Googled: The End of the World as We Know It

PART TWO The Google Story

CHAPTER FOUR Prepping the Google Rocket

(2001-2002)

While Google’s venture capitalists fretted that Page and Brin were spinning their wheels and that the company cried out for professional management, the Internet was growing and changing at warp speed. January 2001 brought two innovations that profoundly disrupted the existing order. Steve Jobs launched Apple’s iTunes application, and within seven years, iPod owners had purchased and downloaded five billion songs. Already reeling from piracy, the big four music companies felt compelled to allow individual songs to be sold at a price Apple chose (ninety-nine cents), inevitably undermining the sale of entire CDs, the centerpiece of their business model. That same January, Jimmy Wales and Larry Sanger launched Wikipedia. Within seven years this nonprofit effort would contain ten million entries in 253 languages, changing the way people gathered information. Wikipedia and iTunes were reminders, as if any were needed, that we had entered the dawn of a new digital democracy that granted more power to individuals.

Page and Brin were convinced that Google would become an even more profound disrupter of the existing order. Their philosophy, Page told a class at Stanford, can be distilled into two words: Don’t settle. He defended the exhaustive process of hiring at Google, and finding managers who respected and nurtured Google’s engineer-is-king culture. But there were too many kings. It wasn’t until January 2001 that Google finally hired its first vice president of engineering operations, Wayne Rosing, who had held a series of senior management positions at Apple, Sun Microsystems, and the Digital Equipment Corporation. The process was laborious, but eventually Rosing was hired. That was “the real turning point,” said employee number 1, Craig Silverstein. “He brought a professionalism to management we had not had before.” When he stepped into the chaos at Google, a shocked Rosing found that one senior engineer “had 130 direct reports.” Instead of doing what most companies did by relying on financial management software made by companies such as Intuit, Page and Brin had insisted that Google engineers invent a new system.

DOERR WAS EAGER to find a CEO for Google, and thought his friend Eric Schmidt might be a perfect fit. Because Schmidt held a Ph.D. in computer science—making him the rare professional manager who could speak the language of engineers—and did not have an oversized ego, Doerr assumed he could work with the founders. At the time, Schmidt was the chairman and CEO of Novell, a computer networking and software company then in the midst of a merger with Cambridge Technology. He wasn’t thrilled with the job; the commute from his home in the Valley to Novell’s headquarters in Provo, Utah, was arduous, and Novell was underperforming. One night, Doerr and Schmidt were chatting at a cocktail party. Doerr asked Schmidt what his plans were, and Schmidt said he hadn’t thought deeply about it.

“I think you should look at Google,” Doerr said.

“I can’t imagine that Google would be worth much,” said Schmidt.

“I think you should have a talk with Larry and Sergey,” said Doerr.

As it happened, he already had. During the process of vetting Wayne Rosing, Brin had called Schmidt, a former colleague of Rosing’s at Sun, for an opinion. The call lasted forty-five minutes and ended with Brin inviting Schmidt to visit Google.

Schmidt visited Google in December 2000. He knew Building 21 well, for he had worked there when it was Sun’s headquarters. In the office Page and Brin shared, he found two desks, a sofa, and the same lava lamps Sun had had on display. In contrast to the carefully groomed Schmidt, Page and Brin seemed to use their fingers rather than a comb to tidy their dark hair; Page’s shorter hair is pulled down and clings to his forehead, while Brin’s wavy locks are pushed back and one sideburn is longer and slants more sharply than the other. To his surprise, Schmidt saw his bio projected on the wall above the couch. There was little foreplay. “They started going at it,” Schmidt recalled. “They said I was mistaken in my business strategy with regard to proxy caches, a method Novell was using at the time to try to speed up Internet connections. Their thesis was that there was so much bandwidth coming down that such proxy caches were a bad business and would be unnecessary. I, of course, disagreed, and disagreed violently. This was a forty-five-minute meeting that went on for an hour and a half. I could not get them to accept the brilliance of my argument. They started from the data they saw at Google, and peppered me with questions. I hadn’t had that good an argument in all my years at Novell.” Page and Brin were also pleased. They appreciated Schmidt’s technical prowess, and he passed the airplane test when he revealed that he, too, was a regular attendee at Burning Man. How much of a suit could he be?

Schmidt was born April 27, 1955, in Falls Church, Virginia, and like Page and Brin was raised in an academic family. Wilson Schmidt, his father, was a professor of international economics at Johns Hopkins and worked for a time in Richard Nixon’s Treasury Department; Eleanor, his mother, received a master’s degree in psychology but stayed home to look after Eric and two brothers. Eric attended public schools, where he got hooked on time-share computers, which in those prehistoric days still relied on punch cards. Another solo-sports enthusiast, he earned eight high school letters as a distance runner. After graduating, he was accepted at Princeton as an architecture major, but switched to electrical engineering because, he said, “I lacked creativity.” He became adept at programming. “All of us never slept at night because computers were faster at night,” he said. He worked summers at Bell Labs, where he was skilled enough to write a software program called Lex, a code that facilitated the writing of text. He received an electrical engineering B.S. from Princeton in 1979 and an M.S. and a Ph.D. in 1982 from the University of California, Berkeley. Graduate school summers were spent working at Xerox PARC, the famed lab that hosted the creation of computer work stations, that forged the technology that became the mouse, laser printers, and the Ethernet. After completing Berkeley, he joined the research staff in the Computer Science Lab at PARC, where he worked alongside such software pioneers as Bill Joy (who became one of four founders of Sun Microsystems) and Charles Simonyi (who would oversee the development of Microsoft Word and Excel).

