The Google Guys (8 page)

In mid-2008, they shut down the free dinners at some of the cafeterias—those in buildings that don't hold the engineers. The reasoning is that engineers are the ones who work late into the night, while everyone else has a real life to go home to. Google spokespeople say that the cafeterias in nonengineering buildings were very lightly used for dinners, and it wasn't worth the expense to keep them open late. This event made quite a splash in tech blogs, whose writers were astounded that Google was cutting off free dinners. But the outrage was overdone. Nonengineers can still get a free meal when they work late; they just have to walk to an engineering building to get it.

In the biggest public backtrack, Google decided in 2008 to reduce subsidies for the extraordinary on-campus daycare centers for employees' children. When they first decided to offer on-site day care, Larry and Sergey opted to create the best daycare system venture capital money could buy. It's an expensive perk. The centers are based on a philosophy called Reggio Emilia, which advocates a self-directed learning program for those preschool Larrys- and Sergeys-in-training, an echo of the Google founders' own success at Montessori schools. They also boast highly paid teachers, small classes, and some of the best educational toys and learning tools.

This backtrack made the national press. According to a
New York Times
article, “someone at Google woke up one day and realized that the company was subsidizing each child to the tune of $37,000 a year—which nobody had noticed up until then—compared with the $12,000-a-year average subsidy of other big Silicon Valley companies like Cisco Systems and Oracle.”
⁶

Not only was Google spending three times as much as other companies, but its subsidy was more expensive than getting a Ph.D. in computer science at Stanford, where tuition tops out at about $34,000. So they decided to raise prices to the parents by about $17,000 a year, making the price to employees a whopping $29,000 a year. Google was dropping its subsidy from $37,000 to about $20,000—still more than other companies, but for a daycare system that is much more expensive than others.

Parents cried, complained, and tried to get management to change its mind. This got Larry and Sergey to back off slightly on the tuition subsidy (they won't say by how much), but they did not change their opinion about the need to backtrack on employees' perks. According to the
New York Times
:

In short, as Google grows, Larry and Sergey have had to grow up and smell the perks, and the aroma turned out to be a bit too rich for a company with twenty thousand employees. Success is not entirely an upward spiral. The
New York Times
reporter concluded that Google was becoming “just another company.”

Eustace defends Larry's and Sergey's decision to cut back on perks, saying, “Over time a small number of perks multiplied by a large number of employees all of a sudden becomes a huge number. Look at bottled water per employee. Multiply it by twenty thousand people, and all of a sudden you're aghast. We just spent a million dollars in one year on water.” Regarding the daycare subsidies, he notes that “the benefit went to a relatively small number of people, but we were paying more per child than a full-time nanny would cost . . . . The numbers just didn't work out very well. It's healthy for us to look at each of those things. I absolutely think they have a right to look at our expenditures.”

This became more critical when the recession that hit the world in 2008 hit Google as well. For the first time, the company started laying off employees. It started with several thousand contract workers, temporary employees who do not work directly for Google. But in January 2009, acknowledging that even Google had to start watching the bottom line, the company announced that it would slow its frenetic hiring pace and was eliminating jobs for one hundred of its recruiters. It also closed several far-flung offices, although it's offering those employees jobs elsewhere at Google.

The idea that Google is becoming “just another company” is a bit of an exaggeration. But, as is inevitable for any company that becomes as big and powerful as Google, the sharp edges are becoming worn as ideals bow to practicality, with the executives conceding to some difficult choices. The company is becoming both tougher and softer. The same is true for Larry and Sergey themselves.

He ne'er is crown'd
With immortality, who fears to follow
Where airy voices lead.

 

I
n January 1999, a reporter knocked on the door of a Menlo Park apartment that had a handwritten sign reading “Google World Headquarters” hanging by the doorbell. Larry and Sergey had gotten their first investment from Andy Bechtolsheim just five months earlier, and the seven-person start-up was still working out of the apartment's kitchen and garage. (“Starting Monday, we'll have 6 full-time employees. This week we have 5, last week we had 4. I think it's going to keep growing at that pace for a while,” said Sergey.)
¹
The reporter, Karsten Lemm, wasn't looking to profile an incredibly promising start-up. Larry and Sergey were just two of several entrepreneurs he was interviewing as part of a story for the German news magazine
Stern
about Silicon Valley and the start-ups that kept springing up like poppies in the spring. Larry Page's business card then said he was CEO of “Google!”—that exclamation mark a sign that the pair aspired to be as important as “Yahoo!”

Larry and Sergey talked with Lemm about the start of the company, getting funding, and why they weren't late to the search engine game, with Sergey adding a telling comment: “There's one more important thing, and that's to bring what we've done to the world. That's very exciting, too, of course. And we think this does have a potential to really change things forever.”

Entrepreneurship is a crime of passion. It requires motive, means, and opportunity. The opportunity that was handed to Google was appreciated by nobody but its founders until it was too late to imitate. The means and the motive are pure Larry and Sergey. Google is one of those companies that, like Apple and Microsoft, relies so heavily on the founders that, without them, it just wouldn't have the dynamism that makes it great.

Theoretically, any of a half dozen companies in business in 1999 could have been where Google is today. Yahoo was the leading Internet company and the main source of finding information on the Web (although it was not a search engine at the time). Microsoft had reached into its very deep pockets to take over the Web browser business and launch the Web site MSN, and was boasting that it was now Internet savvy. The search engine Ask Jeeves had a multibillion-dollar valuation.

