Google has been famous for defiance of authority. Bock develops this further.
At google, we have always had a deep skepticism about management. This is just how engineers think: managers are a Dilbertian layer that at best protects the people doing the actual work from the even more poorly informed people higher up the org chart. But our Project Oxygen research, which we’ll cover in depth in chapter 8, showed the managers in fact do many good things. It turns out that we are not skeptical about managers per se. Rather, we are profoundly suspicious of power, and the way managers historically have abused it. [Page 118]
Acton who said “Power corrupts; absolute power corrupts absolutely” also wrote: Great mean are almost always bad men, even when they exercise influence and not authority: still more when you superadd the tendency or the certainty of corruption by authority, there is no worse heresy than that the office sanctifies the holder of it. That is the point at which … the end learns or justifies the means. [Pages 119-20]
It was such a deeply held belief that in 2002 Larry and Sergey eliminated all manager roles in the company. We had over three hundred engineers at the time, and anyone who was a manager was relieved of management responsibilities. Instead every engineer in the company reported to Wayne Rosing. It was a short-lived experiment. Wayne was besieged with requests for expense report approvals and for help in resolving interpersonal conflicts, and within six weeks the managers were reinstated. [Page 190]
Still Project Oxygen initially set out to prove that managers don’t matter ended up demonstrating that good managers were crucial. [Page 188]. I will let you read Chapter 8 and here are the 8 rules from the study [Page 195]:
1- Be a good coach.
2- Empower the team and do not micromanage.
3- Express interest/concern for team members’ success and personal well-being.
4- Be very productive/results-oriented.
5- Be a good communicator – listen and share information.
6- Help the team with career development.
7- Have a clear vision/strategy for the team.
8- Have important technical skills that help advise the team.
I cannot finish this new post without mentioning a link given by Laszlo Bock about the history of Silicon Valley: “Silicon Valley’s Favorite Stories”, Bits (blog), New York Times, February 5, 2013.
Robert Noyce, right, set up an atmosphere of openness and risk at Fairchild Semiconductor.Credit Courtesy of Wayne Miller/Magnum Photos
Margaret Hamilton during the Apollo program.• Credits : NASA
Now Bock: In one study conducted by Maura Belliveau of long Island University , 184 managers were asked to allocate salary increases across a group of employees. The increases aligned nicely with performance ratings. Then they were told that the company’s financial situation meant that funds were limited, but were given the same amount amount of funds to allocate. This time, men received 71 percent of the increase funds, compared to 29 percent for the women even though the men and women had the same distribution of ratings. The managers – of both genders – had given more to the men because they assumed women would be mollified by the explanation of the company’s performance, but that the men would not. they put more money toward the men to avoid what they feared would be a tough conversation. [Page 170]
Bock mentions another study on page 137 about graduates from Carnegie Mellon that is also mentioned in the New Yorker article as “As the economist Linda Babcock and the writer Sara Laschever explain, in their book “Women Don’t Ask,” women are less likely than men to negotiate for higher salaries and other benefits. At Carnegie Mellon University, for example, ninety-three per cent of female M.B.A. students accepted an initial salary offer, while only forty-three per cent of men did. Women incur heavy losses for their tendency to avoid negotiation. It is estimated that, over the course of her career, an average woman loses a total of somewhere between half a million and a million and a half dollars.” Additionally “Even when women do make it to the bargaining table, they often fare poorly. In “What Works: Gender Equality by Design,” the behavioral economist Iris Bohnet examines data from a group of Swedish job seekers, among whom women ended up with lower salaries than their equally qualified male peers. “Not only did employers counter women’s already lower demands with stingier counter-offers, they responded less positively when women tried to self-promote,” she writes. “Women, it turns out, cannot even exercise the same strategies for advancement that men benefit from.” When women act more like men, she suggests, they are often punished for it. Lean in, and you might get pushed even further back.
In Work Rules!, Bock mentions briefly the GLAT (Google Labs Aptitude Tests) that were also mentioned in David Vise’s Google Story. But he just quickly says they may have been overused and sometimes a waste of time and of resources. But let me refer to his page 73:
That page begins with the image above which can be also found on google blog’s page Warning: we brake for number theory. It’s never too late solve math problems… If you solved it at the time, you got access to the following one:
The second puzzle:
Again feel free to try… you will find answers here. Bock just adds this: The result? We hired exactly zero people.
My father’s father worked in the Chevy plant in Flint, Michigan. He was an assembly line worker. He drove his two children here to Ann Arbor, and told them: That is where you’re going to go to college. Both his kids did graduate from Michigan. That was the American dream. His daughter, Beverly, is with us today. My Grandpa used to carry an “Alley Oop” hammer – a heavy iron pipe with a hunk of lead melted on the end. The workers made them during the sit-down strikes to protect themselves. When I was growing up, we used that hammer whenever we needed to pound a stake or something into the ground. It is wonderful that most people don’t need to carry a heavy blunt object for protection anymore. But just in case, I have it here.
It is said that the future of any nation can be determined by the care and preparation given to its youth. If all the youths of America were as fortunate in securing an education as we have been, then the future of the United States would be even more bright than it is today.
And about Brin entrepreneurship skills or unique personality: The Brins’ story provides me with a clue to the origins of Sergey’s entrepreneurial instincts. His parents, academics through and through, deny any role in forming their son’s considerable business acumen — “He did not learn it from us, absolutely not our area,” Michael says. Yet Sergey’s willingness to take risks, his sense of whom to trust and ask for help, his vision to see something better and the conviction to go after it — these traits are evident in much of what Michael Brin did in circumventing the system and working twice as hard as others to earn his doctorate, then leave the Soviet Union.
