Authors: Ken Auletta
Tags: #Industries, #Computer Industry, #Business & Economics
Googled (34 page)
Silicon Valley venture capitalist Roger McNamee of Elevation Partners calls “Google the most impressive company I’ve ever seen.” Yet in mid-2008 he also said, “I am very disappointed in Eric Schmidt. He got off to a great start because he was wise enough to leave a crazy culture alone. The Google culture has become a monster.”
Even Coach Campbell, who has no direct managerial responsibilities, is not immune from criticism. “He’s more a crutch than a coach,” said a former Google executive, who believes Campbell compliments too much and challenges too little. A senior Google executive observes that until late 2008, Google never had an internal budget that apportioned capital, made choices about what resources to allocate; instead, it projected expenditures and revenues month by month. He blames the CEO for this, but also asked of the experienced coach, “Where was Bill?” He said Campbell spends too much time dispensing hugs. “I find him all hat and no cattle.”
MARC ANDREESSEN was of two minds about Google. On the one hand, he believed, “Google is in a great position,” particularly with YouTube, which he thought will find a way to monetize. On the other hand, he cautioned against Google’s “trying to do everything. You saw their energy initiative! History suggests that people have circles of competence and when you go outside the circle, they fail.”
Columbia’s Tim Wu concurs. “Google is a precocious company. Great grades. Perfect IPO. A typical high school standout,” he observed. “The basic problem is whether they remain true to their founding philosophy. I don’t just mean ‘Don’t be evil.” Will they stay focused on search, on “their founding philosophy, which is really an engineers’ aesthetic of getting you to what you want as fast as you can and then getting out of the way?” Or will Google become “a source of content, a platform, a destination that seeks to keep people in a walled Google garden? I predict that Google will wind up at war with itself.”
Brin rejects this analysis, but when asked what his biggest worry was, he answered simply, “I worry about complexity. I admire Steve Jobs. He has been able to keep his products simple.”
Advertising pressures may add to Google’s complexity, for there is a built-in tension between the interests of users and of advertisers. Recall the aversion the founders once had to banner ads because, they said, “they don’t give the user the best experience.” And now Google heralds its purchase of DoubleClick as a means to get into the banner advertising business it once shunned. Because Google now admits to being in the advertising business, which produces almost all its revenues, they will have to answer this question: Is Google’s customer the advertiser or the user?
“I don’t think I’m worried about that changing at Google,” Brin said. He would not make the same argument for others. “I see other Web sites making trade-offs that I wouldn‘t,” including allowing “pop-ups and pop unders,” or online publications that allow “eight columns of ads on the side and one teensy article.”
But with such a wealth of data at Google’s disposal, their advertising customers will want more. And if Google’s growth sputters, pressure to satisfy advertisers will intensify. Richard Sarnoff, now the president of Digital Media Investments at Bertelsmann AG, whose great-uncle was David Sarnoff, the founder of NBC radio and television, likens these potential advertising pressures on Google to those faced by his great-uncle. “He had a vision of what radio and television could be in terms of being informational, educational, cultural, relevant. He said, ‘OK, we’ve got radio. Let’s put Tchaikovsky on!’ ... The reason the broadcast media didn’t end up being this public trust type of programming but became primarily—let’s call it lower-culture entertainment programming—is that radio and television was just so good at delivering audiences to advertisers. Business being what it is, whatever you’re good at, you concentrate on, you maximize, and that ends up delivering value to your shareholders. Google, like NBC in those early days, finds itself being a phenomenally effective way of delivering consumers to advertisers. The question is: To what extent is that going to change the very lofty principles that the company was originally founded on and that made them effective in the first place? Google is at that kind of crossroads.” Advertising pressures on Google will build. “What I have seen is that their very success has allowed them to resist such pressure—so far.”