But in reality, none of them could have been Google. They didn't have Larry and Sergey or their deep understanding of the Internet, their evangelical zeal and dedication to “the search” as the savior of the Internet. Larry and Sergey had instincts that pointed them in the right direction, like an arrow flying toward dead center of a target. Those traits are what made Google so damnably successful.

They're also frustratingly stubborn, bold to the point of recklessness, and imbued with the sense of the infallibility of youth. They were the right people at the right time, online technologists at the start of the Internet Age.

But it wasn't just Larry's and Sergey's dedication to search that made the difference. They made the right business decisions as well. The surprising thing is that they succeeded despite their lack of previous business experience. Before starting Google, the sum total of that experience was the semester Larry spent working at a bagel stand at the University of Michigan.

And yet, in ten years they managed to turn Google into a corporation with twenty thousand employees and $20 billion in revenues. That ratio of revenues per employee, at $1 million each, is one of the highest in the technology world. (Microsoft weighs in at about $700,000 per employee.)

Larry and Sergey clearly did something right. That thing is based on their idealism and killer instincts. The mission statement they included in the prospectus for their public offering in 2004 was “To do great things for the world.” They knew, unlike most other companies that provided search and portal services, that there was a huge need for a better way to search, that they had it, and that it was important. This attitude has dominated their thinking from the beginning.

Some people argue with the use of the term
idealistic
. In fact, Google's first proclaimed mission statement did not mention doing great things for the world. Before June 1999, the mission statement hastily put up on the company's Web site merely said, “To make it easier to find high-quality information on the Web.”
²

But even that mission statement works. Finding high-quality information
is
something that changes the world. The key thing is that Larry and Sergey were dedicated to the mission, without compromise.

When they filed for their first public stock offering in 2004, Sergey and Larry included the following statement in a letter to Wall Street: “Searching and organizing all the world's information is an unusually important task that should be carried out by a company that is trustworthy and interested in the public good.”

Says Jim Barnett, the CEO of Turn, “They're really serious about building great products, the way Steve Jobs is. I wouldn't use the word
idealistic
, but they're on a mission and will stay true to their vision. They're authentic and committed and valuesdriven.”

That attitude spread from Larry and Sergey through the rest of the company, and has not changed. Craig Silverstein, Google's first employee, describes it this way: “I believe we're enabling the Information Age to continue to grow and continue to be useful. There is great potential for good there. My guess is that most people [at Google] would say something similar to that.”

Could the founders have possibly imagined Google would get as big as it has? Yes, says Silverstein. He recalls a conversation with Larry as Google was just getting started: “I remember once saying something like, ‘Yeah, if we got this deal, and some other deals, maybe we can be a ten-million-dollar company.' Larry said we should be a ten-
billion
-dollar company. I thought he was joking. But now I don't think he was. [Larry and Sergey] have always thought big, and always had this idea that they would succeed in this business.”

Modesty was never one of their strong points.

As a couple of kids from Stanford, hiring Stanford alums, Larry and Sergey were written off by competitors as unimportant. Louis Monier, the cofounder of AltaVista, recalls the attitude at the time: “This is just another Stanford thing.” Monier felt the same way. “The feeling when I first met Larry and Sergey was that these kids are trying, but the market is saturated. I don't think anybody took the Google guys very seriously. Nobody noticed that Google's traffic was going up. Nobody paid any attention until they started to get some real money, and early adopters started moving to Google.”

Ironically for a company that makes all its money from advertising, Larry and Sergey never followed the typical dot-com strategy of spending their VC money to advertise themselves into public awareness. They did put up a few small banner ads on sites such as
WashingtonPost.com
, in exchange for search support. They also went to a couple of trade shows.

But when they started the company, their disciplined frugality meant avoiding expensive ad campaigns. “We've resisted the temptation to have big advertising campaigns,” Sergey said in 2000. “I'm not sure it's the right thing to do. I am concerned about long-term profitability.”
³
So they turned to the Internet itself to spread word of their technology. The key was simply to get their product in the hands of early adopters, influential people who would recommend it to others and make it seem like the thing that cool people wanted to use. In those days, Larry and Sergey met in person with early adopters to tell their story. They had huge enthusiasm and great instincts about how to get Google known; they would tell journalists and other influential writers online to conduct vanity searches on the writers' names, impressing them with the fact that Google would find articles for them that they had written. Appealing to reporters' egos was a surefire hit.

They created so much buzz that they made
Google
a verb. Yahoo had spent millions of dollars on clever television commercials asking, “Do you Yahoo?” But nobody ever said they did.

As it turned out, this approach made it unnecessary for Google to advertise. The company grew so quickly by word of e-mail and online commentary that Larry and Sergey never had to spend the money.

An abundance of observers are ready to offer opinions on why Google ended up as the most important, fastest-growing company on the Internet. Many, of course, believe it was Google's technical superiority that gave the company an enormous head start. “Their idea of PageRank—let the people who publish on the Web vote on popular sites—was an excellent idea,” says Monier. “The PageRank idea is absolutely brilliant. It makes a huge difference.”

But counting links is something that any search engine could have done. When he created PageRank, Larry, remember, was inspired by AltaVista's ability to track links. The difference is that Larry and Sergey recognized that importance while everyone else in technology overlooked it.