His first corporate job was at Sun, which he joined in 1983. Over the next fourteen years, Schmidt would demonstrate a repertoire of talents: as a manager who hired and supervised ten thousand engineers, as a scientist who nurtured the innovative programming language Java, and as Sun’s chief technical officer. He left in 1997 to become CEO of Novell. By his own admission, he failed to do proper due diligence before he took the job. “When you grow up in a company that is well run, it’s hard to imagine a company not well run,” he said. Novell was not well run. When he arrived, Novell had a $14,600,000 shortfall to declare in its quarterly report, and executives there proposed they tap their reserves to cloak it. Schmidt chose to report the shortfall, and Novell’s stock took a dive. Chapter 11 was a real possibility. “Getting near bankruptcy is a pretty good experience for being a tough CEO,” said Schmidt. Looking back on his tenure at Novell, Schmidt candidly said, “I did an undistinguished job.”

Still, his skills and temperament were attractive to Page and Brin. More conversations ensued, and in February of 2001 they offered him the CEO job. Schmidt could not accept until the Novell merger was completed; it was in March that he was named chairman of Google. He assumed the title of CEO in August, and Page was named president, products, and Brin president, technology. According to SEC documents Google filed when it went public, Schmidt was paid a salary of $250,000 and an annual performance bonus. He was granted 14,331,708 shares of class B common stock at a price of 30 cents per share, and 426,892 Series C preferred stock at a purchase price of $2.34. LarryandSergey had a partner.

THE APPOINTMENT WAS GREETED with some skepticism. Schmidt’s critics said he was barely escaping from Novell. They sneered at the Mercedes he drove, the suits and ties he wore. They wondered whether he had the right skill set. “No one from his previous jobs,” said one industry insider who knows him well, “would say that Eric was an inspirational leader, a great speaker or salesman, a take-charge leader like Paul Otellini of Intel, Carol Bartz of Autodesk, or John Chambers of Cisco.” Skepticism about Schmidt was reinforced by the management structure announced by Google. Although Schmidt was named CEO, there was an unusual division of power. He, Brin, and Page would work as a team, and if there was a difference between the two founders over routine decisions, Schmidt would act as the tiebreaker. “We agreed that on any major decision, the three of us must agree,” he said.

When Schmidt arrived full time at Google there was some hissing that he was a stooge. “Eric doesn’t have a huge ego,” venture capitalist and former Fortune columnist Stewart Alsop told GQ. “He’s willing to suffer the myriad small indignities of being a pet CEO.” Reminded of this disparagement, Schmidt declined to take the bait and after a pause said, “I think it’s inappropriate for me to comment on myself.... Self-reporting is always suspect.” His low-key demeanor; monotone voice; and round, frameless professorial glasses were interpreted by some as signs of timidity. But over time, detractors came to appreciate his competence and maturity. His modesty also won converts. Instead of wearing his customary suits, Schmidt soon donned the Google uniform: khakis and a white or black golf shirt with the Google logo. He was building trust. Schmidt was assigned a small office containing two desks, but before he arrived an engineer looking for a place to park spotted the empty office and moved in. According to Rajeev Motwani, who continued to advise his Stanford proteges, when Schmidt arrived he assessed the situation and quietly took the second desk. “They became office mates. Can you imagine a company where an engineer can move into the CEO’s office? That tells you a lot about Eric, and about the company. He understood the company’s DNA, which is that what you do defines your importance.”

While Schmidt did not believe he had come to Google to fix a company that was broken, he knew its management systems were dysfunctional. He also knew he needed to go slowly in changing them. He saw that Page and Brin wanted to stay focused on technology and products, and had an aversion to intrusive bureaucrats. Schmidt set out to convince the founders and the engineers that good managers would liberate the engineers, reduce bureaucracy, provide an audited financial system that would better allocate resources and provide more transparency, a word the founders often invoked. “He found a way to bring the discipline of running a company but not lose the magic,” said Omid Kordestani.

Deftly, Schmidt shed old practices. The weekly free-for-all meeting of about a dozen executives, recalled Craig Silverstein, “had outgrown its usefulness. Yet it was hard to disinvite people.” So Schmidt simply said the meeting was too unwieldy and canceled it. Because he did not substitute another meeting, “no one felt excluded,” Silverstein said. Only later did Schmidt establish his own weekly management meeting.

There was an adjustment period, particularly for Schmidt, to get used to his two unusual partners. “Larry is shy, thoughtful, detailed, a linear thinker,” he said. “Sergey is loud, crazy, brilliant, insightful. Their personalities are so different. When I first came here I didn’t think Larry could talk, because Sergey did all the talking.” An unofficial part of Schmidt’s mission was to police the wildest ideas of the founders.

On one occasion, Brin proposed to Schmidt, “We should run a hedge fund.”

“Sergey, among your many ideas, this is the worst,” Schmidt said.

“No, we can do it better because we have so much information.”

Schmidt explained the legal complications, and said he talked him out of it.

And Page, for all his mania about efficiency, could be obsessive. A footnote buried at the back of Battelle’s book on search provides an illustration. He writes of seeking an interview with Page and receiving this weird counterproposal:

In exchange for sitting down with me, Page wanted the right to review every mention of Google, Page, or Brin in my book, then respond in footnotes. Such a deal would have been nearly impossible to realize, and would have required untold hours of work on Page’s part. Page and I negotiated for weeks over his proposal.... In the end, Page relented.

Like the founders‘, Schmidt’s background was fairly narrow. He was an engineer, with management experience. He had little experience working with advertisers or media companies, which would soon become apparent. But what he did have was maturity and an even temperament. It was said, sometimes by Schmidt himself, that he was brought in to supply “adult supervision.” He was the friendly, wise man with a touch of gray in his neatly parted sandy hair. Eventually, Schmidt became Google’s facilitator, or “catcher,” as he likes to describe his role. “I catch whatever the problem is.” (When I later asked the decidedly non-sports-loving Brin if this description was accurate, he said, “I don’t know what a catcher does.”) The more serious answer, Schmidt added, is that he facilitates decisions that need to be made, establishing management systems, meeting with financial analysts and reporters, serving as Google’s chief link to industry and government. To the founders these were odious tasks, but increasingly important ones. He focused Google on outside technological dangers. “He made us better understand competition in the technology space,” said Marissa Mayer. Google once thought its competition came from search engines like Alta Vista or Overture. “Eric said, ’If we’re successful, Microsoft is going to jump in [to search].‘ Larry and Sergey and I were surprised.”

