The arrival of "Green Google Boondoggle," an opinion piece in the Wall Street Journal piling snootiness on Google's plan to cash in on renewable energy was about as predictable as a Republican swearing fealty to the holy bible of tax cuts. Google's shareholders, Rob Cox and Robert Cyran tell us, won't be pleased with Sergey Brin and Larry Page chasing after fool's gold, when they should instead be keeping their noses to the search engine grindstone.
Is Google turning into a sovereign wealth fund? The search group is gushing cash faster than an Abu Dhabi oil well and showering it widely. Sheiks like to invest their bounties in American bank stakes and tourist traps featuring wax celebrity simulacra. Google hardly seems more selective. Its latest project is a renewable-energy program meant to find ways to generate electricity more cheaply than by burning coal...
Yet the company risks spreading itself too thin -- chasing everything from personalized biotechnology to space flight. Its shareholders probably don't want Mr. Page and other executives spending their time, or Google's cash, on a spate of questionable pet projects that may accomplish little more than satisfying its founders' hubris.
But as Felix Salmon properly notes: tough nuggies. Any shareholder who purchased Google's shares should be fully prepared for quixotic long-shot behavior. "This is exactly the kind of thing that Google was very explicit about when it went public," writes Salmon. "We will not give public shareholders any kind of useful voting rights, they said, nor will we give quarterly earnings guidance. We will spend our money on pet projects that shareholders might not like or want. If you don't like that, don't buy the stock."
Just for the record, How the World Works reread the letter from the founders that opens Google's 2004 prospectus, and still remains one of the more remarkable documents ever included in an SEC filing. The relevant paragraph:
We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long term success, we will continue to seek them out. For example, we would fund projects that have a 10 percent chance of earning a billion dollars over the long term. Do not be surprised if we place smaller bets in areas that seem very speculative or even strange. As the ratio of reward to risk increases, we will accept projects further outside our normal areas, especially when the initial investment is small.
Is it "strange" for Google to suddenly reimagine itself as a clean-tech start-up? Perhaps, but no one can say they weren't warned.
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