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Google.org Plans Major Focus on Plug-In Hybrids

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  • Felix Kramer
    The New York Times report below somewhat unexpectedly breaks the story that Google.org, the philanthropic arm of Google (able to both give grants and invest in
    Message 1 of 1 , Sep 13, 2006
      The New York Times report below somewhat
      unexpectedly breaks the story that Google.org,
      the philanthropic arm of Google (able to both
      give grants and invest in for-profit enterprises)
      is planning to take a leading role in helping to
      commercialize plug-in hybrids. The staff of the
      new organization has been in touch with the
      principal "players" in the PHEV world, and we
      expect they will make a range of announcements in the coming months.


      Philanthropy Google’s Way: Not the Usual
      The New York Times, September 14, 2006

      CAPTION: Dr. Larry Brilliant, the executive
      director of Google.org., used to have concerns
      about the new foundation’s for-profit status.

      SAN FRANCISCO, Sept. 13 — The ambitious founders
      of Google, the popular search engine company,
      have set up a philanthropy, giving it seed money
      of about $1 billion and a mandate to tackle
      poverty, disease and global warming.

      But unlike most charities, this one will be
      for-profit, allowing it to fund start-up
      companies, form partnerships with venture
      capitalists and even lobby Congress. It will also pay taxes.

      One of its maiden projects reflects the
      philanthropy’s nontraditional approach. According
      to people briefed on the program, the
      organization, called Google.org, plans to develop
      an ultra-fuel-efficient plug-in hybrid car engine
      that runs on ethanol, electricity and gasoline.

      The philanthropy is consulting with hybrid-engine
      scientists and automakers, and has arranged for
      the purchase of a small fleet of cars with plans
      to convert the engines so that their gas mileage
      exceeds 100 miles per gallon. The goal of the
      project is to reduce dependence on oil while
      alleviating the effects of global warming.

      Google.org is drawing skeptics for both its
      structure and its ambitions. It is a slingshot
      compared with the artillery of charities
      established by older captains of industry. Its
      financing pales next to the tens of billions that
      the Bill and Melinda Gates Foundation will have
      at its disposal, especially with the coming
      infusion of some $3 billion a year from Warren E.
      Buffett, the founder of Berkshire Hathaway.

      But Google’s philanthropic work is coming early
      in the company’s lifetime. Microsoft was 25 years
      old before Bill Gates set up his foundation,
      which is a tax-exempt organization and separate from Microsoft.

      By choosing for-profit status, Google will have
      to pay taxes if company shares are sold at a
      profit — or if corporate earnings are used — to
      finance Google.org. Any resulting venture that
      shows a profit will also have to pay taxes.
      Shareholders may not like the fact that the
      Google.org tax forms will not be made public, but
      kept private as part of the tax filings of the parent, Google Inc.

      Google’s founders, Larry Page and Sergey Brin,
      believe for-profit status will greatly increase
      their philanthropy’s range and flexibility. It
      could, for example, form a company to sell the
      converted cars, finance that company in
      partnership with venture capitalists, and even
      hire a lobbyist to pressure Congress to pass
      legislation granting a tax credit to consumers who buy the cars.

      The executive director whom Mr. Page and Mr. Brin
      have hired, Dr. Larry Brilliant, is every bit as
      iconoclastic as Google’s philanthropic arm. Dr.
      Brilliant, a 61-year-old physician and public
      health expert, has studied under a Hindu guru in
      a monastery at the foothills of the Himalayas and
      worked as a Silicon Valley entrepreneur.

      In one project, which Dr. Brilliant brought with
      him to the job, Google.org will try to develop a
      system to detect disease outbreaks early.

      Dr. Brilliant likens the traditional structure of
      corporate foundations to a musician confined to
      playing only the high register on a piano.
      “Google.org can play on the entire keyboard,” Dr.
      Brilliant said in an interview. “It can start
      companies, build industries, pay consultants,
      lobby, give money to individuals and make a profit.”

      While declining to comment on the car project
      specifically, Dr. Brilliant said he would hope to
      see such ventures make a profit. “But if they
      didn’t, we wouldn’t care,” he said. “We’re not
      doing it for the profit. And if we didn’t get our
      capital back, so what? The emphasis is on social
      returns, not economic returns.”

      Development of ultra-high-mileage cars is under
      way at a number of companies, from Toyota to tiny
      start-ups. Making an engine that uses E85 — a
      mixture of 85 percent ethanol and 15 percent
      gasoline — is not difficult, but the lack of
      availability of the fuel presents a challenge,
      said Brett Smith, a senior industry analyst at
      the Center for Automotive Research in Ann Arbor, Mich.

      Another barrier, Mr. Smith said, lies in the
      batteries for so-called plug-in hybrids, which
      require more powerful batteries that charge more
      quickly than the current generation of hybrid batteries.

      There are skeptics, too, among tax lawyers and
      other pragmatists familiar with the world of
      philanthropy. They wonder whether Google’s
      directors might be tempted to take back some of
      the largess in an economic downturn.

      “The money is at the beck and call of the board
      of directors and shareholders,” said Marcus S.
      Owens, a tax lawyer in Washington who spent a
      decade as director of the exempt organizations
      division of the Internal Revenue Service. “It’s
      possible the shareholders of Google might someday
      object, especially if we go into an economic
      depression and that money is needed to shore up the company.”

      And there is the question of how many of the
      planet’s problems can truly be addressed by a single corporate entity.

