Story of the week

This is how Google went public!

Do you know who was the person behind making google a public company?You can guess.

The great Warren Buffet, great if you guessed it right and know what we’re talking about but if you don’t then today’s story will interest you a lot. Since, we are so much into the concept of multiverse these days. Thanks to Marvel! We like to imagine what if this happened differently somewhere else. Similarly, just imagine a world where google is a small private company, believe me this was about to happen if they hadn’t met Warren Buffet.

Sergey Brin and Larry Page, Google's co-founders, were hesitant to go public because they believed that handing over authority to shareholders would force them to do things they didn't want to do. They altered their minds after a chance meeting with Warren Buffett. Buffett highlighted how he was able to keep control of Berkshire Hathaway while not owning the majority of the company's equity using a two-tier stock structure. Brin and Page recognised they could preserve control of Google by taking a similar method, and when they went public, they based their stock structure after Berkshire Hathaway's.

The Oracle of Omaha described the Berkshire Hathaway system of Class A and Class B shares. A share, which Buffett and others possess, has one vote per share. B shares have only 1/10,000 of a vote each. This implies the corporation can sell stock to investors while being safe from activist investors and hostile takeovers.

Despite the fact that such share classes were uncommon in the tech industry, Brin and Page opted to copy the structure. Shares of Google (now Alphabet) have one vote, while B shares have ten votes apiece. Even though they possess less than 12% of the company's total shares, Brin and Page own 51% of the B shares between them, giving them shared control.

The rest of the narrative is well-known to you. Google stock debuted for $85 per share, and after a two-for-one stock split in 2014, each of those first shares is now worth well over $5,000. Brin and Page are nonetheless committed to maintaining control, to the point where they split the company into a new class of C shares with no voting power. People who owned A or B shares at the time of the split were given one non-voting share for each voting share they had. Investors continue to buy Alphabet and Berkshire Hathaway, despite their lack of voting power, since both businesses remain excellent assets.