Google: From Company To Cult. What Now?
Wedding planning. Maps. Ultra-high speed fiber networks. Clean energy. 3D modelling. Telecommunications and calling. Mobile phones. Mobile phone software. Browsers. Geolocation. Robotics and driver-less cars. Venture capital. TV. Bookseller. Blogs. Moon travel. Personalized shopping. Cataloging art. Hardware. Scanning libraries. Healthcare. Genetics.
And you thought Google was into Search?
What this 199.70B company is into, may be difficult to sum up. After all, it does maintain 150 distinct Internet domains.
The missionary position
In any other company perhaps, this would have been a vision. It is Google's 'mission' to organize all the information of all the world.
Outer space is part of the world, right? Google has a partnership with NASA. The company has other space exploration initiatives, besides. How does space exploration benefit Google? There is a readymade answer. "As people search for and discover new information in and about the universe, the content their work generates will ultimately be searched by other users. This endless cycle helps us further our mission of organizing the world's information and making it universally accessible and useful," says Google.
Now while the syllogism is structurally sound, it does not really seem to make much sense. Google is trying to say its space exploration programs will create new information, which will need to be searched, and since Google is a search company, it stands to benefit. But wait, Google does not say that. It says it will further the company's mission, and does not really specify any business benefits.
According to the company website, Google is a global technology leader focused on improving the ways people find and use information. Everything in the world can be, and is, expanded or reduced to chunks of information. Take Google Street View and Google Maps. If the company is capturing terrain information and satellite data, that is information. That you can go to Google Earth, and see your house, and your car parked infront, is only about data granularity.
Google is not just a company, it has reached iconic status in popular culture. The company has some 71 offices around the world, and is amongst the most respected and recogniSed global brands.
Google is a mission. And whatever Google does or not, Microsoft seems to want to be able to do.
Two to Tango
Google can be defined by the enemies it has chosen. Google's competition inlcudes general purpose search engines (like Bing and Yahoo), vertical search engines and e-commerce websites (like Kayak, Monster, WebMD, Amazon, eBay), and social networking sites like Facebook and Twitter. Commercial software companies like Apple and Microsoft are also the competition.
In chosing to battle with the Redmond giant, Google could well be on its way to becoming a new and badder Microsoft. Much like Microsoft, Google also dominates its key marketspace, and is getting into line extensions that point all the way to a Google kingdom. Both the companies have similar product lines, be it operating systems (Chrome OS, Android), browsers (Chrome), platforms (Google Apps engine), office and productivity software (Google Docs).
Then there are the antitrust issues. Europe is conducting a formal antitrust investigation on how Google may have misused its status as the dominant search provider of the Internet. In the US, Texas Attorney General Gregg Abbott is looking into Google for possible antitrust activities.There are a whole bunch of other lawsuits on copyright and privacy besides. For example, the US Justice Department is asking questions on Google's purchase of ITA Software, a company that develops software for the travel and airline industry. There are also quite a few class action lawsuits against the company after Google admitted to collecting sensitive and private information from wireless networks while capturing street images for its mapping service.
Google's very first (2004) annual report names Microsoft (and Yahoo) as potential threats. "We expect that Microsoft will increasingly use its financial and engineering resources to compete with us," it says. Subsequent reports continue in the same vein, till in 2009, when the language changes altogether.
If Google is following Microsoft's lead, Microsoft is dancing back, hoping Bing can be the new Google. It has a search (Bing), Bing Maps (earlier known as Microsoft Virtual Earth), Office Web Apps and Windows LiveMesh to counter Google Docs, SharePoint WorkSpace and Windows LiveMesh (as opposed to Google Wave), among other things.
Some of Google's bad blood with Microsoft may be because of Schmidt. He had to counter the Redmond giant both when he was at Sun and then Novell, and Googleplex may have caught on the vibe.
What about Schmidt?
The Google guys were not very keen to have a CEO breathing down their necks, but John Doerr and Michael Moritz, were adamant on this. Since Kleiner Perkins and Sequoia Capital had invested in the company, Google had to tow some of their line, whether they liked it or not. Besides, they were legally obligated to hire a chief executive officer within a stipulated period of time. Failure to do so could result in them having to pay back the $25M in funding they had taken.
If the Google guys were reluctant, Schmidt himself was not too keen either. In fact his exact words are believed to have been, "Nobody really gives a shit about search." (The Google Story by David Vise has an entire chapter dedicated to the hiring process of Schmidt as CEO). His appointment also came with a $1M catch. Page and Brin insisted he invest some of his own money in the company as part of the hiring process. Doerr persudaed Schmidt, and he agreed to buy preferred stock, and joined Google as CEO in the August of 2001, taking over the reins from founder and CEO Larry Page.