“I do somewhat feel like a minority,” he says. “Being Jewish, especially in Russia, is one aspect of that. Then, being an immigrant in the U.S. And then, since I was significantly ahead in math in school, being the youngest one in a class. I never felt like a part of the majority. So I think that is part of the Jewish heritage in a way.” Today, of course, being a young billionaire, he’s again in a class by himself. “I don’t feel comfortable being one of the crowd,” he reflects. “It’s kind of interesting — I really liked the schools that I went to, but I never rooted for the sports teams. I was never one of the crowd supporting something or not. I like to maintain my independence.”
A final note of serendipity in what I just read: The history of Russian Jewish emigration in the mid-1970s can be neatly summarized in a joke from the era: Two Jews are talking in the street, a third walks by and says to them, “I don’t know what you’re talking about but yes, it’s time to get out of here!” Just have a look at my recent post about A History Of Communism Told Through Communist Jokes. Nice coincidence…
Kleiner Perkins is a, not to say the VC brand name – but there is also Sequoia. When their partners write something, it is often worth reading. And this month two of them publish a book! I begin here with John Doerr and his Measure What Matters (though this is the paperback publication – the hardcover was published in 2017). In my next post I will write about Komisar’s Straight Talk for Startups
Ideas are Easy. Implementation is Everything.
Doerr is a Silicon Valley legend. He owes a lot to the pioneers of Silicon Valley, such as Noyce and Moore and particularly to Andy Grove, whom he mentions a lot: he calls him one of the father of OKRs. Chapter 2 is about Grove who said “there are so many people working so hard and achieving so little”. It reminds me of The Innovation Illusion: How So Little is Created by So Many Working So Hard. And many owe to him, beginning with the Google founders. Indeed Larry Page is the author of a short, 2-page and powerful foreword about OKRs: “OKRs are a simple process that helps drive varied organizations forward… OKRs have helped lead us to 10x growth, many times over.”
And Doerr begins with a tribute to Google and its two founders (page 4): Sergey was exuberant, mercurial, strongly opinionated, and able to leap intellectual chasms in a single bound. A Soviet-born immigrant, he was a canny, creative negotiator and a principled leader. Sergey was restless, always pushing for more; he might drop to the floor in the middle of a meeting for a set of push-ups.
Larry was an engineer’s engineer, the son of a computer science pioneer. He was a soft-spoken nonconformist, a rebel with a 10x cause: to make the internet exponentially relevant. While Sergey crafted the commerce of technology, Larry toiled on the product and imagined the impossible. He was a blue-sky thinker with his feet on the ground.
So what are these OKRs? It’s an acronym for Objective and Key Results. “An objective is simply WHAT is to be achieved. Key Results benchmark and monitor HOW to get to the objective.” (Page 7) But there is no recipe. Each company or organization should have its own. “By definition, start-ups wrestle with ambiguity… You’re not going to get the system just right the first time around. It’s not going to be perfect the second or third time, either. But don’t get discouraged. Persevere. You need to adapt it and make it your own.” (Page 75)
Now if you need that kind of advice, read Doerr’s book…
Time to finish my account of In the Plex after already four posts. Chapter 5 is about Google in the mobile and in the video. Chapter 6 is about China, a very interesting chapter about Google’s moral dilemmas. Chapter 7 is about the relationships with government.
These chapters show Google is now a mature and serious company, with exceptions:
The keynote did end on a high note. Page had insisted that there be a question period, almost as if he were running a Google TGIF. This was almost unheard of in CES keynotes. The people at Google in charge of the speech came up with an inspired idea: they spent a bundle to book the comedian Robin Williams (a huge Google fan) as Page’s sidekick for the Q and A. The conceit was that Williams would be a human Google. The comic’s manic improvisations made people instantly forget the awkwardness of Page’s presentation. The funniest moment came when a French reporter began to ask a tough question of Page but could not finish due to Williams’s relentless, politically indefensible, and utterly hilarious mocking of the man’s accent and nationality. The unfortunate Frenchman sputtered with rage. The moment fit Google perfectly: corporate presentation turned as anarchic as a Marx Brothers skit. [pages 246-247]
“Sergey and Larry are not kids anymore,” Eric Schmidt noted in early 2010. “They are in their mid-thirties, accomplished senior executives in our industry. When I showed up, they were founder kids— very, very smart, but without the operating experience they have now. It’s very important to understand that they are learning machines and that ten years after founding the company, they’re much more experienced than you’ll ever imagine.” From Schmidt’s comments, it was reasonable to wonder when the inevitable would occur—when Larry Page, now middle-aged and officially seasoned, might once again become Google’s CEO, a job he had been reluctant to cede and gave up only at the VC’s insistence. When asked directly if he was eager to reassume the role, Page refused to engage. “That’s all speculation,” he said. [Page 254]
And the inevitable brain drain would follow
Google didn’t stop recruiting the best people it could find, especially engineers. In fact, the effort became more urgent because there were vacancies at Google created by valued employees who either joined tech firms that were newer and more nimble than Google or started their own companies. And every so often, an early Googler would simply retire on his or her stock-option fortune. The defections included high-ranking executives and—perhaps scarier to the company—some of its smartest young engineers. The press labeled the phenomenon Google’s “brain drain.” Sheryl Sandberg, who had built up the AdWords organization, left to become the chief operating officer at Facebook. Tim Armstrong left his post as head of national sales to become CEO of AOL. (“We spent all of Monday convincing him to stay,” said the grim Sergey Brin at that next week’s TGIF, expressing well wishes toward its valuable sales manager.) Gmail inventor Paul Buchheit joined with Bret Taylor (who had been product manager for Google Maps) to start a company called FriendFeed. Of the eighteen APMs—Google’s designated future leaders—who had circled the globe with Marissa Mayer in the summer of 2007, fewer than half were still with the company two years later. All of them left with nothing but respect and gratitude for Google—but felt that more exciting opportunities lay elsewhere. Bret Taylor, while specifying that he cherished his time at Google, later explained why he’d left. “When I started at the company, I knew everyone there,” he said. “There’s less of an entrepreneurial feel now. You have less input on the organization as a whole.” When he announced his departure, a procession of executives came to his desk asking him to reconsider. “I didn’t know Google had so many VPs,” he said. But he’d made his mind up. [Page 259]
Really reaching maturity?
