Tuesday, April 17, 2012

Open Letter to Sergey and Larry

Dear Sergey and Larry,

Unless you've been under a rock, (that's where I've been for a couple of months,) every finance pundit in the world has proclaimed your stock split is abusive.  They won't say that, but that's what they mean.  You think you're an innovator at abusive corporate governance.  You're not.

As my sister says, here's the thing: You went about this all wrong.  What you have is a serious case of hedge fund envy!  Public companies have governance.  Hedge funds don't.  Hedge fund managers take 20% of "partner" asset growth every year, and partners have no votes on the assets themselves.  You poor suckers with public companies have to listen to your "board" and sometimes do what is right for the shareholders.

I have a business proposition for you: Announce that you have reconsidered the stock split.  That the market has spoken, whatever you want.  You'll look somewhere between "moderately shareholder friendly" and "heroic in a new age of market transparency".

At the same time, you launch a hedge fund.  Call it a family office, with a little "outside money" to provide incentives to the senior team.  (If you need help with any of the various technical terms here, please call me,) even though the two of you retain 97.4% of the equity in the new management company.

Target a $5 billion raise from outside investors.  Quietly take the assets up to $10 billion shortly after launch when investors are excited. Now, buy $10 billion of Google stock.  Obviously, these should be voting shares that you don't already control.  Presto!  You now increase your control block using other people's money, but the joy here is that if Google succeeds, you take their money, not just their vote!

If you need my consulting services on this project, Google me...

Best regards,