The Google Guys (21 page)

Microsoft became an enterprise computer company by sneaking in the back door. Corporate IT departments were reluctant to switch from a centrally controlled mainframe system to a distributed system of PCs that individuals owned, used, and upgraded themselves. But PCs became cheap enough for managers to buy with a corporate credit card, and they spread to the extent that IT departments had to accept and integrate them into the corporate systems. Girouard is infiltrating corporations with the same tactic. “What Internet technology is used in every business?” he asks. “
Google.com
. Web search. The job of my organization is to transform cloud computing into something that corporate IT does care about and makes use of. It's a rogue approach to changing corporate computing.”

Microsoft's desktop PC programs still dominate in corporations. But Girouard says Google is making substantial progress, and that there are more than ten million business users of its applications programs—both free ad-supported versions and paid versions more appropriate to corporations. Half a million businesses have signed up for the paid versions, with more than three thousand more signing up every day. Most are small businesses, but a few are big companies, including Genentech, Procter & Gamble, and General Electric. Virtually all the companies, however, are still using Microsoft applications as well. “We view this as a marathon, not a sprint,” says Girouard.

Microsoft's view is a remnant of founder Bill Gates's vision, stuck in the old model he helped create. Like the mainframers—including IBM—that Microsoft helped displace from the center of the computing world, Microsoft finds it hard to completely displace its older, more expensive model. IBM had trouble weaning itself from its expensive mainframes, and Microsoft has trouble extricating itself from its more costly PC software model. Selling software is Microsoft's money maker. In order to compete with Google, it will have to learn to make money from leasing out software, adopting free or cheap open systems such as Linux, and generating revenue from online advertising, where it has consistently failed. “The trajectory in computer science is clearly on our side,” says Girouard.

Bill Gates, in fact, had trouble accepting the power of the Internet. Before 1995, Microsoft was trying to create its own “information superhighway,” a proprietary networking system that it alone would own and control. In 1996, I conducted an extensive interview with then-CEO Gates, who was still angrily dismissing the future power of the Internet. “Oh, sure, the Internet is everything,” he sneered. The PC visionary had trouble looking beyond his own bubble.

At Google, any idea is fair game. “Most people would like to divide the world in certain ways—enterprise products, consumer products, media,” says Girouard. “Larry and Sergey don't see things that way. They see people and the way people use technology. They ask, ‘What problems are people having that brave, smart computer scientists can help with?' They never assess whether we have the DNA to do it right. They just look for hard problems to solve that would have a material effect on millions of people.”

Not everything works, and Google has killed a lot of projects. In December 2008, as recession put pressure on even Google's bottom line, Larry decided to kill a lot of projects that seemed to be going nowhere or were not successfully competing with existing products from other companies. The company ceased work on Dodgeball, a mobile social networking service, and Jaiku, a Twitter-like microblogging service. And it killed Mashup Editor, a product in private testing that allowed outsiders to create new Web applications using Google services and technologies.

Some projects have been killed by more successful and ambitious offerings within Google. One is Google Video, which was made obsolete by YouTube. Google Catalog Search fell victim to Google Book Search. Part of being innovative means being willing to fail. But it also means being able to succeed, and Google's list of new products and new industries to tackle keeps growing.

Even re-creating products already invented by others, Google benefits from the ability to collect more data when people use Google's version. Google's new Chrome browser, for example, has the potential to increase Google's knowledge of what sites people are visiting. It has its own RSS reader—a software product that allows people to automatically collect feeds from news sources and bloggers—even though other companies already have perfectly good RSS feed products. But it allows Google to collect still more data about people's habits on the Internet and apply it to their computer algorithms.

Google executives tend to argue that the existing products, especially those created by Microsoft, are in dire need of improvement. “These apps are coming into a market owned by apps that are now twenty to thirty years old,” says Girouard. “It's clearly the case that we have crazy new apps; that the fit and polish is not there. It's breakthrough technology, but the degree of fit and polish, we will work on.”

As for tolerating a string of failures, most good companies in Silicon Valley know that you cannot innovate without being willing to make mistakes. And people tend to forget that Bill Gates built an empire on me-too products, most of which seemed like failures for years until the company got it right. Even Microsoft's operating system was a derivative of one created by another company, which Microsoft licensed from it. Many of the major software applications Microsoft created were based on products invented elsewhere. And, like Microsoft, Google is wealthy enough to spend the money on experimentation.

A more substantive criticism may be that Larry and Sergey have a tendency to believe that they can do a better job than any competitor, creating many things that they could just as well buy. Google's supernetwork is an example. Although it's built with off-the-shelf PCs, their design is modified for efficiency, as is the network connecting them. But does Google really need to invent everything anew?

One thing Larry and Sergey have trouble with is figuring out how to complete a product. Their computer scientist approach is to release products before they're perfected, using the Internet to collect opinions from millions of users to tweak the design. In general, it's a brilliant approach, something that could not be done as efficiently before the Internet. And it's a huge contrast to Microsoft, which creates its products behind closed laboratory doors and releases products that are too complicated for most people to fully exploit. Bill Gates has admitted that this ends up being the case because Microsoft relies on “experts,” mainly product reviewers, to design products. Every product reviewer makes a list of features that a product should have, and creates tables checking off the items on the list and comparing which products have the most check marks. And every reviewer has a different list.

