Stories

At Google, twilight of the founders

Photo of Google founders Sergey Brin and Larry Page in 2002 leaving an elevator at Google's office
Sergey Brin and Larry Page in 2002. Photo by Richard Koci Hernandez/MediaNews Group/The Mercury News via Getty Images

Yesterday's announcement that Google's founders, Larry Page and Sergey Brin, were leaving their executive posts at Google's parent company Alphabet was a surprise only in timing. 

What's happening: Page had stepped back from Google itself in 2015. From their perches at Alphabet — Page as CEO, Brin as president — the two founders oversaw the company's "other bets" on advanced technologies like self-driving cars and drones. Googlers have said that they became less and less a presence inside the company. 

  • Now they're dropping even that level of engagement, retaining their board seats but handing operational responsibility for both Alphabet and Google over to Google CEO Sundar Pichai. 
  • What they are doing can really only be described as retiring — though that word hangs a little uneasily on men who are 46 years old.

The big picture: Page and Brin's move marks a transition in which big tech is passing from the control of founders to the stewardship of successor technocrats. 

  • Apple's Steve Jobs died a decade ago. Bill Gates is long retired from Microsoft. Of the five dominant tech firms, only Amazon and Facebook remain under the direction of their founders.

How it works: Silicon Valley has long embraced the thesis that founders, not investors, are best equipped to to shape their companies' destiny. Google is where this approach most definitively played itself out.

  • Brin and Page designed Google's corporate structure with the idea that what happened to Steve Jobs — who got booted out of Apple by his own hand-picked CEO and board in 1985 — should and would never happen to them.
  • They granted themselves special stock with extra voting privileges that assured they would maintain an outsize influence over the company even as it took outside investment.
  • Google's fabulous success taught tech entrepreneurs to adopt this structure whenever they could. When Mark Zuckerberg built Facebook, he could and did.

Between the lines: Page and Brin's retirement raises uncomfortable questions about what happens to this structure as companies age.

  • The founding pair are becoming something like absentee owners now, retaining control over their company without managing it.
  • Some super-voting shares are inheritable (Facebook's seem to be), but the Google founders' are not.
  • Still, they won't live forever (unless Alphabet's "bet" on life-extension tech, Calico, really delivers), so the company will have to plot a course without them sooner and later. And once they are no longer actively engaged in running their businesses, the logic that justifies giving them super-voting shares falls apart.
  • The lawyers who designed the super-voting share structure borrowed it from the newspaper publishing industry. There, it helped keep families in control of their inheritances — but left companies ill-managed and ill-equipped to respond to waves of technological change.

Our thought bubble: The industry's founder-power corporate arrangements have succeeded at keeping many stellar startups from being seized by short-term-minded investors. But when founders lose interest or age out, the rationale for their retaining extraordinary power over their company's destiny vanishes.

Editor's note: This story has been corrected and revised. The original version suggested that Page and Brin's heirs would inherit their super-voting stock, but under Google/Alphabet's stock structure their shares revert to normal voting shares upon their death (with a handful of conditions).