What could a late entrant like Microsoft do to impede Google? Schmidt, having spent much of his career in opposition to Microsoft, and having supported the government’s antitrust prosecution of the software giant, explained how Microsoft could use its dominant Internet Explorer browser or Windows operating system, on which search engines depended, to cripple Google. Discussions like this, said Mayer, helped persuade Google to build its own applications and, eventually, its own browser, to ensure its independence.

Schmidt also helped focus Google internally. When he discovered that nearly half of Google’s searches were coming from outside America, yet there was no concerted effort to sell ads against these searches, he seized the opportunity. He prodded Omid Kordestani to travel overseas, jokingly saying, “I’ll call you Monday morning at the United terminal and tell you what plane to get on.” Kordestani gained so much weight from eating fast food while on the road that when he returned from his successful trips abroad he would touch his belly and laugh, “Body by United!” Among Schmidt’s signal accomplishments, said Paul Buchheit, was that he kept Page and Brin “focused” and “kept things on track.” Often at meetings, he said, Page and Brin would suddenly change the topic at whim. “Eric would say, ‘No, we need to come to an understanding right now.’”

Soon after Schmidt’s arrival, the troika was romanced by Yahoo’s new CEO, Terry S. Semel, who had come to a Web business after twenty-four years as co-chairman and co-CEO of Warner Bros. Semel came to Yahoo at a time when Internet stocks had plunged; Yahoo’s stock had fallen from a market value peak of $127 billion to $12.6 billion. His arrival aroused the righteous anger of many in the Valley, who were suspicious of “outsiders.” He was dismissed as a representative of old media, as a troglodyte, a Hollywood suit. But the old media warhorse knew how to calm an anxious company, handing out backslaps, compliments. He was a self-proclaimed content guy, and wanted Yahoo to create more of its own, not just license the content of others. And he wanted to sell more ads. He brought in a former ABC network executive, Lloyd Braun, to oversee new content, and an experienced sales team led by Wenda Harris Millard. “Terry brought two things,” said Bobby Kotick, now the CEO of the game company Activision Blizzard, who served on the Yahoo board. Semel was “genetically predisposed to making money,” and if he was presented with one hundred ideas, he could spot the one or two that would make money. “He brought that. And he just brought the maturity and wisdom that comes from experience. He asked the simple question: ‘How do we make money?’”

Semel had huge gaps in his knowledge of the digital world and of Yahoo. He was shocked to learn that Yahoo had lost ninety-eight million dollars the year he arrived. Ron Conway recalled a dinner with Semel on his first day at Yahoo. He said, “Semel did not know Yahoo owned part of Google” in the form of the warrants it banked when it signed its search engine contract with Google. An avid deal maker, Semel became intrigued by Google, particularly after Jerry Yang and David Filo, Yahoo’s founders, urged him, he recalled, to “go meet these guys.”

Semel joined Page, Brin, and Schmidt for dinner in the Google cafeteria. Semel began the discussion: “Help me with something. We’re your biggest customer in the world, right? We both know what we pay you for the whole world is less than ten million dollars, right?”

“Yes,” they concurred.

“So what’s your business?” Semel asked. “You don’t really have a business.”

“We love what we do,” Page and Brin responded.

“Maybe we should buy your company?” said Semel, who thought it was enough of a business to throw out a billion-dollar purchase price tag.

“No, no. We don’t really want to sell our company.”

Semel walked away convinced “one hundred percent they did not want to sell.” He also walked away with assurances from Schmidt that Google was working on “their own technology” to monetize search. Later that year, when Overture approached Yahoo with their patented monetization technology and offered Yahoo a revenue guarantee, Semel signed a contract for Overture to sell its ads. Google was upset, but Semel said that in the first full year, Overture generated two hundred million dollars of advertising revenues. By 2003, Overture separately approached Yahoo and Microsoft with an offer to be acquired. Microsoft declined to bid. (They later reversed course and started up their own search engine.) In the end, Semel acquired two search engines, Overture and Inktomi, and Yahoo dropped its search license agreement with Google. (It was beginning to become clear what a colossal blunder it had been for Yahoo to farm out search in order to focus on building its portal traffic, relegating Yahoo to a weak second place in search. By buying Overture, Yahoo also inherited its April 2002 patent infringement lawsuit against Google.)

Google was growing fast, and the founders worried they’d divide into cliques and lose their cohesive culture. Stacy Sullivan, who had been hired in 1999 as the first employee in human resources, and Joan Braddi, Omid Kordestani’s trusted deputy, were asked to assemble a disparate group of early Googlers to devise a coherent mission statement of core principles the company could embrace. Twelve employees gathered in the cafe, each from a different department. The discussion went in circles for several hours, with Sullivan dutifully writing cliches on a whiteboard. Some wanted the group to enunciate a set of rules: Don’t mistreat people; Don’t be late; Don’t lose user focus; Play hard but keep the puck down. The engineers in the room weren’t interested in codified dos and don‘ts because they reeked of corporate America and offended their sense of efficiency. They also took too long to read. After hours of exasperating discussion, Paul Buchheit blurted, “All of these things can be covered by just saying ’Don’t be evil.”‘

Within a day, engineer Amit Patel, Google employee number 7, wrote the slogan in impeccable handwriting on whiteboards all over Google’s offices. The slogan became viral. When opposing an idea at internal meetings, Googlers would proclaim, “That could be evil.” The slogan became Google’s rallying cry, a way to distinguish itself from other corporations and Microsoft in particular, a way to harness the goodwill Google enjoyed as a free service bringing the world’s information to everyone’s fingertips. To former Intel chairman and CEO Andy Grove, the slogan was too vague to define a boundary, and smacked of self-righteousness. “Do you think Hitler thought he was evil?” Grove said he thought at the time. “It’s too vague, too self-serving, self-defining. ‘I’m not evil, therefore I’m not evil.’”