Eric turned to him and said, “Okay, Larry, what do you want to do? How fast do you want to grow?” “How many engineers does Microsoft have?” asked Page. About 25,000, Page was told. “We should have a million,” said Page. Eric, accustomed to Page’s hyperbolic responses by then, said, “Come on, Larry, let’s be real.” But Page had a real vision: just as Google’s hardware would be spread around the world in hundreds of thousands of server racks, Google’s brainpower would be similarly dispersed, revolutionizing the spread of information while speaking the local language. [Page 271]
Failure in China
China has been Google deepest failure. Despite efforts and (too much?) compromise, Google has never really succeeded in China. Chapter 6 is another must read. Brin who has always been the most sensitive to human rights “went as far” as abstaining at a shareholder meeting.
During the Google annual shareholders meeting on May 8, 2008, Brin took the rare step of separating himself from Page and Schmidt on the issue. Shareholders unhappy with Google censorship in China had forwarded two proposals to mitigate the misdeed. The first, organized by Amnesty International and submitted by the New York state pension fund, which owned 2 million shares of Google, demanded a number of steps before the company engaged in activities that suppressed freedom. The second would force the board of directors to set up a committee focusing on human rights. Google officially opposed the proposals, and with a voting structure that weighted insider shares ten times as heavily as those owned by outside investors, the proposals were easily defeated. But Brin abstained, sending a signal—though maybe only to himself—that his conscience would no longer permit him to endorse the company’s actions in China unreservedly. When shareholders had a chance to question Google’s leaders, Brin explained himself: “I agree with the spirit of both of these, particularly in human rights, freedom of expression, and freedom to receive information.” He added that he was “pretty proud of what we’ve been able to achieve in China” and that Google’s activities there “honored many of our principles.” But not all.
It was a clear sign that Brin no longer believed in Google’s China strategy. Another signal was the fact that after Google China was established, and despite Kai-Fu Lee’s urging, neither Brin nor Page ever crossed the threshold of their most important engineering center abroad. Even in mid-2009, when the pair decided to fly their private Boeing 767-200 to the remote Eniwetok Atoll in the Pacific Ocean to view a solar eclipse and Brin used the occasion to drop in on Google Tokyo, they skipped China. Still, Google was reluctant to defy the government of China. There was still hope that things would turn around. In addition, its business operations in China were doing well. Though it had far to go to unseat Baidu, Google was clearly in second place and more than holding its own. In maps and mobile Google was a leader. In the world’s biggest Internet market, Google was in a better position than any other American company. [Page 305]
“The security incident, because of its political nature, just caused us to say ‘Enough’s enough,’” says Drummond. The next day Drummond wrote a blog item explaining Google’s decision. It was called “A New Approach to China.” He outlined the nature of the attack on Google and explained that it had implications far beyond a security breach; it hit the heart of a global debate about free speech. Then he dropped Google’s bombshell: These attacks and the surveillance they have uncovered— combined with the attempts over the past year to further limit free speech on the web—have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.
On January 12, Google published the Drummond essay on its blog. The news spread through Mountain View like an earthquake. Meetings all over the campus came to a dead stop as people looked at their laptops and read how Google was no longer doing the dirty work of the Chinese dictatorship. “I think a whole generation of Googlers will remember exactly where they were when that blog item appeared,” says one product manager, Rick Klau. [Page 311]
By late 2007, Barack Obama already had an impressive Google following. Andrew McLaughlin, Google’s policy chief, was advising the senator on tech issues. The product manager for Blogger, Rick Klau, had lived in Illinois and had operated Obama’s blog when the politician ran for the Senate (he’d even let Obama use his house for a fundraiser). Eric Schmidt was the candidate’s official host. [Page 316]
In an ideal world: “I think of them as Internet values. They’re values of openness, they’re values of participation, they’re values of speed and efficiency. Bringing those tools and techniques into government is vital.” [Page 322]
But the reality is tougher: “The job was frustrating. Google hadn’t been perfect, but people got things done—because they were engineers. One of the big ideas of Google was that if you gave engineers the freedom to dream big and the power to do it—if you built the whole operation around their mindset and made it clear that they were in charge—the impossible could be accomplished. But in the government, even though Stanton’s job was to build new technologies and programs, “I didn’t meet one engineer,” she says. “Not one software engineer who works for the United States government. I’m sure they exist, but I haven’t met any. At Google I worked with people far smarter and creative than me, and they were engineers, and they always made everyone else look good. They’re doers. We get stuck in the government because we really don’t have a lot of those people.” [Page 323]
Final thought: Is Google evil?
This is a debate I often have with friends and colleagues. You’ve seen my fascination and I love the way Google tries, explores and changes our world. Still, one may see things differently. As an example, here are some quotes about Google Print.
