Authors: Ken Auletta
Tags: #Industries, #Computer Industry, #Business & Economics
Googled (4 page)
Meanwhile, as traditional media was slicing employees, Google in early 2008 was receiving 1 million job applications per year, adding 150 employees per week, and employing nearly 20,000. After the company went public in 2004, its ledger sheet astonished the media. Its revenues, which were $3.2 billion in 2004, zoomed to $16.6 billion in 2007; in that same span, its net profits climbed from $399 million to $4.2 billion. Defying a worldwide recession, its 2008 profits were $4.2 billion and its revenues rose to $21.8 billion (97 percent of it from advertising).
Google had become a juggernaut; it now produced two-thirds of all Internet searches in the United States and nearly 70 percent worldwide. Its index contained one trillion Web pages in 2008, and according to Brin, every four hours Google indexed the equivalent of the entire Library of Congress. In early 2009, users were clicking on and off billions of pages per day and receiving tens of billions of daily advertising impressions. Google’s wingspan was also getting wider. In 2006, it acquired YouTube, the largest user-generated video Web site, with an estimated twenty-five million unique daily visitors in November of that year. In 2007, it acquired DoubleClick, the foremost digital marketing company; that year, DoubleClick posted seventeen billion display ads daily. Google now hogged 40 percent of both the twenty-three billion dollars spent to advertise online in the United States, and the fifty-four billion dollars worldwide online advertising. Google’s ad revenues in 2008 matched the combined advertising revenues of the five broadcast networks (CBS, NBC, ABC, Fox, and the CW). By 2011, Web advertising in the United States was expected to climb to sixty billion dollars, or 13 percent of all ad dollars. This meant more dollars siphoned from traditional media, with the largest slice probably going to Google. And Google had started initiatives to sell advertising for television, radio, and newspapers, which could boost its market share. Google also introduced other services: Gmail, Google News, Google Earth, Google Maps, Google Video, Picasa for sharing digital photographs, Google Books to search every book ever published, Orkut, a social network site, or additional “cloud computing” applications such as Desktop or Docs.
By 2008, Mel Karmazin was no longer alone in questioning Google’s intentions. Nor were those intentions obscure. In the disclosure documents it filed with the SEC in 2008, Google declared, “We began as a technology company, and have evolved into a software, technology, internet, advertising and media company all rolled into one.” When Google adds mobile phones and a full menu of software applications to its cloud computing, and if it figures out a way to monetize YouTube, Eric Schmidt told me, he thinks it is conceivable that Google can become the first media company to generate one hundred billion dollars in revenues. It irritated media executives to hear Schmidt say, “We are in the advertising business,” yet hear Google employees constantly say they were on a quest to bring information to the masses, as if they toiled for a nonprofit that awarded no bonuses.
Marc Andreessen, thirty-eight, who transformed the Internet into a mass medium by helping invent what became the Netscape browser when he was a student and who is today a successful Internet entrepreneur seeking to build his third billion-dollar-plus company, is suspicious of Google’s intentions: “Their game plan is to do everything. Google is Andy Kaufman. The whole thing with Andy Kaufman is you could never tell when he was joking. Google comes out with a straight face and said, ‘We’re just going to be a search engine. We’re not going to be doing any of this other stuff”—competing with advertising agencies, with telephone companies by getting into the cell phone business, with Hollywood, with publishers, with newspapers. “But I am quite sure they’re joking.”
THERE IS A DISCONNECT between the way Google is often perceived and the way it perceives itself. “I sometimes feel like I live on another planet and speak a different language from traditional media companies,” Eric Schmidt said. And in a sense, Google does live on a separate planet. When it moved to its first Mountain View campus in August 1999, the move reflected the determination of its two young founders to keep employees focused inward. The current Googleplex in Mountain View is a collection of two-and three-story buildings with outdoor tables and park benches shaded by trees, a vegetable garden, and walkways pulsing with people and bicycles. Employees enjoy free meals and luxurious snacks (at a cost to Google of about seventy million dollars per year), and are offered bicycles to travel between buildings containing massage rooms and gyms staffed with trainers. Employees eat at large cafeteria tables, take breaks in lounges with pool tables and espresso machines. No need to leave campus for a car wash or oil change; they’re available on Thursdays. Also available are barbers, dry cleaners, day care, dog care, dentists, and five physicians to dispense free physicals and medical care. Comfortable, Wi-Fi-equipped, biodiesel commuter buses transport employees to and from campus from as far away as San Francisco, and they run from early morning to late at night. No need to buy laptop computers; employees choose their own for free. Maternity leave consists of five months off at full salary, and new dads can take seven weeks off at full pay.
