Why it makes sense for Larry Page to donate his billions to Elon Musk

By Felix Salmon
March 25, 2014

Three years ago, with a post entitled “philanthropy isn’t for profit”, I expressed the hope that we had finally reached a turning point, and that people would “do good to do good, rather than simply declaring that the best way they can do good is to chase profit as zealously as possible”. And maybe I was right. That post was directed in part at Matthew Bishop, who had written a silly article asking whether IBM had done more good for the world than the Carnegie philanthropies. But this evening, when I ran into Bishop at an event for rich people in a swanky midtown club, he couldn’t bring himself to defend Larry Page, who said something similar at TED:

Rose asked him about a sentiment that Page had apparently voiced before that rather than leave his fortune to a cause, that he might just give it to Elon Musk. Page agreed, calling Musk’s aspiration to send humans to Mars “to back up humanity” a worthy goal. “That’s a company, and that’s philanthropical,” he said.

Page’s comments have already been attacked by Kevin Roose, and, as I say, they’re not going to be defended by Matthew Bishop. But here’s the weird thing: Page’s ideas aren’t nearly as dumb as they might seem at first blush. In fact, even I can defend them — and I’m the kind of person who generally hates the way that rich people give away their money.

Page, with his unorthodox idea, deftly sidesteps most of the mistakes that rich people make with their charitable donations. Most importantly, there’s nothing self-serving about Larry Page giving his money to Elon Musk: there isn’t any ego boost involved, and there isn’t even a tax deduction. Instead, Page is simply trying to work out how his money is most likely to have a positive transformational effect on the world.

The fact is that private philanthropy almost never has such an effect: big-picture changes to the world come from commerce and from government, not from gifting. Exxon Mobil has changed the world; Phillip Morris has changed the world. Apple and Microsoft and Cisco and Intel have changed the world. Monsanto and Cargill and ADM have changed the world; Pfizer and Roche and Novartis have changed the world. Certainly Great Britain and France and Russia and China and the US of A have changed the world, many times each.

And, as Page knows better than anyone, Google has changed the world.

Page is convinced (I agree with him on this, but I’m not going to argue the point here) that Google has been a positive force in the world. Indeed, it has been a more positive force than at least 99% of philanthropies. A philanthropist with $100,000 in 1998 who wanted to make the world a better place could hardly have done better than Andy Bechtolsheim, the first funder of Google — even if you ignore any good that Bechtolsheim might end up doing with the billions that investment ultimately became.

Of course, it’s impossible ex ante to know which startup is going to be the next Google. But Page is someone who has already changed the world once; he knows that there’s a 99% probability that his philanthropic activity will end up being orders of magnitude less effective and less important than his tenure at Google. It’s important to put philanthropy in perspective: for all that very rich people are indeed very rich, they generally aren’t rich enough to really move the needle on a societal level. Page is worth about $30 billion; the budget for the New York City department of education is almost that much per year. Famously, Bill Clinton has said that he will never be able to achieve, over the entire lifetime of his charitable foundation, the same effect that he could have with a two-second stroke of the pen while he was president. Or, to take a slightly more controversial example, look at the amounts of money pledged in the wake of natural disasters like the Haiti earthquake or Hurricane Sandy. The public is invariably extremely generous when such things happen — but government money always dwarfs private contributions.

Page is also smart enough, and hangs out with enough very rich people, to know that philanthropy is hard — and that there’s absolutely no reason to believe that the luck and skill he has demonstrated founding and running Google would read across to similar philanthropic success. There is exactly one technology billionaire who has put an enormous amount of personal time, effort, and money into running his personal philanthropy; not everybody can be Bill Gates, and it’s unfair to expect that other billionaires should be Bill Gates.

In other words, Page probably lacks both the ability and the inclination to create some world-changing philanthropy on his own — as we can see by the way in which Google.org and the Google Foundation have had relatively little impact. Let’s assume that he’s self-aware enough to know that. And now, in that light, let’s revisit the “idealistic vision” of his TED interview:

It’s a vision that includes everything from widespread artificial intelligence to self-driving cars to high-altitude balloons that bring internet access to the far reaches of the world…

Rose also asked him about his fascination with transportation systems, which Page said started while waiting in the snow for the bus at his alma mater, the University of Michigan. That fixation has led to Google’s self-driving cars project, which Page hopes will someday transform the world’s cities…

Page had words that sounded harsh even in his soft voice for businesses that lacked the same lofty goals of an Elon Musk or a Google. “Most people think companies are basically evil. They get a bad rap. And I think that’s somewhat correct,” Page said. “Companies are doing the same incremental thing that they did 50 years ago, 20 years ago. That’s not really what we need. Especially in technology, we need revolutionary change, not incremental change.”

That may be an easy thing to say when your company’s stock is trading near $1,200 per share and your main business of selling ads makes tens of billions a year. But Page certainly seems like someone for whom those ads are only a means to an end, and that end is not making himself rich. Page wants to build the future that we all may very well end up living in.