All of these concerns, not to mention the luxury of being rich, contributed to the exodus of Google employees. George Reyes, the company’s long-serving CFO, with nearly three hundred million dollars in company stock, decided to retire at age fifty-three. Seeking to get on the ground floor of a hot new digital company, a number of other Googlers left, including executive chef Josef Desimone. Many who left did so out of frustration. The most prominent of them was Sheryl Sandberg.
Frustrated by what friends say was sometimes chaotic management at Google, and wanting broader responsibilities to address these, Sandberg left in March 2008 to accept the title of chief operating officer at Facebook. Venture capitalist Roger McNamee, an investor in Facebook and a close friend of Sandberg‘s, introduced her to founder Mark Zuckerberg. “Sheryl created AdWords,” he said. “The idea had many parents, but the execution was hers.” Her title, vice president, global online sales and operations, did not reflect her importance, he said. And he believed she was junior to some “tired executives.” In the effort to keep her, Google offered her the CFO job, which she declined. “She wanted to be a COO,” said Schmidt. “Sheryl is a terrific executive. But we don’t want a COO.”
By the time Sandberg stepped down, her Google team had grown to four thousand employees, with AdWords and AdSense then yielding 98 percent of the company’s revenues. “Sheryl is a person who balances the left brain and the right brain. All of us could learn from her,” said her close friend Elliot Schrage, who lost an ally in his ongoing efforts to persuade the engineers to think more broadly. Schrage soon followed Sandberg, accepting a position at Facebook similar at first to the one he’d held at Google. (Months later, he was also put in charge of overseeing Facebook’s relations with outside developers.)
Sandberg’s departure was jarring. Her move drew attention to Facebook, the new rocket, and highlighted the strained adolescence of Google. It brought some sadness as well, for Sandberg was popular, and not just among Googlers. When media executives like Donald Graham, CEO of the Washington Post Company, or Arthur Sulzberger, Jr., of the New York Times Company visited Google, they often separately went to her home in Atherton for cocktails or dinner with Sandberg and her husband, David Goldberg. Before she left Google, Graham tried to hire her for a senior position at his company. She was the friendly face at Google that some traditional media company executives trusted enough to let their hair down and ask: How can Google help my troubled business?
Google executives were stumped as to why Sandberg would take the job at Facebook. She wasn’t given the same broad responsibilities as most COOs: vital parts of Facebook—product management and development, engineering, and finance—would continue to report to founder Mark Zuckerberg. And they didn’t understand why she would leave for a company that, according to one Facebook insider, had generated only $150 million in revenues in 2007 and was bleeding money.
Google was already anxious about Facebook, and Sandberg’s defection elevated their discomfort. True, Facebook wasn’t making money, but neither had Google in its first four years. Facebook had 123 million unique visitors in May 2008, according to comScore, a 162 percent increase over the previous May. For the first time, Facebook had passed its rival, MySpace. Also making Google anxious was Facebook’s alliance with Microsoft, which owns 1.5 percent of the social network site and sells its advertising. Microsoft was coming after Google, aggressively allying with traditional media companies—agreeing, for instance, to sell online advertising for Viacom, to license and display its television and movie products on its MSN and Xbox 360 platforms, and expending half a billion dollars to advertise on Viacom platforms.
Google and Facebook were not yet joined in battle, observed Marc Andreessen, who joined the Facebook board in the summer of 2008, but they were engaged “in a little shadow boxing.” Mindful of his experience at Netscape, he said he believed that Google and Microsoft had already fallen into the trap of becoming obsessed with what each was doing. Of Facebook and Google, he said, “It would be a mistake for either company to rush to compete too quickly. The danger there is that you orient your strategy to what others are doing. Then the press wants to write a conflict story: Google versus Facebook.”
