The Ignorant Investor

In the news today:

Google gave the first details yesterday of how it would carry out its commitment to devote a share of its lucrative public stock offering to charity and social causes. It said it had donated $90 million to a new charitable foundation it started and would give another $175 million to nonprofit groups and what it considers socially useful businesses over the next two to three years.

Hey Google shareholders, guess what? Google is going to take a quarter of a billion dollars of your money and give it to charity instead of putting the money to work on improving their products or expanding the business. See, once you gave it to the guys who run Google you basically told them, "Hey- here's my money . . . feel free to give it to the poor."

I suppose the company will say it's justified from a business standpoint because it's good PR, but that $250+ million seems like a whole lot of cash to put towards what amount to the CEOs' favorite charities. My prediction: In a few years we're going to see a book about just how much money Google blew through in the years following their IPO.

Just because these guys had one really good idea when they decided to sell advertising with searches, they now assume that all their ideas are brilliant. That's a dangerous kind of hubris.