As an expert in digital technology and corporate governance, I‘m fascinated by the story of how Larry Page and Sergey Brin started Google out of a garage and built it into one of the largest, most influential companies in the world. Though they are no longer CEO and President of Alphabet, Google‘s parent company, Page and Brin still own over 51% of voting shares, allowing them to exert substantial control even as they‘ve stepped back from daily oversight.
Page and Brin Pioneered Search That Organized the Internet
Of course, Google‘s success story starts when Page and Brin met as Stanford PhD students in 1995. Together they developed an innovative search algorithm called Backrub, which ranked results based on inbound links – a huge improvement over the messy directories that were the norm at the time.
The site was later renamed Google, a play on the mathematical term "googol." And the rest is history – their focus on returning the most relevant results led Google to become the world‘s most popular search engine. As of 2022, Google accounts for over 92% of global search engine market share and handles an astonishing 5.6 billion searches per day.
| Year | Global Search Engine Market Share |
|---|---|
| 2022 | 92.86% |
| 2021 | 92.47% |
| 2020 | 92.05% |
Data Source: StatCounter GlobalStats
Dominance in search also fuels Alphabet‘s massive profits. Search advertising accounts for over 70% of Alphabet‘s $282 billion in trailing 12-month total revenue as of 2022.
Unique Multi-Class Stock Structure Maintains Founder Control
Unlike many tech companies, Page and Brin designed an unorthodox stock structure for Google before its 2004 IPO. This was influenced by advice from Warren Buffet, who used a similar dual-class system at Berkshire Hathaway to keep control of his firm after going public.
As a quick refresher, here‘s how it works:
- Class A shares (GOOGL) – Publicly traded, one vote per share. Represents ownership. Total market cap is $1.2 trillion as of March 2023.
- Class B Shares – Mostly owned by Page, Brin and early investors. Ten votes per share.
- Class C Shares (GOOG) – Publicly traded, no voting rights. Income stream to owners.
The end result is that Page and Brin are able to wield majority voting power despite owning a relatively small portion of overall shares outstanding. Truly ingenious! This has allowed them to maintain tremendous control over the company they founded from the very beginning.
While founders of many technology companies like Mark Zuckerberg have followed this model, some investors have argued it limits external oversight and accountability. I‘ll explore some of these critiques later on.
51% of Votes Gives the Founders Ultimate Authority
Collectively, Page and Brin control approximately 51% of voting power at Alphabet. The vast majority of this comes from their Class B share holdings. But their voting power has decreased slightly from 53% in recent years due to issuance of additional publicly traded Class A and Class C shares.
Specifically:
- Larry Page owns 26.27% of voting shares as of 2022
- Sergey Brin owns 25.25% of voting shares as of 2022
Page and Brin‘s collective voting power peaked at 56.7% in 2017. Google‘s stock split in 2014 also resulted in the issuance of additional Class A and Class C shares, diluting their control a bit. But they still remain firmly in control with over half the voting power.
| Year | Collective Page & Brin Voting Power |
|---|---|
| 2022 | 51.52% |
| 2021 | 51.99% |
| 2020 | 53.46% |
| 2017 | 56.70% |
While other insiders like Eric Schmidt and institutional investors like Vanguard and BlackRock own chunks of shares too, none come close to challenged the founders‘ majority control.
Owning over half the votes empowers Page and Brin to elect Alphabet‘s board of directors, approve major deals, and prevent takeovers. Essentially they have final say in all big decisions about the future of Google and its other brands like YouTube and Android.
Critiques of Concentrated Power
However, some technology analysts and investors have voiced concerns about vesting too much control in founders over extended periods of time.
Arguments against Alphabet‘s governance structure include:
- Insufficient oversight from independent directors
- Limited accountability without threat of activist investors or takeovers
- Allows founders to make decisions benefiting themselves versus all shareholders
- Decreases incentive to take risks and innovate once founders become billionaires
Additionally, while founders point to their voting power ensuring management stays laser focused on the long term, research suggests companies with less founder control often deliver superior shareholder returns over decades-long periods.
So while I greatly respect the innovative vision of Page and Brin, one could argue their unchecked influence raises issues around decision making transparency and the distribution of power at some of the world‘s most critical technology infrastructure companies.
Stepping Down From Management While Remaining at the Helm
As Google grew over the years, Page served as CEO while Brin took on the President role. But in 2019, they announced plans to step back from day-to-day management – passing the CEO title to longtime lieutenant Sundar Pichai.
However, the move didn‘t represent relinquishing any control. Thanks to those super-powered Class B shares, Page and Brin installed Pichai as CEO while remaining firmly in the driver‘s seat strategically as Alphabet board members.
They made it clear Google‘s culture of innovation and bet-the-company boldness would carry on. At the same time, they‘ve entrusted Pichai to add more structure and business discipline as needed amidst ongoing antitrust scrutiny.
And with their majority voting stakes, Page and Brin still have final say on all major Alphabet decisions, including:
- Approving multi-billion corporate acquisitions
- Weighing in on Google‘s sometimes controversial AI pursuits
- Charting Alphabet‘s climate change and sustainability objectives
- Managing antitrust litigation and strategies
The founders may be letting Pichai steer the ship towards their North Star, but their voting power means they‘re still at the charts marking the ultimate course. Over 20 years after founding Google, they determine the vision and acceptable risk profile for big bets – like self-driving cars or Google Glass – that could shape the future of computing.
Future Questions Around Leadership Control
The concentration of voting power with Page and Brin also leads to questions around succession planning and leadership continuity.
Unlike companies with distributed power across executives and directors, Google‘s future strategic direction relies tremendously on staying aligned with Page and Brin‘s goals and risk tolerance. While Sundar Pichai has their trust today, it remains to be seen if another CEO down the road may find it difficult operating in their shadow or chafe at their oversight on the board.
And if the founders were to retire or pass on ownership some day, who inherits control remains unclear. This uncertainty around the continuity of distributed decision making is a key governance critique of dual-class structures.
Of course, it took trusted lieutenants rising up the ranks – like Eric Schmidt initially and Sundar Pichai today – to enable Page and Brin to step back from daily management responsibilities while feeling confident in Google‘s roadmap. Only time will tell if the next generation of leadership earns similar respect.
The Dual-Class Structure Stands…For Now
To close, public ownership hasn‘t changed Google‘s identity as a founder-led business. Thanks to inspired foresight before the IPO, Larry Page and Sergey Brin designed a way to bring in outside investors while retaining ultimate clout over the company they started together back in 1998. Two decades later, 51% is still the magic number!
However, calls for governance reform have become louder in recent years – including shareholder proposals to restructure voting power. But with the founders‘ shares ensuring these face certain defeat, their control of the company seems firmly cemented for the foreseeable future.
While reasonable debates persist around highly-concentrated power in corporations like Alphabet that supply key digital infrastructure across economies, Larry Page and Sergey Brin remain undeniably at the helm of Google due to their savvy leveraging of shares as votes. It will be fascinating to see how it impacts the company‘s future.
