Super Pumped _ The Battle for Uber - Mike Isaac Page 0,35

founders themselves.

Larry Page and Sergey Brin, the co-founders of Google, cemented and institutionalized this practice. In a cramped garage in 1998, Page and Brin founded a search engine to perform a task that sounded bonkers; “to organize the world’s information and make it universally accessible and useful.” It was the exact type of moonshot thinking venture capitalists encouraged.

But while the Google founders were excited to change the world, they didn’t want to make decisions based on what the money men wanted. The motto “Don’t be evil”‡‡ became synonymous with Google’s founders and their approach, the message being “even though we’re growing into a mature company, we won’t be doing terrible things for money.”

In 2004, when Google undertook its IPO, it used a controversial financial instrument called a “dual-class stock structure.” Google sold “Class A” shares to the public, while its founders held onto “Class B” shares. The two classes held the same monetary value, but Class B shares came with special privileges; every Class B share represented ten “votes,” or ten individual chances to yea or nay company leadership decisions. Class A shares, on the other hand, held only one vote per share. Page and Brin made sure that over the years, they had held onto enough stock in their company—and more importantly, were issued enough Class B shares at the time of the IPO—to maintain majority control.

Page and Brin didn’t actually want to go public. For the founders, listing their stock on the Nasdaq meant opening Google up to oversight from annoying people who knew nothing about tech. Investors would want to skim cash from Google. And when those investors felt revenue growth wasn’t strong enough, they’d try to change the company by imposing their collective will upon the two co-founders.

As one investor told it, Brin and Page agreed to go public only after meeting Warren Buffett, the legendary American business mogul, who introduced the two young founders to the dual-class stock structure.

“We are creating a corporate structure that is designed for stability over long time horizons,” Page wrote in a letter cheekily titled “An Owner’s Manual For Google Investors.” “By investing in Google, you are placing an unusual long term bet on the team, especially Sergey and me, and on our innovative approach. . . . New investors will fully share in Google’s long term economic future but will have little ability to influence its strategic decisions through their voting rights.”

Many founders followed this same playbook. “Larry and Sergey did it, why shouldn’t we?” young entrepreneurs asked themselves. Mark Zuckerberg was considered crazy when he spurned a $1-billion acquisition offer from Microsoft. After Facebook went public in 2012, Zuckerberg maintained outsized influence due to a dual-class share structure and faced no board resistance when he pivoted the entire company to focus on building for mobile devices, an enormous gamble that paid off handsomely.§§

Facebook was followed by Internet 2.0 companies like LinkedIn, Zynga, and Groupon, all of which mimicked the dual-class structure. Snap Inc., helmed by another tech wunderkind, Evan Spiegel, famously declined a $3.5-billion acquisition from Facebook in 2013. When the company went public, in 2015, the twenty-six-year-old Spiegel became the world’s youngest billionaire.

Only in a place like Silicon Valley, where founders are celebrated above all, could an executive like Spiegel spurn such an offer and be celebrated for his bravery. Where nonbelievers might consider such a choice irrational, the “cult of the founder” suggests that no matter what the chief executive may decide, he was probably right because he was the right guy to begin with.

As the balance of power shifted to founders in 2010, venture capitalists had to fight—hard—to beat out their competitors to invest in the best young companies. They hosted parties for entrepreneurs, wined and dined them at chic eateries like Nopa, Bar Crudo, and Spruce. Sometimes a flashier approach worked; chartering a Learjet 31 to bring a group of twentysomething techies to SXSW showed founders that a VC firm could travel in class. Nothing was more “baller” than a private jet.

Gurley didn’t rely on expensive gimmicks alone. He gave impeccable guidance, answering calls from a founder at 11:30 at night, after his kids were asleep and he was near dozing himself, to talk strategy or walk a young entrepreneur off some panicked ledge. Gurley competed for the most important deals. And more often than not, he won.

Benchmark had been looking for a ride-hailing or taxi-based business to invest in for some time. Gurley had already been meeting with companies like Cabulous, Taxi Magic,