It's hard to think of two companies that on the surface have less in common than Google and Berkshire Hathaway.
One is at the cutting-edge of the seismic technological shifts affecting the way people consume media and gather information online.
The other focuses on slow-changing industries and companies that have been around for generations or more, and has a 79-year-old CEO who famously avoids technology investments.
But in many ways Google and Berkshire Hathaway have some interesting similarities, Ken Auletta shows in his excellent book "Googled: The End of the World As We Know It."
"Googled" gives the history of the search giant and shows the ways the company has greatly disrupted businesses including television, newspapers, telephones, advertising, movies and book publishing.
Berkshire Hathaway is never mentioned, and there's just one reference to Warren Buffett -- when Auletta reveals that Google co-founder (and fellow multi-billionaire) Sergey Brin considers Buffett one of his heroes.
Andrew Ross Sorkin shows in "Too Big to Fail" that Buffett was having dinner with Brin and Brin's wife on the night that Lehman Brothers failed in September 2008. The two have apparently cultivated a friendship, which itself is interesting considering that one of Buffett's closest pals is Bill Gates, whose Microsoft Corp. is in a fierce battle with Google over control of Internet search.
Whether the similarities between Berkshire and Google are due to Brin's relationship with and admiration for Buffett or are purely coincidental, they are unmistakable in "Googled." Here are 10 of these common grounds:
1. The leaders of both companies generally consider stock splits pointless, which (along with strong earnings) has led each company's stock price to rise far above the per-share market norm. Of course Berkshire appears to be set to split the B stock 50-to-1 to facilitate the Burlington Northern Santa Fe deal, but the A shares won't be split.
2. Buffett, Brin, Google co-founder Larry Page and Google CEO Eric Schmidt have gotten fabulously wealthy through their large stakes in the companies, but they pay themselves a relative pittance to run the firms. Buffett gets $100,000 a year, and the Google troika gets $1 each. None of the four takes bonuses or stock options.
3. The leaders rely on logic and data to make decisions, not emotion or subjective information.
4. Neither company puts much focus on public relations or marketing, considering that for the most part a waste of time and resources.
5. Brin and Page frequently appear on stage before Google's employees to take questions, much like Buffett and partner Charlie Munger do at Berkshire. Brin appears to play the role of Buffett, answering the bulk of the questions and serving as a more natural showman, while Page is akin to the more reserved and serious Munger.
6. Both companies hate Wall Street's short-term focus and generally disdain investment bankers. Instead they focus on the long-term and are unfazed by short-term fluctuations in the company's stock price.
7. Each company has a dual class of stock that allows Brin, Buffett and Page to keep a large amount of voting power. In both cases the men own an unusually large percentage of the company stock.
8. Neither company pays a dividend despite swimming in cash. Instead the cash is used to make investments toward the company's growth.
9. The leading men have tried to use their wealth to benefit society through charitable programs and foundations -- Buffett with his donations to The Bill & Melinda Gates Foundation and Google through Google.org.
10. Management empowers and praises the people doing the real work -- in Google's case the engineers, and in Buffett's case the people running Berkshire's operating units.
So are we likely to see Buffett invest in Google due to these common grounds? Don't bet on it. Buffett says he doesn't understand technology well enough to invest in it, and he doesn't like industries that change so rapidly.
But one could make the case that Buffett has considered Google and companies like it when making recent investments.
For example Auletta shows that Google spends billions of dollars a year on the huge data centers that are packed with the computers and servers where Google's reams of data are stored. Google is pushing hard toward cloud computing -- in which the Internet browser, not the personal computer, is where people store their documents. These data centers are energy hogs, which is partly why Google makes investments in the alternative energy space.
Some of Buffett's interest in utility companies may derive from the trend toward cloud computing (though it likely goes far beyond that). Burlington Northern is also the leading shipper of coal in the country, and coal is what produces a huge percentage of the country's electricity -- which will be even more in need as hybrid automobiles become more common.
Further, as Auletta shows, Google has had a highly disruptive effect on newspapers, for which Buffett has had a lifelong love. But Buffett has turned extremely bearish on newspapers over the past decade. Berkshire's purchase of Business Wire could be one way to hedge the company's ownership of The Buffalo News and nearly 20 percent stake in The Washington Post. As newspapers cut back on their staffs, services like Business Wire become more crucial for disseminating information.