Come April, Schmidt will continue to be chairman and some 10 percent owner of Google, but the reins of the company will go to Larry Page, who will be the new CEO.
The new old CEO
Schmidt's blog announcing the change in Google's management clearly stated that the new CEO is here for good, and was not filling in the role temporarily. The company's decision to go with Page as the CEO took everybody by surprise and Wall Street by shock.
But is Page really such an unlikely choice? We have to remember hiring a CEO outside the holy triumvirate will probably always be an anathema for the company. Page is perceived to be a nice guy; but nice guys can be smart. If the man could build a working printer out of Lego blocks when he was a kid, he can surely figure out how to walk and talk like the CEO of a multi-billion dollar company now. Plus, he will still have Schmidt and Brin. They will still be taking decisions together, as always.
Page boasts of a 'healthy disregard for the impossible', and mere lack of precedent will not stop him. Charlie Ayers, Google's famous chef, tells the story of how he would insist on suppliers giving a 35% discount for long-term contracts with the company under the tutelage of Page. Do you subscribe to any particular management theories, 'Playboy' magazine had asked Page in an interview. "We try to use elements from different companies, but a lot is seat-of-your-pants stuff," Page had replied. He has come a long way since.
Google's link-analysis search algorithm that had made it king in the first place, is called 'PageRank'. In his new avatar, Page will lead product development and technology strategy. Page knows Google products inside-out, he helped build most of them. He has no experience in running a company, but he is not running the company, he has hired some of the best brains in the business to do that for him.
Google's Chief Business Officer (and senior VP) is Nikesh Arora, who was chief marketing officer and member of the management board at T-Mobile before joining Google. Shona Brown, yet another senior vice president, and in charge of Business Operations was a partner at McKinsey. Shona has a bachelor's degree in computer systems engineering, an M.A. in economics and philosophy from Oxford University (which she attended as a Rhodes scholar), and a Ph.D. and postdoctoral degree from Stanford University's Department of Industrial Engineering and Engineering Management. Page can continue to focus on the 'mega-ambitious dreams'.
The new arrangement frees Schmidt to do his own thing, while still continuing to be a crucial part of Google. He can focus more on the Schmidt Family Foundation more perhaps. He is part of the President Obama's Council of Advisors on Science and Technology (PCAST). He may have political ambitions and run for government (like Meg White or Cary Fiorina). Google has spent some $5.2 million lobbying in Washington, it would sure be nice if Scmidt ended up in Washington himself. Then there are Schmidt's business interests besides Google. TomorrowVentures, founded in 2009 by Schmidt, is a seed and early-stage investment firm. There is a potential conflict of interest here, especially as Google also has a venture capital outfit, Google Ventures with a $100M a year budget. Then there is the competition.
Chris Hughes, one of the Facebook founders, launched Jumo last year, a social network for social activism. Jumo is part of TomorrowVenture's philanthropic efforts. But then Schmidt is no longer CEO now. Neither is Google new to conflicts of interests. Sergey Brin's wife Anne Wojcicki has a biotech startup 23andMe, Google is an investor in which. It is not clear why a search/software company would want to have a stake in biotech research, and even though Brin recused himself from the discussions in this case, just think of the implications if Brin's wife's company was indeed not given the money.
What happens if the Google trio fight?
Google may be a multi-national and a multi-billion dollar business, but it has the agility and decision-making process of a small family-run operation. At the end of the day, just three guys get to decide what goes and what not. In this sense, Google is like a cottage-industry, only on a much much much larger scale.
Google bylaws provide that the company's CEO and presidents will together have general supervision of the company. That means Schmidt, Page and Brin. Google's annual reports clearly list any disagreement between the triumvirate as a potential risk factor. "In the event our CEO and our two founders are unable to continue to work well together in providing cohesive leadership, our business could be harmed.
Come 2009, and the scenario is slightly different. Google's 2009 annual report for example, points out a slightly different risk factor. It says that if the company were to lose the services of Schmidt, Brin or Page, or other members of the company's senior management team it may not be able to execute its business strategy. Its 2010 annual report follows suit.
If the Google trio disagrees, rest assured, it will be behind closed doors. They will be poster boys for solidarity in public in the years to come. And there are 20,000 more people to back them up. Google has a history of hiring incredibly talented people, Nobel laureates, for example, as a matter of course. This year the company plans to hire more than 6,200 people in what surely must be one of the company's biggest expansions.
So how come 20,000 incredibly talented people, including doctorates, Nobel Laureates, and Nasa scientists failed to see social media coming?