The point here is that Page’s ambitions are vast: they require vision and also the kind of resources which can be marshaled only by massive corporations, rather than any individual. And the question then arises: what can Page do with his personal wealth which could play on the same playing field as the ambitions he has at a corporate level?

The answer, surely, is help create another Google — another company which can change the world for the better. And if you look around for someone capable of pulling off such a feat, Elon Musk is always going to be at the top of the list.

Does that mean, pace Roose, that Page considers buying stock in Microsoft to be a credible alternative to giving money to the Gates Foundation? Of course it doesn’t. For one thing, the chances of Microsoft transforming the world again are pretty low. And for another, who said anything about buying stock?

If your philanthropic intent is to help Elon Musk change the world, there are lots of things you can do which are better than simply going out into the market and buying stock in Tesla. That stock has already been issued; the money Musk raised by selling that stock is already in Tesla’s coffers. If you buy the stock from some hedge fund, all you’re doing is transferring money to a hedge fund, you’re not particularly helping Elon Musk.

On the other hand, the glory of corporate capital structures is that they allow your money to be leveraged many times, in a way which is very difficult in traditional philanthropic contexts. (Indeed, if you give money to a foundation and then the foundation gives away just 5% of its capital every year, then you effectively have substantial negative leverage on your donation.)

So let’s say that Elon Musk issued a new class of stock. In the UK, such things are often called a golden share. Such stock would have voting rights and possibly quite substantial voting rights at that; it might even come with one or more board seats. But it would represent a negligible economic interest in the company: it would have no right to dividends, for instance. (For an example of how such a structure might work in the event of an acquisition, take a look at how the Reuters Founders golden share still has an important role to play within Thomson Reuters.)

The money used to buy the golden share would go straight onto the asset side of the corporate balance sheet, where it could support the issuance of more equity and more debt: it would punch well above its weight. It could help Musk’s company to grow faster, to be more ambitious, to be less beholden to common shareholders and/or bondholders. It might not, ultimately, make any difference at all — but, on the other hand, if the sum of money involved were in the multiple billions of dollars, it might make a very large difference indeed. In short, Page would have ended up buying the possibility of changing the world — again.

At that point, Page just needs to start comparing probabilities. What is the probability that he would change the world through traditional philanthropy? What is the probability that he would change the world if he bought a golden share from Elon Musk? If the latter is greater than the former, that’s a pretty strong reason to choose Musk over some tax-exempt foundation.

One of the big problems with contemporary philanthropy is that it’s obsessed with results: everybody wants to ensure that their money is making a real difference. In the case of unconditional cash transfers, for instance, which are pretty trendy these days, you know with certainty that after you give $1,000 to a poor person, that person is $1,000 richer. It’s a clear and unambiguous outcome, and there’s a lot of evidence to suggest that making poor families richer does wonders for their quality of life.

From the point of view of someone like Larry Page, however, it’s easy to see how the idea of simply giving his money directly to the poor might not appeal. The short-term effects would be wonderful, but also limited; the long-term effects would be relatively slim and hard to discern. Certainly the outcome would be minuscule compared to the long-term effects of, say, the invention of the printing press.

Which means that if you’re a person with Page’s ambitions and Page’s wealth, the trick is to take risks, rather than try to engineer a certain outcome. Better a small chance of creating a permanent and positive change to the way the world works, than a much larger chance of making a much more limited intervention. It’s a reasonable stance to take.


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I usually agree with your thoughts on philanthropy Felix, but I disagree here. Or I guess I don’t feel that you have made a complete argument. What I’d want to see to compare the impact of various asset allocations would be to look at counterfactuals. So for example what is the counterfactual of Gates spending the money that he has invested in his foundation in a way more in keeping with typical billionaire spending habits (I guess mostly investment and bequeathment). Likewise, what is the counterfactual to Google never having being created. The thing about counterfactuals this unwieldy is that you can’t really give a right answer, but I do think they can at least help clarify gut feelings. My gut feeling is that no Google would mean no real change in the world as we know it other than that the particular niche Google now occupies would be occupied by a different search engine. Maybe this would be a better search engine, maybe a worse, but in either case it wouldn’t be a very meaningful difference. My gut feeling is also that if Gates had invested his money differently a large number of people currently living would have died of disease. Maybe a few thousand people, maybe a few hundred thousand, maybe a few million. These than are the cases I would want to compare to answer the question, which endeavor has had a more transformational impact on our world? Is a slightly more effective search engine equal to say a hundred thousand lives saved (this sounds weird but I think the question has meaning and don’t mean it as snark)? This is the kind of thinking and comparison that would have yielded an interesting insight. Like I said I usually agree with you but I think the above post would benefit from more engagement along these lines, and I hope you revisit the issue. We do agree about government though.

Posted by BROYL | Report as abusive

“From the point of view of someone like Larry Page, however, it’s easy to see how the idea of simply giving his money directly to the poor might not appeal. The short-term effects would be wonderful, but also limited; the long-term effects would be relatively slim and hard to discern.”

