Google filed for a prospective $2.7 billion sale, valuing the company in the $20-25 billion range. There will be two classes of stock, one with supervoting rights (ten times those of regular shareholders), which keeps power squarely in the founders’ hands. Google will auction all of its shares.

John Battelle says, “Having seen how the quest for IPO glory can ruin a company, it’s good to remember that an IPO is just the beginning of something, not an end in itself, though sometimes folks caught up in it can forget that. It certainly happened to us at Wired, for a while we thought we were reinventing the entire IPO process - we even redesigned the prospectus to look like our magazine. But high-minded claims of reinventing how the business world will work rarely come to pass, and it’s never in anyone’s interest to make such claims in the first place. I’ve seen it, trust me”.

“The five-page, Warren Buffet-inspired letter which opens Google’s S1, entitled “An Owner’s Manual” for Google Shareholders, was written in the first person by Larry Page. I can only imagine the eyes rolling at Kleiner Perkins, Morgan Stanley, and the rest of the veterans as the founders insisted on this, and I can imagine this letter is what broke the camel’s back last week and engendered the “let’s not get too cute” comment in the New York Times.

The letter, which is unusual for an S1, borders on hubris. It’s personal, discursive, and rather defensive in tone, and it attempts to address an investor’s most pressing questions about the company. It claims, several times over, that Google is different, special, and remarkable. It also acts as something of a caveat, a pardon for future sins, claiming that going forward, Google will not act like public companies are supposed to act, because it is unique and long-term focused. “We’re different, and better than others,” is the tone. “Don’t ask why we do things the way we do them. We know best.” To be honest, the letter made me cringe a bit. “Yow,” I said to myself (and now to you…). “Do they really want to set themselves up like this?”

The letter states, among other things:

1. We don’t need to do this for the money; 2. We have no plans to run our business to satisfy Wall Street’s need for smooth earnings predictability; 3. We plan to give no earnings guidance, not at least as it’s understood on Wall St.; 4. Don’t ask us to do so, we’ll simply decline the request; 5. We’ll do odd things that you won’ t understand; 6. We will make big bets on things that may not work out; 7. We run the company as a triumvirate, so there will not be clear leadership from one person like most other companies; 8. We bridge the media and tech industries (interesting), which are in flux, so we’ve chosen a two-class stock structure similar to the NYT, WashPost, and NYT that helps us avoid being taken over by those forces; 9. We plan using an auction model, as it feels fairer and we understand auctions from AdWords; 10. Don’t invest in us if this scares you at all, or the price feels too high; 11. Don’t even think about asking us to cut expenses with regard to our employees; 12. We believe in the idea of Don’t Be Evil; 13. It’s evil to pay for placement or inclusion (a swipe at Yahoo); 14. We hope to bridge the digital divide through Gmail type free services and a foundation with at least 1% of profits and equity to help make the world a better place; 17. Betting on Google is a bet on Sergey and Larry (this was said multiple times, making me wonder if there wasn’t some odd future blame being assigned here by the VCs or bankers); 18. This letter is our way of answering the questions we can’t answer in the coming months due to the IPO quiet period.

If Google comes out at $35 billion, don’t think it’s a screaming “buy.”

Wired has a complete report on Googlemania while www.google-ipo.com has the numbers and Google — itself — has the news.

Posted by Sam Churchill on Friday, April 30th, 2004 at 12:02 am.