Maybe the care that Google took to hide its activity was an early indicator of trouble to come. If the world would so eagerly welcome the fruits of Ocean [Google Print code name], what was the need for such stealth? The secrecy was yet another expression of the paradox of a company that sometimes embraced transparency and other times seemed to model itself on the NSA. In other areas, Google had put its investments into the public domain, like the open-source Android and Chrome operating systems. And as far as user information was concerned, Google made it easy for people not to become locked into using its products. […] It would seem that book scanning was a good candidate for similar transparency. If Google had a more efficient way to scan books, sharing the improved techniques could benefit the company in the long run—inevitably, much of the output would find its way onto the web, bolstering Google’s indexes. But in this case, paranoia and a focus on short-term gain kept the machines under wraps. “We’ve done a ton of work to try to make those machines an order of magnitude better,” AMac said. “That does give us an advantage in terms of scanning rate and cost, and we actually want to have that advantage for a while.” Page himself dismissed the argument that sharing Google’s scanner technology would help the business in the long run, as well as benefit society. “If you don’t have a reason to talk about it, why talk about it?” he responded. “You’re running a business, and you have to weigh [exposure] against the downside, which can be significant.” [Page 354-55]
But not all of the publishers found Google charming. Jack Romanos, then CEO of Simon & Schuster, later complained to New York’s John Heilemann about Google’s “innocent arrogance” and “holier-than-thou” attitude. “One minute they’re pretending to be all idealistic, talking about how they’re only in this to expand the world’s knowledge, and the next they’re telling you that you’re going to have to do it their way or no way at all.” [Page 357]
[There] was the conviction that in a multimillion-dollar enterprise such as Book Search it was unconscionable for authors and publishers not to be paid. After the debate, Aiken laid out the essence of his group’s rationale to an Authors Guild member who told him that he’d like his books discoverable by Google. “Don’t you understand?” Aiken said. “These people in Silicon Valley are billionaires, and they’re making money off you!” [Page 360]
Google has missed opportunities such as in social networking. Orkut, then Wave, Dodgeball, Buzz replaced by Google + were more beta tests and then a reaction to Facebook. Google often tries things without much effort and checks if traction comes or not. But its ambition has not really slowed down: “Michigan had already begun digitizing some of its work. “It was a project that our librarians predicted would take one thousand years,” Coleman later said in a speech. “Larry said that Google would do it in six.” [Page 352]
Indeed Page had dreamed about digitizing books already at Stanford and in the early days of Google, he began playing with scanners, helped by Marissa Meyer: “The first few times around were kind of sloppy, because Marissa’s thumb kept getting in the way. Larry would say, “Don’t go too fast … don’t go too slow.” It had to be a rate that someone could maintain for a long time—this was going to scale, remember, to every book ever written. They finally used a metronome to synchronize their actions. After some practice, they found that they could capture a 300- page book such as Startup in about forty-two minutes, faster than they expected. Then they ran optical character recognition (OCR) software on the images and began searching inside the book. Page would open the book to a random page and say, “This word—can you find it?” Mayer would do a search to see if she could. It worked. Presumably, a dedicated machine could work faster, and that would make it possible to capture millions of books. How many books were ever printed? Around 30 million? Even if the cost was $10 a book, the price tag would only be $300 million. That didn’t sound like too much money for the world’s most valuable font of knowledge.” [Page 360] (Google Print is now Google Books – https://en.wikipedia.org/wiki/Google_Books)
In 2011, Page ambition is still there. He is now the CEO. In late 2010, “Sergey Brin had repeated the sentiment: ‘We want Google to be the third half of your brain’ “. [Page 386]
“I just feel like people aren’t working enough on impactful things,” Page said. “People are really afraid of failure on things, and so it’s hard for them to do ambitious stuff. And also, they don’t realize the power of technological solutions to things, especially computers.” He went on to rhapsodize about big goals like driving down the price of electricity to three cents a watt—it really wouldn’t take all that much in resources to launch a project to do that, he opined. In general, society wasn’t taking on enough big projects, according to Page. At Google, he said, when his engineers undertook a daunting, cutting-edge project, there were huge benefits, even if the stated goal of the project wasn’t accomplished. He implied that even at Google there wasn’t enough of that ambition. “We’re in the really early stages of all of this,” he said. “And we’re not yet doing a good job getting the kinds of things we’re trying to do to happen quickly and at scale.”[Page 387]
I just finished In the Plex and I kind of feel sad. It is a book I wish I would never have finished reading. I have now read four books about Google. In fact, we are far from the end. It may even be just the beginning as Page and Brin seem to believe and I will probably read other books abotu Google in the future. As good as this one? Only the future will tell… but i will finish here with a 2007 post.
If I consider the first 3 chapters of in the Plex as an amazingly great description of Google’s technology (chapter 1), business (chapter 2) and culture (chapter 3), the remaining chapters are also very good but I will not describe them in as much detail. Chapter 4 is about Google products that should be considered as based on two main features: they are fast and they are cloud-based (Gmail, Googledocs, Youtube, Chrome).
Sergey Brin even put a label on his cofounder’s frustration at the tendency of developers to load more and more features into programs, making them run way too slowly. Page’s Law, according to Brin, was the observation that every eighteen months, software becomes twice as slow. Google was determined to avoid this problem. “We want to actually break Page’s law and make our software increasingly fast over time,” says Brin. [Page 185]
And of course: Google often kept its products in beta much longer than other companies, signaling that users should be tolerant of faults and that an update was probably around the corner. In the case of Gmail, which became the public name for the project, the beta label was not removed until five years after Google released it, when it had tens of millions of users. [Page 171]
This reminds me a quote of Richard Newton: “Silicon Valley and the Bay Area are cradles of innovation.” And he further added, stating a colleague of his: “The Bay Area is the Corporation. […When people change jobs here in the Bay Area], they’re actually just moving among the various divisions of the Bay Area Corporation.”