Most employees are alloted a day a week, or 20 percent of their time, to work on projects they feel passionate about. This has produced more than a few of Google’s technological breakthroughs. Just as important, it conveys a sense of freedom. “It’s a way of assuring people that they are scientists and artists,” said Indian-born engineer Krishna Bharat, who used his 20 percent time to invent Google News. It’s also a way to encourage engineers to push the envelope, to assume that their mission is to disrupt traditional ways of doing things.
There is at Google a utopian spirit not unlike that found at Burning Man, the annual anarchic-animistic retreat in Nevada’s Black Rock Desert that culminates in the burning in effigy of a giant wood and desert brush “man.” It does not go unnoticed by their friends that Brin and Page have been regular attendees at this weeklong retreat in August, whose Woodstock-like spirit is captured in Burning Man’s ten stated principles, which include a devotion “to acts of gift giving”; creating “social environments that are unmediated by commercial sponsorships, transactions, or advertising”; and “a radically participatory ethic” that can lead to “transformative change.” “Google is a cross between a start-up and graduate school,” said Peter Norvig, Google’s director of research, who joined the company in 2001 and wears bright Hawaiian shirts and sneakers with laces left untied. “Formal rules don’t matter. There’s still a loose feel. The disadvantage of being a start-up is the fear that you will run out of money. There is stress. Google is more like graduate school in that you don’t have that stress. You expect one day that the guys in suits will take over. That hasn’t happened.” The engineers remain in charge. Google aims to be nonhierarchical. Stacy Savides Sullivan, who joined the company in December 1999 and said she was its fiftieth employee, is Google’s chief cultural officer. She described the culture as “flat,” and said her mission is to ensure that it stays that way. The reason the founders “smashed together” employees—making them share offices and work in teams on projects—is to “create a company everyone wants to work at,” to impose a team culture. She described her task this way: “My role is to help facilitate and orchestrate the culture.” It is no accident, many Googlers believe, that in 2007 and 2008
Fortune
magazine christened Google the best U.S. company to work for.
Fortune
magazine christened Google the best U.S. company to work for.
Google is both egalitarian and elitist. Salaries are modest, and there are no executive dining rooms. The two founders and CEO Schmidt (all now billionaires) have insisted on being paid $1 a year and have declined stock option grants since 2004; they were each paid bonuses of $1,700 in 2007 and declined bonuses altogether in 2008. The top salary of $450,000 was paid equally to the other members of the executive committee, who in most cases received bonues equal to 150 percent of their salary. Most employees are invited to share the riches. Google projected that stock option grants to employees in 2008 would total $1.1 billion. These grants confer millionaire status on many Googlers. Google’s approach to users is also egalitarian, from its reliance on “the wisdom of crowds” approach to search results to its demonstrated faith in “open source” systems.
It is a close-knit culture. Google is not egalitarian about sharing information with outsiders. Ask just about any Googler basic questions—How many searches does Google perform each day? How many of its employees are non-Americans? What is the starting salary of engineers?—and you’ll receive a robotic, “We don’t disclose those numbers for competitive reasons.” Google has deliberately set out to build a team culture composed of elite performers, and an inevitable consequence is that it can be an opaque and insular culture.
Google’s hiring practices are certainly elitist. On the first day of work at Google, new employees attend an all-day orientation session at which they are told how few of the more than one million yearly applicants were hired at Google. They are reassured that more applicants are accepted by Harvard (about 7 percent) than are hired by Google (about 1 percent). The screening process relies on measurable things, like grades and SAT scores.
