observed in What’s Wrong With Wall Street (1988), dual-class voting stocks like our Company’s reduce accountability for corporate officers and insiders. In our view, the danger of such disproportionate voting power was illustrated by the recent fraud charges brought against top executives at Adelphia Communications and Hollinger International.

That's pretty harsh.  Does Google equal Adelphia?  Are Larry and Brin siphoning off money from Google?  As Bill points out, the market was extremely conscious of the dual-class common situation back in August of 2004; no secrets here.  The pension fund bought the stock with full knowledge of the situation.  Unless something has changed to make the situation more "dangerous" than it was previously, then why the proposal?  The pension fund seems to think that the voting structure enhances the agency problem between the management and the shareholders of Google, but who's watching the agency problem between pensioners and the pension fund that wastes its money on useless shareholder proposals?

Permalink | Google | Comments (2) | TrackBack (0) | Bookmark

Bill over at TOTM is thrilled about his blog's PageRank of 7. He should be! TOTM is only three months old, but it has the same PageRank as Conglomerate ... which has the same PageRank as ProfessorBainbridge.com, Althouse, and the Volokh Conspiracy! I read and enjoy all of these blogs, but they are not roughly equivalent properties. Even a bigger mystery, the very popular Concurring Opinions has a PageRank of 5. Something is out of whack here.

On a side note, did you know that the PageRank trademark is a play on the name of Larry Page, one of Google's founders? I learned that reading The Google Story.

Permalink | Google | Comments (1) | TrackBack (0) | Bookmark

Way back in the spring of 2004, before Google went public, I questioned whether the company had staying power because it relied exclusively on internet advertising for revenues. Google proceeded to complete a successful IPO and followed with one quarter after another of startling successes, resulting in an outrageous stock valuation. I have been the first to admit my surprise.

Is it possible that the chickens are finally coming home to roost?

Starting in January, Google's stock began sliding. First there was the Barron's article that said Google could lose half of its value over the next year. Then Google missed is quarterly earnings numbers. This was dismissed as a tax-induced blip, but as people dug deeper, some have concluded that Google is a very cool company without many revenue options. The price of the stock declined by almost $100.

Over the past fortnight, the stock has regained some of that lost ground, but today Google CFO George Reyes said essentially what I was saying two years ago: Google needs to find some new sources of revenue. Google's shares tumbled and are now down over $27 on the day.

Analysts are holding firm, stating that there was nothing new in Reyes' statement. They had the same reaction to the Barron's article. If you subscribe to the W$J, check this out. All of the analysts surveyed on February 1 were pegging Google's price target at more than $400 per share, and half of them were estimating something over $500 per share. The current price is in the $360s.

Now, Google is telling a growth story that relies on something other than search revenues:

Mr. Reyes said the new products Google has been introducing at a furious pace recently will produce "meaningful" revenue contributions in the future. The mobile and local arenas, in particular, offer "a lot of opportunity," he said.

Google will continue to invest heavily in the quality of its search engine and new products, he added, and this will continue to drive a "virtuous circle" whereby product strength causes rising traffic, which attracts more advertisers and generates higher revenue.

"There's been a huge acceleration in the level of innovation in the company," he said. "It's all about risk taking."

Do you believe in the "virtuous circle"? This sounds more like a startup pitch than a market leader: upward spiraling revenues from unproven (or unreleased) products ...

I am still a skeptic.

Permalink | Google | Comments (1) | TrackBack (0) | Bookmark