The Power Law: Venture Capital and the Making of the New Future

by Sebastian Mallaby

Following a precedent set mainly by family-owned media firms, they decreed that Google would issue two classes of shares. The first, to be held by the founders and the early investors, conferred ten votes on big company decisions. The second, to be held by outside stock market investors, conferred only one vote. Collectively, outside investors would receive shares bestowing only a fifth of all votes. Insiders, chief among them Brin and Page, would retain control over the company.[59] When the Googlers proposed this share structure, Doerr and Moritz raised two objections. First, outside investors might recoil at the prospect of second-class citizenship. Consequently, some might refuse to buy the stock, resulting in a lower share price and a less profitable VC exit. Second, enshrining founder control indefinitely seemed ill-advised.