Google's products invariably start off with lousy reviews because of everything they lack compared with the competition. But the company carefully adds features that are really needed by most users, and ends up with a clean, easy-to-use product, if not the most versatile. The Gmail program, for example, was panned by a lot of reviewers when it first came out. It's now widely respected for its simplicity and dependence on Google's search capabilities, which rely on searching for names or words in a long list of e-mails rather than requiring users to organize everything into categories to make them easier to find.

The difficulty with releasing a product in “beta” form, before it's finished, is that a product is never really finished. Most software developers just get as far as they can under the deadline they're given, then extend the deadline before releasing the product to the public, in order to get in other features they feel certain are necessary. At Google, some products never seem to come out of beta. Gmail, for example, has been on the market for five years, and is still listed as a beta product. Google has never explained why this is the case.

It's become something of a joke in the industry. Says board member Hennessy, “Sergey is frustrated with the fact that even when a product is ninety percent there, it's still in beta. It's hard to figure out how to get it to where you want it to be.” But he adds that making that decision is a problem at every innovative company. Google is just more public about it.

And overall, he's extremely impressed with the company and its products. “Google's execution, certainly since the IPO, has been as good or better than any company I've ever seen,” he says. “It's driven by analysis and the approach of getting all the data in front of you, so you don't spend as much time to make a decision: Is this a big issue or a small issue? Is there a quick fix or is this a major problem? That kind of thing goes on a fair amount.”

By tapping the power of technology and imagination, Larry and Sergey have started morphing Google into a new kind of company; one more diversified, perhaps less focused, certainly more ambitious. But this is also dangerous territory, technological landscapes in which they have neither experience nor a head start. Sometimes they wield Google as a blunt instrument. It's not the best way to win friends. This time, Google is moving into new markets in which its competitors are aware of the potential and are determined to get it right. And they know who the enemy is.

A little sincerity is a dangerous thing, and a great deal of it is absolutely fatal.

 

 

F
or a while, Chris Sacca seemed to be turning Google into a phone company. A lawyer by training, he's a former Google manager whose specialty was “special initiatives.” He had been hired to handle negotiations and legal work as Google went about buying up fiber optic cables laid by telecommunications companies in the late 1990s, and lying fallow since the dot-com crash.

A few years ago, he got himself into trouble with another group at Google. Google has been creating applications for cell phones for several years, but has been having trouble getting cell carriers to allow customers to install the apps on their phones. During a lecture at Oxford, someone asked him why his wireless carrier blocked customers from using Google Groups on their cell phones. It hit a sore point for Sacca. He had grown weary of the fact that most cell carriers were so resistant to change. Mostly, they want to dictate what applications people were allowed to use, and they prefer to dictate that customers use applications that the cell carriers themselves create, even though they're invariably inferior to those created by independent software companies. It's an extra source of revenue for them, and they hate giving up any control to outsiders. Sacca sympathized with the questioner, and complained that Google had even gotten letters from telephone companies telling Google to prevent people from using Google's free apps on their phones.

The media picked up on his comment and it spread. Google was at war with the cellular providers. Very soon, the mobile group within Google, which made the applications for mobile phones, complained. The group was wary of alienating the telephone companies, because it was trying to persuade them to work with Google. “The Google Mobile business got incredibly mad at me,” says Sacca. “They even wrote a letter to get me fired. We'd been bullied into not saying anything.”

Sacca has since left Google, but he was not fired. He left after his stock options were vested, and decided to take a break from the nonstop treadmill of working as an entrepreneur. He still praises Google's culture. “It was an exciting entrepreneurial time,” he says. “We were flying under the radar. That was really fun. We were dressed in jeans and sweatshirts and moving millions of dollars around.”

Sacca took his problem with the telephone companies to Larry. Fortunately, Larry had other ideas about the uproar. Recalls Sacca: “Larry's attitude was, ‘Look, what we're saying here is entirely true. The wireless carriers are trying to get between us and our users. If we try to appease them, we'll lose our identity in the process. Or we can stand up and try to evolve this space into what it should be.' ”

Larry's response about changing the cellular industry, in fact, was to become even more aggressive. He encouraged Sacca to pursue a bid for a wireless spectrum that the U.S. government was offering to sell to phone companies. “Larry gave me a push, to figure out how to be more of a catalyst, to help shape the wireless space.”

The role of industry catalyst has become a huge one for Larry. It explains some of the company's most confusing moves. It also causes a lot of animosity among the companies being catalyzed.

Telecommunications is Larry and Sergey's current favorite because in this area they see a picture out of whack, like a framed photograph cracked and misaligned after an earthquake. The Internet is the earthquake, and Google is the fixer trying to bring the two halves back together. On one side is the public, ready to embrace the cheaper and more robust capabilities of the Internet, the philosophy of open standards rather than closed systems controlled by large corporations, the luxury of freedom of choice. On the other are the telephone and cable companies, unwilling to reach across the chasm and embrace the changes the Internet offers—including cheaper or free services.

With that philosophy, Sacca, who is known as a ruthless negotiator, got top management to approve a bid of up to $5 billion to buy the rights to the 700 MHz wireless spectrum.

In pursuit of that goal, the bid came with a caveat. Google would bid only if the FCC stipulated that carriers keep the system “open,” including a requirement that the winning bidder of one coveted section of the spectrum—known as the C-block—allow all cell phones, not just its own, to operate in the spectrum. That ensured that if another company won the bid, Google cell phones and mobile applications would still work in the spectrum.