      But even while expressing reservations about
      Google’s approach, Mr. Owens said that the
      structure of Google.org “eliminates all the
      constraints that might otherwise apply.”

      The only conventional part of Google.org is the
      Google Foundation, a nonprofit with an endowment
      of $90 million that is constrained in how it
      spends by the 501(c)(3) section of the Internal Revenue Service code.

      Google’s big philanthropic experiment lies in the
      part of Google.org where the bulk of the funding
      now resides. This part of Google.org will be
      fully taxable, with the ability to invest in a
      full spectrum of programs and companies.

      All of Google.org’s spending, Dr. Brilliant said,
      will be in keeping with its mission, and there is
      to be no “blowback.” That is, should Google.org
      make a profit with one of its ventures, those
      funds will not go to the search engine business,
      but will stay within Google.org.

      Google had existed for only six years, when, in
      advance of the company’s initial public offering
      in August 2004, Mr. Page and Mr. Brin told
      potential investors that they planned to set
      aside 1 percent of the company’s stock and an
      equal percentage of profits for philanthropy. By
      the end of 2004, Google.org was formed.

      The company has said it plans to spend the money
      over the next 20 years, and the Google board
      recently approved a more rapid disbursement rate,
      $175 million over the next two years.

      “Poor people can’t wait,” Dr. Brilliant said.
      “Dying people can’t wait for some 20-year plan.
      It’s not what we’re doing here.”

      Ventures that grow out of Google.org could be
      seen to have a competitive edge because they do
      not need to show a financial profit. But
      financial returns from a project like the
      high-mileage car are not necessarily the aim.

      “I think how you count profit is the issue here,”
      said Peter Hero, president of the Community
      Foundation of Silicon Valley, a charitable
      foundation with about $1 billion in assets.
      “Google.org is measuring return on cleaner air
      and quality of life. Their bottom line isn’t just
      financial. It’s environmental and social.”

      Once Google.org was formed, the company spent
      months searching for an executive director. There
      was no lack of interest in the job.

      “Literally thousands of people worldwide got in
      touch with us,” said Sheryl Sandberg, the Google
      vice president who led the search. “We’d get
      someone who was an amazing technology
      entrepreneur but who didn’t know anything about the developing world.”

      Then along came Dr. Brilliant, an affable man
      generous with bearhugs and self-deprecating humor
      whose unlikely résumé looks like a composite
      career summary of multiple high achievers.

      After receiving his medical degree, Dr. Brilliant
      studied for two years with Neem Karoli Baba, a famous Hindu guru.

      As Dr. Brilliant tells the story, in 1973,
      shortly before the guru’s death, he told Dr.
      Brilliant to “take off the ashram whites” and use
      his skills as a physician to help eradicate
      smallpox, which was devastating India at the time.

      Dr. Brilliant joined a team of United Nations
      workers who painstakingly worked their way
      through India inoculating people against the
      disease. In 1980, the World Health Organization
      declared that smallpox had been eradicated.

      In 1978, Dr. Brilliant started the Seva
      Foundation, which focuses on preventing and
      curing blindness throughout Asia and Latin
      America. In 1985, Dr. Brilliant was a co-founder
      of the Well, a seminal online community.
      Throughout the 1990’s and early 2000’s, he ran
      several high-tech companies in Silicon Valley.

      Dr. Brilliant first heard about Google.org in
      early 2005 while lying in bed in India, sick with
      dysentery. He had gone there to work with the
      polio eradication program of the United Nations
      and, while recovering, he saw news of Google.org in a local newspaper.

      He sent an inquiry to the only e-mail address he
      could find: info@.... He got no response.

      This year, Dr. Brilliant was awarded the TED
      Prize, an award given at the annual Technology,
      Entertainment and Design conference, a gathering
      of leaders from the technology and entertainment
      industries. The prize awards three recipients
      $100,000, and a “wish” for how to change world.

      Dr. Brilliant’s wish was for the creation of an
      “early detection, rapid response” system for
      disease outbreaks. The idea would be an
      open-source, nongovernmental, public access
      network for detecting, reporting and responding to pandemics.

      Some Google insiders heard about the award and
      invited Dr. Brilliant to give a talk at the
      company. Mr. Page and Eric E. Schmidt, Google’s
      chief executive, were in the audience as Dr.
      Brilliant described the polio eradication efforts
      of the United Nations. They agreed they had found
      their director and began to recruit him.

      At first, Dr. Brilliant said, he was thrilled.
      But then he turned skeptical, largely because of
      the for-profit structure of the organization.

      “I got weak knees,” he said. “It was weird. It
      was precedent setting.” After several lengthy
      conversations with executives at Google, Dr.
      Brilliant changed his mind. Six months into the
      job, he has traveled to India to visit eye
      clinics and polio vaccination projects with Mr.
      Page, and to China to discuss clean energy
      alternatives. Next week, he leaves for Africa to
      visit Google grant recipients in Ghana.

      Dr. Brilliant said he had no desire to “reinvent
      the wheel” by working on projects others are
      already involved in. And although Google is a
      high-tech company, that does not mean that
      Google.org will be throwing around high-tech solutions.

      “Why would we put Wi-Fi in a place where what
      they need is food and clean water?” he said.

      -- -- -- -- -- -- -- -- -- -- -- --
      Felix Kramer fkramer@...
      Founder California Cars Initiative
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