- Well said Felix… a compelling argument against increasing the resources we allocate towards traditional transfer payments which cost a ton and yield few measurable benefits. Best hopes for an expanded EITC to help those who’s labor isn’t worth very much and a more narrowly focused approach to income redistribution for those without catastrophic limitations like blindness, or unusable limbs.

Posted by y2kurtus | Report as abusive

Will Mars someday be known as “Pageus”? or “Pagune”?

Posted by Christofurio | Report as abusive

The equation implied here is even more complex. Mush receives government support for some of his projects (tax breaks and infrastructure donation to start a company in Texas, for instance). So here is the power of government, again, to make the big movements.

But in futures unmeasurable, the ability to lift one person’s education or quality of life in order to be someone who may change the world — rather than dead from disease, cannot be underestimated. One in a million is all we need.

Thus, both private and nonprofit interests are required to help on survival as well as visionary scales. Do you want to help disabled students, or the gifted ones? We each choose for the moment.

Felix, there’s really no way to compare the merits of compassion vs. innovation or policy.

But there is a very good further discussion to be had on the merits of choosing which contributions get the blessing of tax impunity. That’s a big reason why people are “obsessed with results.” They’re trying to win the confidence of more contributors, who are mostly folks hoping to get a tax deduction from their support.

Posted by fingersfly | Report as abusive


I can’t agree with your hypothesis. First of all, while your tech centered ideals certainly can show that Google has made the internet a better place, I’m not sure how you’re jumping from that into the real world.
As Allen Brooke recently wrote on Quark about finding a purpose, many of the over educated, those who have time to spend thinking about colonies on Mars and the benefits of Google, have turned Maslow’s Needs Hierarchy upside down. I think your arguments that Google and Elon Musk have or will do more from mankind come from the perspective that the basic needs like food, shelter, clothing, etc. of most people are satisfied. Therefore everyone just needs to have better access to information, the ability to develop their self-esteem and think about moral and philosophical issues all day long.
The fact is more than a 80% of the world’s population has to think about the basic needs in Maslow’s pyramid. Bill Gates and friends may not solve all the world’s problems but they are trying to solve the basic problems that plague our society. I doubt that someone looking to make a few dollars to buy his family foods is also pulling out his IPhone to get recommendations from Google Maps on where the best new Ramen truck is, or checking his Google+ account to setup a Hangout with his pals.
Google has done amazing things for the 20% of the world that has 75% of the money and resources Nonprofits can and do certainly benefit when talented, creative minds like Larry Page, Bill Gates and Elon Musk use their brain power to make the world a better place.
I just don’t agree that spending billions upon billions to create a colony on Mars will in anyway help us figure out how the 80% that don’t have Google can stop thinking about things that you, I and the other 20% take for granted.

Posted by DDanenfelzer | Report as abusive

I think this misses the point. 30 billion given to the some of the poorest, least connected people on earth will pay for a lot of school, for the a non-wood fire stove, for whatever those people feel would measurably improve their lives. This is a classic utilitarian argument–the money would improve those peoples lives, and decrease human suffering to a much greater extent, if just given to the poor rather than invested in to an entrepreneur whose innovation will only marginally improve our own. It’s hard to put a price on a family’s new found ability to keep their kids in school past the third grade.

Posted by Gaelen | Report as abusive

Monsanto manufactured Agent Orange that had devastated the lives of millions in Vietnam. It is currently trying to prevent states from passing laws requiring the labeling of genetically-modified foods. It is also working hard to sue small farmers in developing countries whose crops have been accidentally cross-pollinated by Monsanto-owned crops and trying to squeeze money out of already poor people.

I can’t believe you mentioned Monsanto with the likes of Apple and Google. No one even knows the long term repercussions of eating Monsanto’s genetically modified plants. I hardly consider them a positive influence on the world.

Posted by MNRC | Report as abusive

FingersFly… “Do you want to help disabled students, or the gifted ones?” good question. Will the gifted ones do things to help disabled students? That’s really what this discussion is about isn’t it?

Elon Musk is one of the gifted ones. He wants to help the world through sustainable energy and has the pieces to make a huge shift in humankind in that and by taking us to a new world. But he might not have the money (he’s trying to make SpaceX profit fund the settlement of Mars).

Of interest, he also recognises that humanity moves in stages, it doesn’t always go forwards, and there’s a real possibility that we could lose our ability to colonise Mars in 100 years if we don’t do it soon. Unlikely – but environmental catastrophes or war etc could hit us hard. A Mars city will be a potential protected pocket of civilisation that can do things we won’t be able to do on Earth, and ultimately bring much good to Earth.

Posted by GregAlex | Report as abusive

I definitely like that i don’t must transform moisturizer after i get a hankering to bomb down rad trails at mind smashing speeds as an alternative to gussying up and being all ladylike, not all moisturizers can pull double responsibility so be ready to try a couple of distinctive manufacturers for the requires just before getting 1 (or two) that do the work.