It has huge sales,
and a bid to log all the
information in the world - - -
one tiny project at a time.
G OOGLE CHIEF EXECUTIVE, ERIC SCHMIDT REALIZED HE WAS AT A NEW KIND OF COMPANY REAL SOON AFTER JOINING IT IN 2001.
At a 10-person management meeting—Google employed only 180 people at the time—everyone talked, fast, about whether to put ads on Internet search results. It was a two- hour debate, and each combatant had lots of data to back up his position.
But the decision to proceed was pretty much unanimous, launching Google on a new path to torrid growth. Schmidt realized this company loves to talk it out, also jettisoning hierarchy, business silos and layers of management for a flatter, “networked” structure where the guy with the best data wins.
“It was a big conversation. The networked model is a conversation,” says Schmidt, a brainiac engineer who worked at the famed Xerox PARC labs, then ran strategy at Sun Microsystems and was chief executive of Novell before joining Google.
Google is now at $6 billion a year in revenue and $7.6 billion in cash, employing 5,000 painstakingly chosen people. Schmidt and other insiders believe they may have found a world-changing way to run a company. (Then again, nothing Google does, in its own view, is ever average.) Most firms still look like the refining and manufacturing businesses of Rockefeller and Ford. Google founders Larry Page and Sergey Brin, children of the Internet, have built a world where a well-chosen elite accommodates flexibility, shifting roles and, above all else, urgency.
Google prides itself on hiring only the truly brilliant (and the unabashedly arrogant, rivals say) and believes the crowd always outsmarts anyone inside it. It shares all the information it can with as many employees as possible, encouraging debate but insisting on like-minded cooperation. It also pursues a rapid-fire food- fight strategy that throws out ideas as fast as possible, to see what sticks.
Brin and Page have created a corporate organism that tackles most big projects in small, tightly focused teams, setting them up in an instant and breaking them down weeks later without remorse. “Their view is that there is much greater progress if you have many small teams going out at once, Schmidt says. The mission over-all: to collect “all the world’s information” and make it accessible to everyone. “It’s a cause.
Hundreds of projects go on at the same time. Most teams throw out new software in six weeks or less and look at how users respond hours later. With 82 million, yes. 82 million, visitors and 2.3 billion searches in a month, Google can try a new user interface or some other wrinkle on just 0.1% of its users and get very massive feedback, letting it decide a project’s fate in weeks.
One success in ten tries is okay; one in five is superb. Everyone from a failed venture moves to another urgent project. “If something is successful, you work it in, somehow,” Schmidt says . “If it fails, you leave.”
A typical task, from tweaking page designs to doing scientific research, involves six people . Orkut, a social network with several million users (most of them in Brazil and Iran), has three full-time staffers. Last month, September 2005, Google was reported to be in a bid to derail Microsoft’s overtures to America Online by teaming up with Microsoft’s cable ally, Comcast, to invest in AOL; that this didn’t leak earlier may have been because only a few Googlers were in on it.
One true god rules at Google: data.
The more you collect, the more you know and the more certain your decisions can be, disciples believe. Gut instinct, a staple at Barry Diller’s InterActive Corp. and at Terry Semel’s Yahoo, isn’t in evidence at this company. “Often differences of opinion between smart people are differences of data,” says Marissa Mayer, director of consumer products and among Google’s first 20 employees. In some meetings people aren’t allowed to say “I think ...... but instead must say “The data suggest....
Every Google employee starts the week writing five lines on what he or she did the week before. They are posted on an internal Web site for all to see. New product ideas circulate among thousands of engineers on an “ideas mailing list.” An e-mail flies out every time someone posts (there are now thousands in the archive). The e-mails are half brainstorming, half a search for kindred spirits, inviting others in the crowd to join you on a project you propose. They have spawned much of the software inside everything from the Gmail e-mail product to a controversial effort to digitize thousands of books.
Caffeine and a sense of community fuel these pursuits. At the Googleplex, the crowded headquarters in Mountain View, Calif., coffee stations have urns labeled “regular” and “strong.” Private offices go to only a few dozen of the brass. Even Kai-Fu Lee, the China superstar who defected to Google and sparked a lawsuit from his former employers at Microsoft, shares a cubicle with two other guys.
One key rule: You can’t call any idea “stupid.” (Nor is most any idea too wild. On a recent day at the Google campus a bulletin board invited workers to a session on the dream of erecting a 200-mile-high elevator into space.)
This ideas-and-data approach lets Google use fewer managers—one for every 20 line employees, compared with one for as few as 7 industry wide. “It has been as high as one to 40,” Mayer says; one manager had 180 direct reports. Another benefit, she says, is that employees may be better braced should Google stock, which went public at $85 in August 2004 and is now at $340, suddenly crater. “In a downturn you want your people to feel empowered. Fear and suspicion happen when information is hidden.”
Some applicants may start with one of Google’s famous—and ridiculously difficult—exams. (Sample: “Find the first ten-digit prime number in the mathematical constant called ‘e’.”) Prospects endure eight or more interviews. Each interviewer ranks them on a l-to-4 scale; a 4 means “I would hire this person, and I will argue why,” while a 3 means “Inclined to hire, but can be argued out of it.” A panel of eight Googlers reviews the scores. Later annual regression analyses compare performance with initial ratings. One anomaly: Women with weaker scores end up performing better than women with all 4s.
“The interview still isn’t picking some thing up,” worries Mayer, a former debate champion whose rapid speech races to catch up with an even faster brain. Schmidt credits her with inventing the Google way, starting with building the Google roster. “We need generalists,” she says. “Lots of projects and companies grow without doing new things; they just get bigger teams. We want projects to end.”
Once deemed Google-worthy, new hires ge t bid on by managers across the company. Workers are asked to spend 20% of their time on something that interests them, away from their main jobs. Companywide a full 10% of time is spent dreaming up blue-sky projects. Some brilliant prospects don’t get hired, flaming out when background checks show they are difficult to work with. “It takes discipline not to hire some of these people, they are so smart, says engineering chief Alan Eustace. “But it also doesn’t take much for a single person to subtract 10% from everyone else. Very quickly, that reduces your total output.”
But Eric Schmidt worries how long he can make it all sing. The bigger Google gets, the harder it is to foster useful conflict and make fast decisions. And the stronger Google gets—its third-quarter net income soared sevenfold to pass $380 million on sales that almost doubled to $1.58 billion—the more it comes into the crosshairs of sniping detractors.
The Association of American Publishers is suing Google over its plans to scan the contents of several major libraries, fearing large-scale copyright infringement. “Their attitude is that we don’t get it, we are flat-earth people, and they are in a hurry without time for all this,” says the publisher group’s president, former congresswoman Patricia Schroeder. “Their model is to get all the content for free----great for them,” she says, predicting, “They’ll do the same to the movie industry. Hollywood won’t like it.”
Marc Meyer, who knew Schmidt at U C Berkeley and worked with him at PARC, says Schmidt sees a day when Google will hold everyone’s data on a “trust me” basis. “He told me, ‘If you want it to be private, don’t put it in a computer,”’ says Meyer, now at a recent tech startup . “Eric has an Anakin Skywalker conundrum. He has absolute power, and it will be hard to resist the Dark Side.”
Schmidt counters: “I joined a small company full of smart guys, and it still feels like that. We just have to change outside perceptions.”
F O R B E S Magazine
November 14, 2005 (pgs. 198-202)
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