TechCrunch, AP, et al, are reporting that Google just invested $3.9 million in a biotech start-up run by Sergey Brin’s wife. The company, 23andMe, immediately used this money to pay back a $2.6 million loan Sergey had personally extended to the company. For several reasons, this transaction is bizarre.
First, given the obvious conflicts of interest (perceived or otherwise), why would Google do this? As far as I know, Google is not normally in the business of investing in start-ups, especially biotech ones. So what’s the strategic imperative here? What Google business logic could possibly offset the scrutiny that such an investment would receive? Even if a Google investment makes all the business sense in the world (and if it does, I need some help understanding why), it looks terrible, and Google obviously knows that. So what gives?
Second, why didn’t Sergey just make this investment himself? Yes, $3.9 million is chicken feed for Google, but it’s also chicken feed for Sergey (the AP reports his current net worth at $16 billion). Sergey could fund 1,000 such start-ups before breakfast and never miss the money. Sergey’s idol, Warren Buffett, would NEVER let Berkshire Hathaway invest in his wife’s start-up. So, again, what gives?
I understand that Google is “a different kind of company,” but, in this case, I’d like it to be different by explaining more about why this investment was made, who approved it (the Audit Committee, apparently–but why?), and why Sergey didn’t conclude that it wouldn’t be better for all involved if he just made the investment himself. Inquiring minds want to know.
NYT has more detail, including the names of a couple of other start-ups Google has invested in. The decision still sounds strange, but better than it did initially. The situation could have been helped with clearer upfront communication.
(Hat tip to Rick Stratton)