Wait for it
Google's social media initiatives have been rather jinxed. In 2003, the company wanted to buy Friendster, but Friendster refused to be bought. Orkut Buyukkokten, an engineer working with Google, developed the eponomous social networking site Orkut, which began as invitation-only. Orkut became quite popular when it was launched, and became especially popular in India and Latin America. Over the years, however, the site ceased to be unique, and stopped being fun, despite claims to both. It is now managed and operated by Google Brazil. There were also some "allegations" by a small company called Affinity Engines that Orkut "stole" its code, based on the fact that both the codes seemed to have the same bugs. Don't hold your breath for great things to happen with Orkut anytime soon.
Google Answers was Page's idea. It was something like a platform for crowdsourcing, where users could post a question, and specify how much they were willing to pay for an answer. If the answer was not satisfactory, the user would be refunded what he paid, minus a 50-cent listing fee. Answers did not really take off, and was subsequently retired. The company however bought Aardvark last year, which also has a similar working model, minus the payments bit. Aardvark is yet to reach a tipping point. Quora, a startup funded by Benchmark Capital, and launched last year is being heralded to be the next big disruptive thing in answers instead.
Google Wave was a personal online application and collaboration tool. There was a huge buzz before its launch and people clamored for invites. Wave however confused the average user. It seemed like a lot of work; and at the end of the day, Wave tried to fulfil a need the average user did not really have. It could have been a good enterprise product; but failed miserably as a consumer Internet application. Google killed the project.
Google Buzz, the app that could have challenged Twitter, but did not, is still alive, but it is running on crutches. Google was accused of not obtaining proper user consents to share private data, including address book contacts. Users had to opt-out of Buzz and they were subscribed by default to the service. Google tried doing some damage control, but by then it was really too late. Most users seem to have linked their Twitter accounts with Buzz and have promptly forgotten all about it. And now Google is considering buying Twitter for some $8B to $10B.
Google Me is believed to be Google's answer to social media. It is coming soon. It has been coming soon for almost a year now. Whatever it is, take a look at Google's purchases a little later in the story. The company definitely has a little social media something up its sleeve; and knowing Google it will get it right this time.
Google's business is primarily focused around search, advertising, operating systems and platforms, and enterprise. The company's latest annual report filed with the SEC on February 10, 2011, also says it aspires to build products that improve the lives of billions of people globally. What next? Well, the company owns a windfarm that can provide energy to 2 million homes, it has invested in genetics and is trying out a car that can drive itself.
Wall Street has been indulgent. Google's sales growth have been fairly steady in the last few quarters. Earnings have incresed steadily. Google's return on equity is 23%, which beats the industry average of about 17%. Not bad for a company that IPO'd at $85. The rate of growth has been a little flat last couple of years, but all that will change as the economy inches its way out of the Great Recession right into the next tech bubble.
Analyts peg Google's 12-month price target at some $750 to $800 a share, more than its $742 peak in 2007. Google's institutional ownership have been impressive as well. As has been the list of companies Google managed to own in 2010.
Google goes shopping
Google has already bought three companies in 2011, and it is just February. eBook Technologies and SayNow, to be integrated with Google Books and Google Voice, were acquired last month for undisclosed sums. Google also paid $10M for Fflick, a website devoted to aggregating film news based from Twitter.
In 2010, Google bought 25 companies. Businesses it focused on included social media, search, and photo-editing, among other areas.
Google's motto of 'Don't be evil' is admirable, but Google seems to have its own interpretation of evil, which is not. The company also seems to have violated several of its own principles over the last few years. Take Google Streetview for example. Google inadvertently picked up private data while its cars were out on the streets gathering information, in what the Australian communications minister has called the single biggest breach of privacy in history. In another significant breach of privacy, a Google engineer was fired for accessing Gmail accounts and chat logs of several minors. The company has been sued several times over its advertising practices. It has also been accused of removing and manipulating search results. A lot of what Google does is opt-out, when it really really should be opt-in. Google Books for example is believed to not always ask authors and publishers if they want their books scanned. The company also has to realize and respect that the Google way may not be the only way.
Google has a human and a emotional side to it that resonates with its users. The guys at the top are young, honest (or give a very very good impression of honesty), are extremely smart, and you have to agree that they are ethical, even though you may not agree with their brand of ethics. Google has also consistently been among the best places to work for. However, brilliance may lead to arrogance and a certain blind-sidedness. Zuckerberg and the Google guys are a lot alike in this respect. They seem to have a university-dorm eye view of the world around.
While geeks may inherit the earth, dumb people, the ones without doctorates or Nobel prizes, also have a certain right to the planet, and Google probably should start respecting them, including their rights to privacy. Like not wanting their house pictured on Google Maps. "Google policy is to get right up to the creepy line and not cross it," Schmidt has said. That is a far cry from not being evil. Incidentally, Schmidt has also said that he thinks people want Google to tell them what to do next. We really, really don't!