You'd think that a billionaire like Google co-founder Sergey Brin would be happy to channel some investment money into his wife's start-up. And you'd be right. Only, believing in the old business phrase of Other People's Money, he's doing so not just out of his own pocket, but those of Google's investors. And he -- and Google -- have doing so in some ethically questionable ways for at least two years.
David Weir, my colleague at BNET Media, pointed out yesterday that Google had filed an 8K with the SEC that described investments in 23andMe:
Last Friday, according to the document filed today, the company invested ~$2.6 million in a B-series for 23andMe, Inc. , a privately-held operation "dedicated to helping individuals understand their own genetic information through DNA analysis technologies and web-based interactive tools."Briney's wife Anne Wojcicki is one of 23andMe's co-founders.
It's not the first time that Google has invested in the company. Back in May, 2007, it put $3.9 million into the start-up in the form of a Series A preferred stock purchase, right after Brin and Wojcicki married:
Some of the money that Google staked this month was used to repay $2.6 million in financing previously provided to 23andMe by Brin, one of the world's wealthiest men with an estimated $16 billion fortune.The disclosure, which marked Google's first confirmation of a secretive marriage consummated in the Bahamas earlier this month, could pose nettlesome questions of nepotism for the Internet search leader, which ranks among the world's most scrutinized publicly held companies.
At the time, Google said that it had hired an independent advisor, and 23andMe also had money from Enterprise Associates, MDV-Mohr Davidow Ventures, and Genentech. What makes the latter worthy of note is that Genentech CEO Arthur Levinson is one of Google's board directors. And that raises the whole question that my colleague Michael Hickins covered in the issue of Google and Apple, both in growing competition, sharing two board members in common: Google CEO Eric Schmidt and Levinson.
As the current SEC filing notes, in November of 2007, Google bought an additional $500,000 in Series A preferred stock that had been "held by an investor." No mention in the SEC filings of the investor's name. Brin had also invested $10 million in convertible debt financing, which turned into Series B preferred stock.
According to the USA Today 2007 story, Google also leased the garage of a Menlo Park home of Susan Wojcicki, sister of Brin's wife and the person who introduced the two of them, and, at the time at least, the sister was a vice-president of development at the company.
Getting twisted enough for you? In the words of the immortal Ronco commercials, "But wait! There's more!"
Brin appears to have sunk $10 million into this series B round, while Google has put in $2.6 million. As if the financial investments weren't controversial enough, apparently Google and 23andme have entered into some sort of leasing agreement, though the details of this agreement are not available.In addition, last year, Gawker (in its late, great incarnation as ValleyWag) noticed that Brin had also channeled money to Wojcicki's firm through a charitable connection. Brin's personal foundation "donated" money to the Michael J. Fox Foundation, after which 23andMe announced that it would sign up Parkinson's patients for genetic testing paid for by a $600,000 grant from -- the Michael J. Fox Foundation.
This is simply too cozy for any degree of ethical comfort, and would suggest that Google needs to seriously reconsider its governance, particularly as the company is already
- attracting DOJ interest in the Google Books settlement
- having its ties with Apple examined by the FTC
- appearing at Congressional hearings over behavioral advertising practices
Image via stock.xchng user woodsy, site standard license.