I will let you discover the long analysis around concerns for privacy (Pages 179-78) but cannot avoid a final quote: It wasn’t Google’s job—nor should it be—to filter […] personal information. Griffin understood how [Eric Schmidt] felt, because she came across upset people all the time. You could explain forever how making obscure but damaging information available in milliseconds was at the core of Google’s lofty mission. “Principles always make sense until it’s personal,” she says. […] “My personal view is that private information that is really private, you should be able to delete from history,” Schmidt once said. But that wasn’t Google’s policy. If Google’s own CEO had trouble dealing with privacy, how could ordinary people cope? [Page 175]
As of August 2015, Google had acquired 182 companies (136 from the US, 26 from Europe, and 20 in the rest of the world) for more than $26B. here is a visual description of the fields and years.
“You can’t understand Google,” Marissa Mayer said, “unless you know that both Larry and Sergey were Montessori kids.” [Page 121]
“It’s really ingrained in their personalities,” she said. “To ask their own questions, do their own things. To disrespect authority. Do something because it makes sense, not because some authority figure told you. In Montessori school you go paint because you have something to express or you just want to do it that afternoon, not because the teacher said so. This is really baked into how Larry and Sergey approach problems. They’re always asking ‘Why should it be like that?’ It’s the way their brains were programmed early on.” [Page 122]
As a corporation, Google was determined to maintain its sense of play, even if it had to work to do it. The high holy day of Google culture is April 1, when imaginations already encouraged to run wild are channeled into elaborate pranks requiring months of work. The effort involves considerable organization, as ideas go through an elaborate approval process to find a place in the company’s ever-increasing roster of seasonal spoofs. The need for some oversight became clear as early as 2000, when Brin sent employees an email announcing that Google had a new valuation (meaning the estimate of its market price had gone up) and would soon reprice its employee stock options— from 25 cents to $4.01. Some people didn’t realize that $4.01 was a reference to the calendar and frantically tried to buy up all the shares that they were entitled to before the price went up. They dug into savings and borrowed from their families. Google eventually had to make people whole. [Page 123]
As the years went on, more Google divisions felt compelled to devise their own jokes, and by 2010 Wikipedia listed seventeen major April Fool’s initiatives for that year alone. [Page 123] What follows is just one example, among the most famous ones.
************ GOOGLE MENTALPLEX – APRIL FOOL 2000 ************
New! Search smarter and faster with Google’s MentalPlexTM
Remove hat and glasses.
Peer into MentalPlex circle. DO NOT MOVE YOUR HEAD.
Project mental image of what you want to find.
Click or visualize clicking within the MentalPlex circle.
The Bayshore Googleplex, also known as Building Zero, or the Nullplex, was the staging ground for Google to build out its culture into a sustainable corporate structure. No matter what happened, engineers would have the run of the place: their Montessori-inspired freedom would be Google’s distinguishing trait. [Page 129]
“Google is not a conventional company,” began Page’s letter, released on April 29, 2004. “We do not intend to become one.” It was an explicit warning to potential shareholders: fasten your seat belts!
In his “Owner’s Manual to Google,” Page put front and center the unofficial motto of Google, “Don’t be evil.” “We aspire to make Google an institution that makes the world a better place,” he wrote. “We believe strongly that in the long term we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short-term gains. This is an important aspect of our culture and broadly shared within the company.” [Pages 149-50]
The impact of money making…
Even the Google masseuse noticed the impact of money, especially when it came to the divide between early employees holding valuable options and those who came later. “While one was looking at local movie times on his monitor, the other was booking a flight to Belize for the weekend,” she said in a book she wrote. “Don’t think everyone wasn’t aware of the rift.” [Pages 149-50] She became a millionaire herself.
Engineers can self-organize
Both Page and Brin believed that the company should run like the Internet itself: fast-moving, bottom up, going to work every day to make yesterday obsolete. “We were born in the Internet time,” says Megan Smith, “so our company’s like our products in some weird way.”
Google, however, had been through an early ordeal that showed that this flat-org ideal was unattainable. In 2001, Google had more than four hundred employees, reaching the point where it was impossible to pretend that it was an intimate company where everyone knew everyone else. Worse for Page and Brin, despite their best efforts, a layer of middle management was creeping in. Worse still, some of the newcomers were experienced product managers from companies such as Microsoft, whose training made them un-Googley—and those newcomers had difficulty adopting the often heretical approaches of the founders.
Brin and Page came up with a solution: Google would no longer have managers. At least not in engineering. Instead, they figured, the engineers could self-organize. That approach worked well in the nascent days of Google. If something needed fixing, people would figure out on their own what was wrong, and what was broken would be fixed. Other people would identify interesting problems in computing, and from those insights new products would arise. At the time Google had just hired Wayne Rosing to head engineering. Brin and Page figured that everyone could just report to him. The engineers would arrange themselves in pods of three, work on projects, and check in with Wayne.
That struck some of Google’s executives as madness. Stacy Sullivan, the head of HR, begged Page and Brin not to go through with it. “You can’t just self-organize!” she told them. “People need someone to go to when they have problems!”
The newly arrived Schmidt and the company’s unofficial executive coach, Bill Campbell, weren’t happy with the idea, either. Campbell would go back and forth with Page on the issue. “People don’t want to be managed,” Page would insist, and Campbell would say, “Yes, they do want to be managed.” One night Campbell stopped the verbal Ping-Pong and said, “Okay, let’s start calling people in and ask them.” It was about 8 P.M., and there were still plenty of engineers in the offices, pecking away at God knows what. One by one, Campbell and Page summoned them in, and one by one Page asked them, “Do you want to be managed?”
As Campbell would later recall, “Everyone said yeah.” Page wanted to know why. They told him they wanted somebody to learn from. When they disagreed with colleagues and discussions reached an impasse, they needed someone who could break the ties.