Eric Schmidt was happy with the slogan, though, and happy with what he was accomplishing at Google. Years later, he sat on one of three canvas-backed directors chairs jammed into the closet-sized conference room dubbed “the directors room” that is next to his office in Building 42. The view from a narrow vertical window overlooked a Google parking lot; the white brick wall to his left held a whiteboard containing mathematical formulas; to his right were several framed newspaper clippings, including one headlined “The Grown-Up at Google.” He admitted to feeling that he had grown as an executive since his days at Novell. “Most people who worked with me ten years ago,” Schmidt said, “would have said, ‘He’s smart, a nice guy, but he can’t lead.’ What is the distinction between then and now? Toughness.”

Back in 2001, his “toughness” was circumscribed. He did not issue orders to the founders, he had to persuade, to prioritize his concerns, and pick his battles. There were palpable tensions—the founders would sometimes loudly explode in meetings that the company was becoming bureaucratic, and Schmidt knew he was the target. These were three strangers working together, and the founders were uncomfortably ceding some management control over their invention, their baby. Schmidt knew the founders did not blame each other. There was rarely a hint of tension between Page and Brin—“In all the years I’ve worked with them,” said John Doerr, who is a Google director, “I’ve never seen them get angy with each other.” But it was not unusual, said another early investor, to witness emotional outbursts by the founders aimed at others, and to see these outbursts fielded and defused by the calm, self-effacing Schmidt. The go-slow, relaxed way that Schmidt approached the founders or changed the management meetings or eventually chased a squatter from his office was at times exasperating to others. While describing Schmidt as “the unsung hero” of Google, Shriram admits, “He had a slow start.” The founders at first, he said, “challenged everything,” and openly wondered: “Could they trust his judgment?” Meanwhile, the VCs were pushing for a revenue plan. And Moritz was skeptical that Schmidt was the right man to bully it through Google.

Schmidt needed help to lower the emotional temperature, and to upgrade Google’s management. That help came in the form of Bill Campbell, then sixty-one, a barrel-chested man known throughout Silicon Valley as “the coach.” At one time Columbia University’s head football coach, Campbell had also been a senior executive at Apple and a CEO of several Valley companies, including the Go Corporation and Intuit, the now-thriving online software company that provides financial services to individuals and small businesses and where he worked side by side with the founder. John Doerr knew that Campbell felt an obligation to give back to a Silicon Valley that had made him rich enough to own his own Gulfstream IV His discretion is legendary, and part of his allure. Aside from a profile in the magazine of his alma mater, the only other time he has ever been profiled was in a superb 2008 Fortune magazine piece by Jennifer Reingold titled, “The Secret Coach.” His many friends offered tributes but Campbell would not sit for an interview. A Google search retrieves very few Campbell press mentions.

Doerr served on Campbell’s Intuit board, and had called on him to mentor young leaders of Valley companies. Regularly, Campbell would join fifteen or so of Doerr’s dot-com CEO clients over dinner. The sessions are dubbed Camp Campbell, “and I’m not allowed to attend,” said Doerr, who described Campbell “as one of my two best friends.” In late summer of 2001, Doerr reached out to his friend to help Schmidt and the founders. “I felt it was an opportunity worth Bill’s time,” he said. “Eric had not been CEO on a scale Google would become. Larry and Sergey and Eric needed to be coached.”

In the Valley, Coach Campbell is a magnet for friends old and new. Still the chairman of Intuit, he is also the colead outside director at Apple, and one of Steve Jobs’s few confidants. On weekends and evenings, when big college or professional football and basketball games are televised, Campbell can often be found with a group of buddies in downtown Palo Alto’s Old Pro sports bar, a Stanford student hangout he owns. He’ll have a table in the middle of the pub piled high with hamburgers, French fries, pizzas, and his preferred drink, Bud Lite. Just under six feet tall, Campbell is easily spotted, and not just by the Kennedyesque thatch of gray hair that sprawls across his forehead: he’s the guy in constant motion, moving about the room dispensing high fives, fist pumps, hugs, and baseball caps. He sports an oversized Columbia 1962 ring and weighs just three or four pounds more than he did as a college linebacker. At the Old Pro, he’s garrulous. Outside, he’s allergic to interviews with reporters, and even with friends he sequesters conversations he has with other intimates. His discretion is well known, and part of his allure.

In a rare 2007 interview with two McKinsey & Co’s partners for the McKinsey Quarterly, Campbell said something that is music to engineers at places like Google: “empowered engineers are the single most important thing that you can have in a company.” He was talking about a tech company, and he went on to say that to foster innovation “you’ve got to be careful that you don’t make engineers beholden to product-marketing people. For me, growth is the goal, and growth comes through having innovation. Innovation comes through having great engineers, not great product-marketing guys.” He also said that smart tech executives should spend entire days “doing nothing but reviewing projects. A whole day, with the whole management team, so that we can clean up those projects, clean out the ones that aren’t going to be good, and take the bodies that are recovered and put them on the projects that look like they have the best prospects.”

Explaining Campbell’s role as a bridge builder at Google, Moritz said, “Bill’s contribution has been to take the emotion out of decisions. He’s more objective. He’s seen as a neutral source and a fair man.” The objectivity was needed, he explained, because: “You had two founders who were in their twenties and Eric was twenty years older, and you had to make that relationship work between people who did not know each other. It was natural that the founders would be suspicious. There were bumps at the beginning that Bill helped smooth over.” The biggest bumps, another Google insider said, were not between Schmidt and the founders, but with two venture capitalists on the board, Doerr and Moritz: “Eric had a busy-body board. The impression the board had was that Larry and Sergey were not focused. When they got Eric in, now they wanted to micromanage him.” They wanted Schmidt to push harder to monetize search. Doerr and Moritz “were both impatient,” said Shriram, who had served as a bridge between the founders and the board and gratefully handed this role to Campbell.