The applicants most scrutinized are the engineers and technical employees, who make up half of Google’s work force. “It’s an engineering-driven and -focused culture,” said a former Google executive who did not wish to be identified. “The founders don’t value marketing”—or most nonengi neering disciplines. Larry Page is aggressively disdainful of marketing and public relations. In early 2008, Page instructed Google’s public relations department, which consisted of 130 people, that he would only give them a total of eight hours of his time that year for press conferences, speeches, or interviews.
The thirst to quantify everything drove several visual designers to quit Google in early 2009. Douglas Bowman, who was hired as Google’s first visual designer in May 2006, wrote a blog explaining why he left. “When a company is filled with engineers, it turns to engineering to solve problems,” he wrote. Google wanted to test market every color, every design. Unlike Apple, Google was more concerned with functionality than taste, elegance. Management, said Bowman, pushed to “reduce each decision to a simple logic problem. Remove all subjectivity and just look at the data.... And that data eventually becomes a crutch for every decision, paralyzing the company and preventing it from making any daring design decisions.”
Google honors its engineers as creators, treating them the way the legendary management consultant Peter Drucker suggested a half century ago that companies should treat “knowledge workers,” said Hal R. Varian, Google’s chief economist. But an engineering-dominated culture has drawbacks. “In some ways, they have not done enough to communicate what they are doing internally or externally,” said Paul Buchheit, Google’s twenty-third employee, the one who coined their “Don’t be evil” motto and who left with three other Googlers to launch a social network, FriendFeed, in 2006. “Part of the culture is not to communicate. That’s what we did when we started Gmail. We put it out without an announcement.” In beta testing new products, Google does get feedback from users. But something else is at work here as well. Engineers are rarely accomplished communi cators. Google is a culture dominated by a belief in science, in data, and facts, not instinct or perception or opinion. This reflects not just a disdain for public relations, but also a whiff of arrogance.
Whether the employee is an engineer, a manager, or a marketer, a belief in the company’s virtue is central to the Google culture. From day one, Google forfeited advertising revenues by refusing to run ads on its home page and by refusing to allow advertisers—as competitors like GoTo did—to pay to get their products ranked higher in search results. Google could run more ads than it does, but instead discards ads that don’t attract clicks or are not deemed “relevant” to users as information. At the core of the Google value system, said engineer Matt Cutts, is the belief that the user experience matters most, and if the user experience is simple, and fast, and uncluttered with ads, and if Google makes no attempt to steer users to its own sites, a bond of trust will form. “We maintain a church/state wall” between the information a Google search provides and advertising, said Larry Page, who likened what Google does to how newspapers strive to keep the influence of advertisers away from the reporting of news because “there is an inherent conflict between the two.”
Google won friends among users by being free; it won friends among advertisers by charging only if users clicked on the text ad; it won friends among news readers with Google News, which is both free and until early 2009 was ad-free; it won friends among Web sites and small businesses by generating advertising dollars and new customers. From its second auction program, AdSense, Google said it pockets 20 percent of the revenues, giving the rest to these Web sites, or what Google calls its business partners. (Actually, said several of those partners, Google also charges 10 percent of “overhead” costs, so partners net about two-thirds.) Google, in 2008, provided a total of over five billion dollars to its hundreds of thousands of “partners.” Little wonder, then, that Google was often seen as a savior by those dependent on the Web. Jason Calacanis, who cofounded Weblogs, Inc., a company that publishes blogs, said AdSense generated in 2008 a total of four thousand dollars a day in advertising income for his bloggers.
Google does its part to address global warming. It places on its roofs the largest installation of solar photovoltaic panels of any corporate campus in the United States, generating sufficient electricity to power one thousand homes. It has solar-powered stations in its outdoor parking lots to charge its fleet of hybrid cars, and offers subsidies (five thousand dollars at first and now three thousand) to any employee who purchases a hybrid that gets at least forty-five miles per gallon (one thousand employees have received this subsidy). The company earmarks 1 percent of its profits to its philanthropic arm, the Google Foundation. CEO Schmidt sometimes lapses into speaking of Google as a “moral force,” as if its purpose were to save the world, not make money.
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