ALTHOUGH ITS FINANCIAL PERFORMANCE was sterling, the first quarter of 2008 was the winter of Google’s discontent. The company was becoming more defensive. It was under attack for its privacy and China policies, for its growing dominance in search, for its perceived threat to copyright owners, for its disruption of such traditional businesses as advertising, for its efforts to muscle into the mobile telephone business. The government was peering over its shoulder. Like other giant corporations, Google’s power, and sometimes its behavior, threatens to sabotage its trusted brand. A Microsoft executive, clearly enjoying the rain of criticism falling on Google, candidly observed, “People dislike Google for the same reason they disliked us: arrogance.” A major difference between the two is that while Microsoft’s dominant operating system was difficult to avoid, people can escape Google with a single click of a mouse.
Microsoft’s engineering culture, like Google‘s, had missed the warning signals that its actions had aroused the government bear. And Microsoft, like Google, truly believed it was advancing the public good. Microsoft’s Internet Explorer was, after all, given away for free. A single dominant operating system meant that PCs could more easily communicate with one another, as Microsoft liked to say. Both companies were capable of being blinded by righteousness—the flip side of hubris. Unlike Microsoft, Google was managed more chaotically.
The smart question asked of Google was the one Adam Lashinsky of Fortune posed in early 2007: “Is Google’s culture great because its stock is doing well, or is its stock doing well because its culture is great?”
WHAT WASN’T AT QUESTION was Google’s success. Measuring it by growth, profits, and market valuation, it’s difficult to claim that Google’s management has not worked. And a reason it has worked, so far at least, is that it is, in the words of Google director Ram Shriram, “controlled chaos—meaning that there is some method to the madness. If you have too much structure, you have less innovation.” Instead of describing Google management as chaotic, Brin said, “I’d prefer ‘less structured.”’ He cited Google’s youth as a partial explanation: “We’re only in this business ten years.”
Former vice president Al Gore recounted a private conversation he had with Brin and Page several years ago in the boardroom near their office. Gore worried aloud whether Google was maintaining its focus on potential new search threats and continuing to prosecute its technological lead in search. “They had to go to another meeting,” Gore recalled, “and said, ‘If you can stay, Al, we’d like to bring in the engineers and scientists in charge of this part of the business.’ Ten of them came into the boardroom. Larry and Sergey left. I spent another three hours. And then when it was over, I gave Larry and Sergey an oral report.”
Four weeks later, Gore said, laughing, “I went up to their office and found that all ten of these people had been moved in. All ten of them!” He described how Page and Brin had to cram twelve computer monitors into the glassed two-story office, and “move around some of their toys—a remote control helicopter, flying messenger boards, whatever the latest new supercool toy is.” These ten people stayed—“until they satisfied themselves that they had an ongoing system for maintaining hypervigilance in the organization on the continuing innovation necessary to make sure they were always at the cutting edge of the highest quality search experience available on the Internet.... I defy you to think of any other executives in the world who would have a team like that into their personal office for weeks on end.”
Gore may have been a prod, but the execution of innovation at Google is due to the focused passion Brin and Page bring to Google. Barry Diller, who had that unsettling session with Page and Brin in the early days of Google, when Page would not look up from his PDA to talk to him, now thinks what might be construed as rudeness was really focus. “They had their own method of communicating and processing,” Diller said. “They give much less quarter than other people do to common business courtesies. They’ve stayed true to this. It’s a spectacular strength. It means you never get defocused by the crowd.” At Google the focus is on the engineer is king culture Brin and Page had the precocity to impose.
True to its open-sourced, wisdom-of-the-crowd ideals, Google has created a networked management. It is bottom-up as well as top-down management, and it unleashes ideas and effort. “There is a pattern in companies,” Page explained, “even in technological companies, that the people who do the work—the engineers, the programmers, the foot soldiers, if you will—typically get rolled over by the management. Typically, the management isn’t very technical. I think that’s a very bad thing. If you’re a programmer or an engineer or computer scientist and you have someone tell you what to do who is really not very good at what you do, they tell you the wrong things. And you sort of end up building the wrong things; you end up kind of demoralized. You want to have a culture where the people who are doing the work, the scientists and the engineers, are empowered. And that they are managed by people who deeply understand what they are doing. That’s not typically the case.”
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