“I would sit with Larry and Sergey and try to figure out the things they more or less wanted from Eric,” recalled Campbell. Then he’d sit with Schmidt. He performed this particular function for three years, until 2005. Looking back over the life of Google, these sessions where Campbell performed as both a psychologist and a coach loom especially large. The company could have imploded. On Campbell’s shoulders rested a complex problem. He had to earn the trust of the founders, Schmidt, the board, and Google executives. He had to help put management systems in place, recruit executives, suggest financial controls and the structure of board and management meetings.

One would expect an ex-football coach to be an in-your-face, blustery, and threatening personality. And Campbell sounds like he would be, for he has a deep, hoarse voice that seems the product of yelling all day. But he is self-effacing, quick with a quip, more listener than talker. Schmidt likens Campbell’s ability to listen to that of a shrink, adding, “When he walks into a room, everyone smiles. I’ve never seen that.” But he also said that “shrinks are seen as passive,” which is why he believes the “coach” appellation is more accurate. “A coach says, ‘Let’s go!”’

Campbell laughs when told that some refer to him as Google’s shrink and offers this modest explanation of his role: “Sometimes when you are in a big and complex organization, your behavior is noted. And if your behavior is sometimes out of line, sometimes it’s me that will say, ‘Move it a little bit in this direction or that direction. Not much.’ Shrink would not be the right description. It’s more coaching people into the right direction.”

It did not take long for Campbell to win over Schmidt and the founders. “Bill took me under his wing,” said Schmidt, who refers to him as “my consiglieri.” Campbell is so valuable at Google, Page said, because “he has the unique ability to be a warm person, one that everyone can relate to, but also has the experience of actually running a company” Brin smiles when asked about Campbell and speaks of his “especially high EQ,” emotional intelligence. A principal criticism of Brin and Page is that they, like many of their engineers, lack EQ. Did he, I asked, think they lacked EQ? “We are ranked far below Bill Campbell,” Brin conceded.

Two Campbell ideas embraced by the troika were an executive management meeting with their direct reports and Campbell that consumes several hours every Monday, and project review meetings with engineers that occupy much of Tuesday, Wednesday, and Friday afternoons. Campbell regularly holds one-on-one sessions with other senior executives to offer evaluations, mediate management disputes, hold hands. In other companies, Brin said, politics become excessive when you get to be large. “One of the reasons we’ve been able to avoid politics is Bill Campbell. When issues arise, he’s willing to intercede.” One day I’d scheduled an interview first with Brin and then Campbell. But Brin had arrived late and we backed into Campbell’s allotted time. We were in the small conference room a few doors from Brin’s office in Building 43 and Campbell ambled in for his scheduled interview. Brin smiled and instantly rose from his chair and the two men hugged.

Campbell participates in the Monday executive management meeting, discusses the agenda that Schmidt sends out to participants specifying the decisions they need to discuss at the meeting. He acts as envoy, visiting YouTube headquarters with some frequency in the first half of 2008 to find ways to generate revenues from the popular video site and improve communications between the two companies. Campbell is the only outside person ever welcomed into Google’s inner sanctums. In addition to executive meetings, he attends board meetings. “He’s closer to us than the board,” said David Krane, director of global communications and public affairs. “Eric said management is a marathon, not a sprint. It’s stressful,” Page said. “Bill plays an important role of keeping us all healthy and interacting.”

Why does he volunteer to spend approximately two full days a week on the Google campus? “This is family for me,” he said, a catch in his voice. “These are people I love dearly. I’ve been doing this since late 2001. I probably get as much out of this as everybody gets out of me. The joy of participating at a company that is at the leading edge of anything going on in the personal technology space. It’s centered here. There’s innovation daily. They think about changing the world.” He refuses to be paid more than a dollar a year; in 2007, his compensation was increased when he was given a reserved parking space on a campus where spaces are usually filled by 10 a.m. Brin said he and Page had to insist on compensating Campbell with Google stock options. The fact that Campbell plays such an atypical role at Google suggests that in addition to coach or shrink he can also be described as a babysit ter. The fact that Google needs one is a reminder of its youth.

TO BETTER UNDERSTAND Bill Campbell, Jr., roll the reel back to Homestead, Pennsylvania, the small steel town near Pittsburgh where he was born on August 31, 1940. His mother, Virginia Marie Dauria, was a home-maker while his father, William V Campbell, worked the night shift in the steel mill and taught high school physical education. He became the basketball coach at Duquesne University, where he was a close friend of the football coach Aldo T “Buff” Donelli, then the principal of the local high school and finally the school superintendent of the district. Bill’s mom stayed home to raise him and his younger brother, Jim, who went on to become an All-American wide receiver at the Naval Academy. Bill was an honor student at the public high school, and though he weighed only 175 pounds, he was voted All Western Pennsylvania as an offensive guard and linebacker. What was his football talent? “Speed. And I would hit ya!” he said with a laugh. “When colleges came around, I couldn’t understand why guys who weren’t as good as I was were going to Penn State and Pittsburgh. It pissed me off. So I got recruited by the Ivy schools.”

Bill chose Columbia, where Buff Donelli, who had gone from Duquesne to Boston University, had just replaced Lou Little, the Columbia football team’s longtime coach. Bill received a scholarship and played middle linebacker on defense and offensive guard. He went on to star and captain the 1961 Columbia team that tied Harvard for its first, and only, Ivy League football championship. He hurt his knee that year, which ended his playing career and earned him a 4-F draft deferment. When he graduated in 1962 with a degree in economics, he decided to stay at Columbia to get a master’s degree so that he could stay involved with football. He was studying economics, but “I wanted to be a coach,” he said. Donelli appointed him assistant freshman football coach, and he doubled as a resident adviser. His second year, he scaled back graduate studies to part-time in order to serve as the offensive and defensive end coach on the varsity football team.

His career goal was to become a head coach. “My dad was a coach,” he said. “There was nobody I admired more than my dad and Buff Donelli. These were the two role models I had. I wanted to be Buff Donelli. I wanted to be Bill Campbell, Sr. My dad was so respected in town. He had been the coach, the superintendent. He just had this way about him. He could unite anybody.”