Nonetheless, Page and Brin were determined to go through with the plan. They called an all-hands meeting and announced it to a baffled workforce. For a few people it meant leaving the company. Others scrambled to find new roles. On the other hand, the move was welcomed by the engineers, who had been chafing at the creeping management restraints. For example, Eric Veach, who at the time was trying to invent the auction-based AdWords, later said that losing a manager had liberated him to make his breakthrough.
Ultimately, however, the plan petered out. After the initial turmoil, there was a quiet backslide where Google’s managerial class reassembled and regained a place in the structure. You just couldn’t have more than a hundred engineers reporting to Wayne Rosing. Google was taking on new engineers at a furious rate, and, brilliant as they were, the new people needed some guidance to figure out what to do. “I don’t remember Larry and Sergey saying that they were wrong and that we were right, but they agreed we could start to hire managers again, as long as the managers were good culture fits and technical enough and could be highly respected by the engineers,” says Sullivan. [Pages 158-59]
It was Marissa Mayer who told him the obvious—Page wasn’t looking for project managers who were smart enough to understand engineers—he wanted them to be engineers. Mayer suggested that Google look for computer science majors who saw themselves not just as engineers but as future CEOs. Her idea was to assemble a legion of “associate product managers.” Google would get them straight out of school, young people with no preconceptions derived from working elsewhere. Their careers would co-evolve with Google. “We value insight over experience,” says Mayer. “We take people who we think have the right raw skills and insights and put them into roles with a lot of responsibility. And while that happens with APMs, it also happens all across the company. People here might not really be accomplished or have a long career before coming to Google, but they have the right data instincts about their area.” […]That process made the managerial weakness of the APM an asset for Google, by making sure that data was at the center of decision making. [Page 161]
Ultimately, the program helped Google maintain its team approach while still focusing on engineering as opposed to the kind of more elusive un-Googley skills that an MBA brings. (One might also note that Google, in its management practices and hiring preference for freethinkers, has achieved a complete turnaround from the ethic posed in William H. Whyte’s 1956 classic The Organization Man, which describes the perfect corporate employee as “obtrusive in no particular, excessive in no zeal”—the polar opposite of a Googler.) [Page 162]
Larry’s and Sergey’s peripatetic ways could drive Googlers crazy. Even Eric Schmidt sometimes viewed them acerbically: “Larry will call and say, ‘I’m going to go visit Android,’” he says, referring to Google’s mobile phone project. “He’s not going over there to inspect—he’s going over there to have fun.” But Maria Montessori might approve. “To be … helpful,” she wrote, “it is necessary rigorously to avoid the arrest of spontaneous movements and the imposition of arbitrary tasks. [Page 166]
Following my part 1 about In the Plex, here is part 2 and though I will come back with the topic in part 3 let me begin with this: Googlers love jokes and in particular April Fool. Nobody knew how successful and profitable Google had been for some years…
The hiding ended on April 1, 2004. As a consequence of going public, the company was required to share its internal information with the bankers who would potentially handle the IPO. Google’s finance people had gathered the bankers in its headquarters, then located in Mountain View. On the eve of the meeting, chief financial officer George Reyes and Lise Buyer, the director of business optimization, came up with a plan to reveal the secret Google style. Opening the meeting, Reyes welcomed them. Since the bankers had taken a big gamble by signing on without seeing the bottom line, he said, he’d go straight to the numbers. Then he put up slides with some figures. “You could hear a pin drop,” Buyer would later recall. The slides indicated that Google was indeed making pretty good profits. Not earthshaking but more than respectable, especially for an Internet business offering a free service supported only by ads. The bankers listened politely, but you could tell that they’d heard chatter that things had been, well, better than good, and they were apparently doing some mental recalculations.
Then Reyes told the bankers he was sorry, but he’d mistakenly put up the wrong slide. Could he display the real numbers? A balance sheet appeared with more than double the revenues and profits on the previous slide. It exceeded even the wildest expectations. April fool! “George was flawless,” says Buyer. “It was a beautiful moment.” [Page 70]
What’s a business plan?
The Google founders had not been that much focused on the business side… Salar Kamanagar would be a very unusual hire:
Kamangar more than compensated for his lack of experience with quiet determination. Though he appeared placid and self-contained— and loathed the spotlight—he had a steely, gnawing resolve. […] Kamangar made a short list of companies he might like to work for—brand-new start-ups that might take a chance on someone like him—and because, like many Stanford students, he had been playing with an early version of Google, he put it on his list. One day in March 1999 he saw in the Stanford Daily that Google was recruiting. He went to the Tresidder student center and found Sergey Brin in a small booth. “Unlike everyone else I’d talked to, he wasn’t using jargon. He had a very clear, very ambitious, grand—in some ways grandiose—vision for what Google could become,” Kamangar would recall. But Brin was not interested in hiring him. Kamangar was a biology major, not an engineer. Even at that stage, the Google preference was for computer science majors. Kamangar kept pressing. “He would walk in every day and say, ‘I want to work for free,’” says investor Ram Shriram, who was taking a day off from Amazon every week to help protect his investment in Google. Brin finally agreed to take him on part-time to do things that engineers couldn’t be bothered with, such as drawing up a business plan. “Neither founder had any interest in that,” says Shriram, “They said, ‘Yeah, we need money, but we’re not really interested in spending too much time on that. What’s a business plan?’” Whatever it was, Google needed one. Its original million-dollar funding had been granted solely on the basis of Google’s technology. But the company was already struggling to pay for equipment—its servers were overwhelmed by new users—and Brin and Page needed full coffers to finance their ambitious hiring plans. Venture capital could provide that. But they’d have to make a credible case that Google could one day be profitable.