"Googled" is a highly recommended read.
One is at the cutting-edge of the seismic technological shifts affecting the way people consume media and gather information online.
The other focuses on slow-changing industries and companies that have been around for generations or more, and has a 79-year-old CEO who famously avoids technology investments.
But in many ways Google and Berkshire Hathaway have some interesting similarities, Ken Auletta shows in his excellent book "Googled: The End of the World As We Know It."
"Googled" gives the history of the search giant and shows the ways the company has greatly disrupted businesses including television, newspapers, telephones, advertising, movies and book publishing.
Berkshire Hathaway is never mentioned, and there's just one reference to Warren Buffett -- when Auletta reveals that Google co-founder (and fellow multi-billionaire) Sergey Brin considers Buffett one of his heroes.
Andrew Ross Sorkin shows in "Too Big to Fail" that Buffett was having dinner with Brin and Brin's wife on the night that Lehman Brothers failed in September 2008. The two have apparently cultivated a friendship, which itself is interesting considering that one of Buffett's closest pals is Bill Gates, whose Microsoft Corp. is in a fierce battle with Google over control of Internet search.
Whether the similarities between Berkshire and Google are due to Brin's relationship with and admiration for Buffett or are purely coincidental, they are unmistakable in "Googled." Here are 10 of these common grounds:
1. The leaders of both companies generally consider stock splits pointless, which (along with strong earnings) has led each company's stock price to rise far above the per-share market norm. Of course Berkshire appears to be set to split the B stock 50-to-1 to facilitate the Burlington Northern Santa Fe deal, but the A shares won't be split.
2. Buffett, Brin, Google co-founder Larry Page and Google CEO Eric Schmidt have gotten fabulously wealthy through their large stakes in the companies, but they pay themselves a relative pittance to run the firms. Buffett gets $100,000 a year, and the Google troika gets $1 each. None of the four takes bonuses or stock options.
3. The leaders rely on logic and data to make decisions, not emotion or subjective information.
4. Neither company puts much focus on public relations or marketing, considering that for the most part a waste of time and resources.
5. Brin and Page frequently appear on stage before Google's employees to take questions, much like Buffett and partner Charlie Munger do at Berkshire. Brin appears to play the role of Buffett, answering the bulk of the questions and serving as a more natural showman, while Page is akin to the more reserved and serious Munger.
6. Both companies hate Wall Street's short-term focus and generally disdain investment bankers. Instead they focus on the long-term and are unfazed by short-term fluctuations in the company's stock price.
7. Each company has a dual class of stock that allows Brin, Buffett and Page to keep a large amount of voting power. In both cases the men own an unusually large percentage of the company stock.
8. Neither company pays a dividend despite swimming in cash. Instead the cash is used to make investments toward the company's growth.
9. The leading men have tried to use their wealth to benefit society through charitable programs and foundations -- Buffett with his donations to The Bill & Melinda Gates Foundation and Google through Google.org.
10. Management empowers and praises the people doing the real work -- in Google's case the engineers, and in Buffett's case the people running Berkshire's operating units.
So are we likely to see Buffett invest in Google due to these common grounds? Don't bet on it. Buffett says he doesn't understand technology well enough to invest in it, and he doesn't like industries that change so rapidly.
But one could make the case that Buffett has considered Google and companies like it when making recent investments.
For example Auletta shows that Google spends billions of dollars a year on the huge data centers that are packed with the computers and servers where Google's reams of data are stored. Google is pushing hard toward cloud computing -- in which the Internet browser, not the personal computer, is where people store their documents. These data centers are energy hogs, which is partly why Google makes investments in the alternative energy space.
Some of Buffett's interest in utility companies may derive from the trend toward cloud computing (though it likely goes far beyond that). Burlington Northern is also the leading shipper of coal in the country, and coal is what produces a huge percentage of the country's electricity -- which will be even more in need as hybrid automobiles become more common.
Further, as Auletta shows, Google has had a highly disruptive effect on newspapers, for which Buffett has had a lifelong love. But Buffett has turned extremely bearish on newspapers over the past decade. Berkshire's purchase of Business Wire could be one way to hedge the company's ownership of The Buffalo News and nearly 20 percent stake in The Washington Post. As newspapers cut back on their staffs, services like Business Wire become more crucial for disseminating information.
"Googled" is a highly recommended read.