Bill had a summer job after his second year as a coach at Columbia and eagerly anticipated year three, starting in September 1964. But he received a notice from his Pennsylvania draft board to report for a physical. Expecting to again be declared 4-F, he was surprised when he passed. He was even more surprised that “they took me in the service that same day.” He was swiftly dispatched by train to Fort Knox and never got back to collect his belongings at Columbia. For the next two years he was an army private stationed at U.S. bases, landing at Fort Gordon, Georgia, where he ran the athletic program and was both the assistant football coach and the quarterback.

After being discharged from the army, Campbell returned to Columbia as the coach of the freshman football team, and studied for a master’s degree in education. The next year, he became Donelli’s offensive line coach and thought he was on his way to head coach—until Donelli chose to retire. The new coach brought in his own assistant coaches, and Campbell was out of a job. He found a new job as linebacker coach at Boston College, where he stayed six years, rising to defensive coordinator. He returned often to New York, where he met his future wife, Roberta Spagnola, a Columbia University dean, on a blind date. When Columbia called in 1974 and asked him to return as head coach, Campbell jumped at the chance. He and Roberta married in 1976, and would have a son and a daughter.

Over his six years at Columbia, Campbell had a record of twelve victories, forty-one defeats, and one tie. He blames his losing record on his devotion to the players as men rather than as athletes. He was a nurturer. “I really felt like I committed to these kids. My view was more father coun selor and adviser .... I wanted these guys to achieve. I wanted them to go to work for Procter and Gamble or IBM, if that’s what they wanted. I took great pride in getting summer internships for them at Merrill Lynch and Salomon Brothers. I was more engaged with them. I often think that had I been less worried about that and more dispassionate about playing, maybe I would have been better.” If he had to do it over, though, he says, “I wouldn’t change. I couldn’t change.”

After leaving Columbia, he became a sales and marketing executive at J. Walter Thompson, where he stayed until Eastman Kodak, a client, recruited him to be its director of marketing. Then, in 1983, John Sculley, recently appointed the CEO of Apple, heard about Campbell from a relative and began courting him for the job of vice president of marketing. He clinched the sale by demonstrating for Campbell the revolutionary Macintosh computer, which Apple would introduce in 1984. “It would be pretty unusual today to hire a football coach to be your VP of sales,” Sculley later told a reporter. “But what I was looking for was someone who could help develop Apple into an organization.” Campbell took over sales as well as marketing just months after he joined Apple, and set about firing the consultants and most of a sales force that “wore polyester pants and gold chains.” He said he replaced them with recent college graduates, half of them women, and all hungry to succeed. “What I learned from coaching,” he said, “is that if your guys are not as big and fast as the other guys, you’re fucked!”

Campbell’s boldness appealed to the ever-rebellious Steve Jobs. The two men bonded. By 1984, said Campbell, “Sculley and Jobs were going at each other already.” Although Jobs had recruited Sculley to bring professional management to Apple, he came to think he was more interested in marketing, including marketing himself, than in Apple products; Sculley believed Jobs wanted an acolyte, not a CEO. Nevertheless, Campbell earned the rare distinction of being able to both befriend Jobs and command Sculley’s respect. Before Sculley succeeded in pushing Jobs out of Apple in 1985, Campbell warned him it would be a huge mistake. Tensions flared between Campbell and Sculley, and in 1987 Campbell was put in charge of Apple’s Claris software division, with the intention of spinning it off as a private company with Campbell at the helm. But with Claris thriving, Sculley changed his mind. Campbell left rather than remain as a division head under Sculley.

At the recommendation of John Doerr, the Go Corporation hired Campbell as their CEO. The company was an early pioneer in pen computing—too early, it seemed, and when the market didn’t respond, Campbell unloaded the Go Corporation on AT&T, in 1993. He next became CEO of Intuit when Doerr suggested to founder Scott Cook that Campbell would be a great partner. Four years later, he moved up to chairman of the board. On the eve of Steve Jobs’s return to Apple in 1997, he asked Campbell to join his board.

Today Campbell serves as a mentor to some of the Valley’s most successful entrepreneurs, from Marc Andreessen to Steve Jobs, whom he walks and talks with most weekends in Palo Alto, where they are neighbors. He estimates that he spends about 10 percent of his time on Apple business, about 35 percent on Intuit business, an equal amount at Google, about 10 percent as chairman of the board of Columbia University, and the remainder on assorted activities. He said he has donated his Google stock to the foundation he established to make charitable gifts to his hometown, among others. He donated money to his Homestead high school for a new stadium, scholarships in his father’s name for student athletes, a new gym named for his brother, who died of lung cancer in 2006, and Apple computers for the school. In the fall, he coaches sandlot football for eighth-graders from St. Joseph’s School of the Sacred Heart in Atherton, California; in the spring, he coaches the eighth-grade girls in what’s called powder puff football.

He doesn’t have a lot of enemies. Marc Andreessen said of Campbell, “He’s been incredibly important in the Valley. Business is changing so quickly,” and less experienced entrepreneurs turn to Campbell for guidance. “Bill has been a model mentor. When he’s not in the room, he’s still there because people ask, ‘What would Bill say?’”

IN SCHMIDT AND CAMPBELL, Google had executives who could work with the founders and mentors the whole organization to work together. Now it needed to recruit senior executives. With an assist from Campbell, one of Schmidt’s initial targets was Sheryl Sandberg, who had just concluded her service as chief of staff to treasury secretary Lawrence Summers. The Clinton administration was winding down, and Sandberg, who was just thirty-one, was much in demand.