Kamangar became the point man in one of the weirder VC rounds in Silicon Valley’s history. Shriram helped him out, but Salar had a remarkable degree of responsibility. He wrote the slides for the presentations, crunched numbers for the valuation, and, of course, drew up the business plan. Though hired as a part-timer, he went fulltime two weeks later, dropping his pursuit of a second degree at Stanford. “It was ten times more exciting than what I was doing at school,” he says of Google. [Pages 71-72]
“How big do you think this can be?”
[John Doerr, from Kleiner Perkins]’d seen plenty of smart nerds with good ideas, and was more than happy, on the recommendation of Andy Bechtolsheim, to see two more. Google’s idea, presented with Kamangar’s slides, was compelling. And its founders seemed straight out of the mold of previous winners from Stanford. The meeting was just ending when Doerr asked a final question: “How big do you think this can be?”
“Ten billion,” said Larry Page. Doerr just about fell off his chair. Surely, he replied to Page, you can’t be expecting a market cap of $10 billion. Doerr had already made a silent calculation that Google’s optimal market cap—the eventual value of the entire company—could go maybe as high as one billion dollars. “Oh, I’m very serious,” said Page. “And I don’t mean market cap. I mean revenues.”
More than a decade after that meeting, Doerr would still marvel at the conversation. “I didn’t think the guy could do it, but I was impressed,” he says. “It had to do with the tone of voice. He wasn’t saying this to impress me or himself. This is what he believed. This was Larry’s ambition, in a very thoughtful, considered way.” [Page 73]
A business or three?
The post-VC business plan anticipated three streams of revenues: Google would license search technology to other websites; it would sell a hardware product that would allow companies to search their own operations very quickly, called “Google Quick Search Box”; and it would sell ads.
Brin and Page themselves had made the very first licensing deal, with a company called Red Hat, a software company that distributed a version of the free Linux operating system. It earned Google around $20,000. [Page 78]
But advertising was far from obvious…
But they had no idea what a Google ad should be. Some at Google—including the director of technology, Craig Silverstein—thought that the whole effort was a distraction and that Google should outsource its ad system to some company more accustomed to waddling in the muck of Mammon. “I was like, ‘We’re not an advertising company, we’re a search company—let someone else worry about the advertising,’” says Silverstein. “It was good they did not take my advice.” [Page 78]
Susan Wojcicki later admitted the real problem: “No one clicked on the ads.” But she felt that the experiment was a great success. “It was incredible that we were going to build an ad system at all. What, we didn’t have enough to do with search? Now we’re asking our engineers, ‘Can you develop subsecond delivery times in every language in the world for every specific keyword?’ It was impressive that they actually did it.”
One contingent unimpressed at this point was Google’s investors. By the time of the Amazon affiliate bust in January 2001, it was almost two years after the $25 million investment, and the company was yet to make any money from the 70 million daily searches on its site. One angel, David Cheriton, was joking to friends that all he’d gotten from his six-figure Google investment was a T-shirt—“the world’s most expensive T-shirt.” To the money people on Google’s board, the problem was no joking matter. [Page 79]
So they hired a full-time CEO as the founders needed “adult supervision”.
From the start, Schmidt adopted a public stance toward the founders of unfettered admiration, a position he carefully maintained thereafter. “I fairly quickly figured out these guys are good at what they do,” he told me in early 2002. “Sergey is the soul and the conscience of the business. He’s a showman who cares deeply about the culture, the one who talks more, with a bit of Johnny Carson. Larry is the brilliant inventor, the Edison. Every day I am thankful I accepted this job offer.”
His anecdotes about disagreements with Sergey and Larry followed a consistent storyline: Schmidt expresses a tradition-bound preconception. The young men who, technically at least, report to him, reject the idea and demand that Google pursue an audacious, seemingly absurd alternative. The punch line? “And of course they were right,” Schmidt would say. What had seemed crazy was actually a canny assessment of how things worked in the new Internet-based economy! […]
That deference would prove a winning strategy, even though for a couple of years there were serious adjustment problems, because the founders clearly suspected that they would have done just fine on their own. Kordestani remembers that as Schmidt’s arrival was impending, both founders expressed their anxiety to him. Ostensibly, the issue concerned the titles each of the founders would use to describe his respective role. On a deeper level Sergey was troubled, says Kordestani, because “he was hiring his own boss, in a way, knowing he wants to be the boss.” Brin took the title president of technology.
Larry was even more troubled. Kordestani had to assure Page that he was still essential and Google would fail without him. Kordestani also reminded Page that he would no longer have to perform tasks that he didn’t enjoy, such as dealing with Wall Street and talking to customers. Page wound up describing himself as president of products.
As late as 2002, the founders still sounded bitter when explaining why Schmidt was hired. “Basically, we needed adult supervision,” said Brin, adding that their VC investors “feel more comfortable with us now —what do they think two hooligans are going to do with their millions?” The transition was rocky, but as the years went by, Page and Brin seemed to genuinely appreciate Schmidt’s contribution. Page would come to describe the CEO’s hiring as “brilliant.” [Page 81]
Indeed three ad models.