Sandberg has short dark hair, an angular face that is softened by a bright smile, and an engaging manner that makes strangers feel comfortable. She was the first of three children born to Adele and Joel Sandberg, she then a professor of English and other languages, he an ophthalmologist. The Sandbergs moved to Miami from Washington, D.C., when Sheryl was three, and although Sheryl was considered the smartest student in her public high school, she wasn’t a bookworm; from childhood, she has been popular. For college, she left Florida and went to Harvard and in her junior year there took a course from Lawrence Summers, then the rising star of the economics faculty. At the end of the semester he invited his five best students to lunch at the Harvard Faculty Club and offered to serve as their senior thesis adviser. Sandberg accepted Summers’s offer—“He changed my life,” she said—and went on to win the John H. Williams Prize as the top graduating student in economics. When Summers was appointed chief economist at the World Bank, he brought her in as his special assistant.

Sandberg had a particular interest in health care, and in the early nineties went for a time with a team to India to work to alleviate leprosy and AIDS. Shaken by the poverty and suffering she witnessed, she vowed that she “was only going to do things that were good for the world.” She wanted to work in nonprofits or government but felt she required a broader education. She stayed at the World Bank two years before deciding she would go back to school. “I come from a Jewish family,” she laughed. “My dad’s a doctor. You had to have a graduate degree!”

Accepted at both Harvard’s law and business schools, she chose the latter, believing she needed a better understanding of how organizations worked. Between her first and second year she got married. Though the marriage lasted only a year, she graduated near the top of her class as both a Baker and a Ford scholar; with her former husband in Washington, D.C., she fled to the West Coast, where she joined McKinsey & Company in California, working on health care. McKinsey gave her no more joy than her marriage. “You don’t do anything,” she explained. “You just tell other people what to do.” She left after one year.

Summers was then deputy treasury secretary under Robert Rubin in the Clinton administration. The two had kept in contact and, again, he recruited her as his special assistant. For the next four and a half years, she worked for Summers; when he was elevated to treasury secretary she became his chief of staff. But when the second Clinton term ended in January 2001, she had to move on. Washington had taught her some surprising things. “Over the years,” she said, “I got less naive. I no longer thought, The private sector is bad. The public sector is good.” At Treasury, her most “exciting” meetings had been with technology companies. In America, she believed, “economic growth was all technology driven.” She decided she wanted “to go and be an operational executive in a tech company, a make-the-trains-run job.”

In early 2001, she moved out to San Francisco. Her sister lived there, and it was the technology capital of the world. She took time to clear her head, and in any case, with the dot-com bust still reverberating, it was a difficult time to seek a job. She signed up for cooking classes and relished her free time. She was offered an executive position by eBay, but she had her sights set on Google. “When I came out of the government, I wanted to do something that I believed in,” she told me. “I went to Google because Google had a higher mission, which is to make the world’s information freely available. But they weren’t offering me a job.”

Schmidt talked to her in the fall of 2001, and like all top applicants, she met with Brin and Page as well. When Schmidt offered her a position in late 2001, she was excited, but on closer inspection wasn’t sure it was a real job. “I was supposed to be a business unit general manager, but there were no business units, and therefore nothing to be managed,” she said. Schmidt “called me every week and said, ‘We’re profitable this week too!”’ Friends advised her to “work for a real company,” one that earned steady profits. “I met Eric and said there is no job. He looked at me and said, ‘You’re looking at this the wrong way. None of this matters. Growth matters. Get on a rocket ship and all things take care of themselves.’”

She was employee number 268. Her title was business unit general manager, even though, as she had noted, there was no business unit. There was also no CFO, which is perhaps why Eric Schmidt assigned her a top secret mission, kept even from their venture capitalists, to investigate a potential round of private financing to pump money into a four-year-old company that had yet to have a profitable year. Among the people Sandberg spoke with was Mary Meeker, the author of the seminal Internet report at Morgan Stanley. Their discussions, Meeker said, made her take greater notice of Google. “Before Sheryl arrived,” said Meeker, “they were so quiet and private. She was part of a push to bring people in.” Months and many meetings later, Sandberg made a PowerPoint presentation to the founders and Schmidt. The consensus of the people Sandberg consulted was that Google should be valued at one billion dollars. The consensus of the founders and Schmidt was that they would not pursue more investment capital because this valuation was, she said, “a total insult.”

The project was shelved. “I needed another job. I knew I wanted to work for Omid Kordestani, who runs all business and operations. We were launching AdWords CPC.” Kordestani planned to expand the AdWords staff from four to eight. “Omid said to me, ‘I need a tractor. You’re a Porsche. Why do you want this job?’”

She thought their ideas for selling ads were innovative. If they worked, they would be efficient—by cutting out sales teams—and bold, giving advertisers an incentive to make the ads more relevant. Advertisers would rank higher on the search results page based not just on the price they bid per keyword, but on the number of clicks their ads received. The more clicks, the lower the price, and the higher they would rank.

Advertising, Schmidt said, had not been viewed “as a priority” by the founders—nor, according to Doerr, by Schmidt. And, indeed, Schmidt had become convinced that since Google had succeeded in building the best search engine, the money would follow. But by 2002, at the helm of a four-year-old company that had yet to have a profitable year, Schmidt knew it was time to focus on money. But he also knew Page and Brin had definite ideas about what was “evil.” Senior software engineer Matt Cutts recalled that a credit card company (it was Visa) offered five million dollars to put a link to their credit card logo on the bottom of Google’s home page. But Page and Brin wouldn’t budge, nor would they relax their strictures against advertisers paying for search results. “Google was really trying to do right by their users,” said Benjamin A. Schachter, then the senior Internet analyst for UBS. But they weren’t building a profitable business.

Moritz was becoming restive, openly wondering if Schmidt was tough enough. A Google insider with direct knowledge said that in 2002, Moritz pressed for Schmidt to be fired. Another insider said the unhappiness with Schmidt was at first shared by others who also worried that he wasn’t tough enough, that he was moving too slowly to galvanize a management team, to challenge the founders, and most especially, to find a revenue stream.

Schmidt remained calm, at least outwardly. By late 2001, he knew of the effort at Google that Sandberg was now working on to devise the new version of AdWords, the advertising program associated with search. In AdWords as it worked through 2001, advertisers paid Google the old-fashioned way, based on a cost per thousand (CPM) whether the searcher clicked on their ad or not. What Google was quietly exploring was switching to a cost-per-click model, an idea that built on the Overture model. In addition to Sandberg, Omid Kordestani assigned Salar Kamangar, the author of the original Google business plan, to serve as a bridge between the engineering and the sales team as they improvised.