But contempt for traditional advertising permeated Google from the top down. In their original academic paper about Google, Page and Brin had devoted an appendix to the evils of conventional advertising. The founders weren’t sure what their ads would be but were adamant that they somehow be different. […] Nonetheless, the early Google ads worked like traditional ones in one key aspect: the advertiser was billed according to how many people viewed the ad. This CPM (cost per thousand) model was the basis of almost all ad markets. […] While Google expected to make most of its money from licensing, Armstrong was told, advertising might one day account for as much as 10 to 15 percent of its revenue. [Page 84]
Finally Google created AdWords Select and AdSense in addition to the classical AdWords Premium. And surprise, surprise…
The dicier challenge was getting skeptical customers of the original AdWords to leave a system they were happy with to try this complicated new one. On January 24, 2002, Google tested AdWords Select by offering it to selected advertisers. […] From that point on, revenue from the right-hand side of Google’s search results page—which had previously constituted only 10 to 15 percent of Google’s ad take, with the bulk coming from the direct sales of premium ads—began rising. […] In any case, Google was reaping rewards, and 2002 was its first profitable year. “That’s really satisfying,” Brin said at the time. “Honestly, when we were still in the dot-com boom days, I felt like a schmuck. I had an Internet start-up—so did everybody else. It was unprofitable, like everybody else’s, and how hard is that? But when we became profitable, I felt like we had built a real business.”
Best of all was that Google, against all odds, was making that profit without surrendering its ideals. “Do you know the most common feedback, honestly?” Brin asked. “It’s ‘What ads’? People either haven’t done searches that bring them up or haven’t noticed them. Or the third possibility is that they brought up the ads and they did notice them and they forgot about them, which I think is the most likely scenario.”
[…] Page said in 2002. “Every month we make more money than the last one.” The only slight regret? They never got those PhDs.
“I’ve been meaning to,” said Sergey.
“Maybe someday,” said Larry.
“My mom keeps asking,” said Sergey.
Larry frowned. “My mom doesn’t ask me anymore.”
Still automatic advertising may be risky…
The only hitch in the program was the risk that the ads Google placed on a website would be inappropriate or even offensive. When human beings created an ad for a publication, they took care to avoid situations where the combination of a certain ad with a certain type of article would produce a tasteless match that would appall readers and win no business for the advertisers. Google’s algorithms weren’t so sensitive. “The editors would get freaked out,” says Liebman. Some of the unintentionally offensive matches became classics. Liebman would cite an ad that ran alongside a gory murder story in the New York Post: someone had chopped up a body and stuffed it in a garbage bag. Alongside this gruesome text was a Google ad for plastic bags. “We didn’t foresee that there were times when you don’t want to target ads to the content,” says Georges Harik. “We would analyze a page about a plane crash and happily place an ad for airline tickets. I think we rapidly discovered that this was a bad idea.” Google engineers started working on ways to mitigate this problem, but it would never be totally eliminated. It was just too hard for an algorithm trained to discover matches between articles and ads to exercise human good taste. In 2008, a story about the Mumbai attacks headlined “Terrorists kill the man who gave them water” was accompanied by an ad that read “Terrorism: Pursue a certificate in terrorism 100% online. Enroll today. Ads by Google.” An account of massive food poisoning at an Olive Garden restaurant in Los Angeles was accompanied by a coupon offering a “FREE Dinner for Two at Olive Garden.” [Page 105]
A really amazing business…
When someone clicked on an AdSense ad, the money paid by the advertiser was split between Google and the publisher whose site hosted the ad. According to Rajaram, the original thought was to split the money down the middle—Google would take half and the AdSense publisher would take the other half. But Brin thought that such a split gave too much to Google. The idea was to build the program for the long run, and if Google made it clear that it was taking half the money, a competitor might undercut the program by giving 80 or even 90 percent of the fee to the publisher. So Google decided to give the majority of the money to the publisher. Then Susan Wojcicki came up with an idea that some might find strange: What if we don’t reveal the revenue share percentage with the publisher? That way Google wouldn’t have to worry about a competitor boasting a better split. [Page 106] Which they did.
“It was one of the single biggest painful things for me,” says Rajaram. “On every panel I went to for the first year, I would get questions about why isn’t Google sharing the revenue split and why isn’t Google being transparent. People said we were doing it because we weren’t generous. But quite to the contrary, we were being generous. We just didn’t want our competitors to tell publishers that they were offering a better revenue share.” (In May 2010, Google finally revealed the split. “In the spirit of greater transparency,” Google reported that of the money received from advertisers on AdSense for content, 68 percent went to the publishers whose pages hosted the ads. Google kept the other 32 percent. That was close to the proportions that participants and analysts had long assumed. Google’s belated announcement only raised more questions as to why it had been a secret in the first place.) [Page 106]
Later in the year, AdSense achieved a milestone in its run rate— $1 million a day. […]While AdSense was a great success, the bulk of Google’s revenues came from AdWords. Eric Veach and Salar Kamangar’s auctionbased AdWords Select product had first been thought of as a supplement to the more traditional, impression-based ads in the premium program, which was now called AdWords Premium. But it was working so well that Google would sometimes allow its auction-based ads to break out of their side-of-the-page ghetto and leapfrog to the premium zone sitting on top of the search results. If Google felt that the outcome would raise more revenue, a select ad would “trump” a premium ad and knock it out of that coveted position. As more and more auction-based ads trumped the hand-sold premium ads, Kamangar argued that Google should entirely end the practice of selling premium ads by a sales force that set prices and charged by impression. He set up a project, code-named D4, to implement the idea. Most Googlers called the plan Premium Sunset. […] Eric Veach believed that the data showed that the auction-based, pay-per-click model was actually better for everybody. The key was the ad quality, which made sure that ads would appear before sympathetic eyeballs. He did a close analysis and concluded that ads bought through AdWords Select performed better. He also uncovered hard proof that some premium advertisers were paying way too little for some valuable keywords. […]Nonetheless, the move would be painful. It meant giving up campaigns that were selling for hundreds of thousands of dollars, all for the unproven possibility that the auction process would generate even bigger sums. “We were doing $300 million in CPM ads and now were going to turn this other model on and cannibalize that revenue,” [Page 110]