This began a long and intense period of brainstorming. The team liked the idea of charging by the click, thinking it was a way they could farm out not just search, as they had done with Netscape and Yahoo, but also advertising. “We knew we needed a lot of ads, and to have a lot of ads we also had to syndicate,” Kamangar said, performing the search function for sites like Yahoo but also selling ads for them. He knew that Page and Brin would resist allowing advertisers to pay for placement within search results. He also knew advertisers were wary. The CPC model was associated with low-quality ads that were harder to sell and were known as “remnant advertising.” Advertisers like to determine where and when their ads appear, and if they allowed a company like Google to put their ads on other Web sites, and allowed the Web sites to choose the times they would appear, the advertiser would lose control. Was there a system to serve both users and advertisers?

For months they came up empty. Members of the team remember Kamangar walking about with two fingers pressed to his lips, muttering, “I’m thinking, I’m thinking.” One day, he said, a “lightbulb went off.” What if Google combined the cost-per-click model with a measurement of whether users found the ad relevant? Google engineers could come up with an algorithm to measure the quality of the ads, he thought, assuming that more clicks meant users liked the ads. To sell them they could use what economists call a Vickery Auction, an idea suggested by a colleague, Eric Beach. In a Vickery Auction, named after William Vickery, the twentieth-century Canadian economist and Nobel laureate, after Google set a minimum bid price per keyword, the advertiser bids, say, fifteen dollars for a keyword. If the next bid is ten dollars, the winner only pays one cent more than the second highest bidder, saving nearly five dollars; the second-place bidder pays a penny more than the price bid by the third, and so on. The advantages for Google were many. By charging per click, Google could syndicate its ads—sell them on other Web sites as well as on Google search. The more ads it sold on different platforms, the more data Google collected, and thus the more reliant on Google advertisers became. And Google could automate the entire system, minimizing the size of its sales force.

The advantages for advertisers were manifest. They knew they were not being gouged, because they only paid a penny more than the next highest bidder. They benefited by being charged only when the user clicked on the ad. This gave them an incentive to produce a better ad because better ads produced more clicks, which lowered their cost per click. And by charging per click, Google opened online advertising to many small businesses who normally had nowhere else to turn but the Yellow Pages. By allowing Google to syndicate ads, advertisers were achieving the online equivalent of one-stop shopping offered by network television, whereby ads appeared on hundreds of local stations. And because the system was automated, advertisers were spared the expense of a monitoring system. They would simply transmit to Google their keywords, their bid per keyword, their monthly budget, and their billing information. And then using Google Analytics, they could monitor the results online.

Page and Brin made a major amendment to the new AdWords before it was inaugurated in February 2002. At the annual technology, entertainment, design (TED) conference in Monterey, they engaged in conversation with the Israeli entrepreneur Yossi Vardi. Vardi is a bear of a man with a walrus mustache and a friendly, even impish manner. His company started ICQ, the Internet’s first instant messaging system, and sold it to AOL for four hundred million dollars. He and the Google founders discussed search ads—how to make them unobtrusive and yet relevant to users. Vardi suggested that they could use two-thirds of the page for search results and wall off the text ads from the search content the way a newspaper walls off ads. They could do this by placing a thin blue line between the search results and a smaller gray box on the right-hand side of the page containing the text ads and links to the advertiser. Users could either click on the link or not. Vardi’s idea, Brin recalled, was the genesis for the way ads were displayed. Page and Brin decided the ads should be small, a couple of lines long, imposing a limit of ninety-five characters, and insisting that they be informational.

It was unclear when the new AdWords was introduced that it would be what it became: a Google money machine. “The AdWords is brilliant because it allows you to scale the advertising solution to what you need,” said former Microsoft executive Nathan Myhrvold. It democratizes advertising, allowing Google to use it for either small or large advertisers. It was also, Myhrvold believes, pirated from Overture. The rival search engine thought so too, and later that year filed a patent infringement lawsuit against Google.

A year later, a second money gusher—AdSense—would spring from the CPC model. At the time, Paul Bouchet was developing Gmail and working on software to match words sent in an e-mail with keywords selected by advertisers, allowing small text ads to instantly appear. Brin wondered why they couldn’t apply this innovation to a new program that would help bloggers and any Web site make money. This idea would be called AdSense. If a reader was looking at an analysis of computers on a Web site like Engad get, an HP or a Dell ad could appear. Similarly, readers of a story about the law in an online newspaper might see a law firm’s ad, while people looking at a Web site devoted to pancreatic cancer could see ads for pharmaceuticals. Google would serve as the matchmaker, delivering the advertising and sharing the revenues. As with AdWords, the advertiser would pay only when the ad received a click. And as AdWords democratized advertising, luring small advertisers online, so AdSense would become a way for Web sites to generate income. The effort was led and architected by Susan Wojcicki, vice president, product management, who later received the prestigious Google Founders Award—paying about twelve million dollars—to honor her efforts. AdSense, Danny Sullivan told USA Today, “basically turned the Web into a giant Google billboard. It effectively meant that Google could turn everyone’s content into a place for Google ads.”

Eric Schmidt recalled how Brin lobbied him for money to market the program. “He and an engineer developed a system of showing ads on people’s blogs or Web sites. They came to show this to me. It was not an exciting demo. And Tim Armstrong’s sales guy is assigned to help them out. Now we’ve got three people out of control! So Sergey comes in and said, ‘I need to buy inventory to make this happen.’”

“How much?” asked Schmidt.

“I need a million dollars,” said Brin.

“We don’t have a million dollars!” said Schmidt.

“Sure we do,” said Brin.

“I didn’t give a precise answer”—a couple of hundred thousand dollars, said Schmidt, chuckling. (Susan Wojcicki remembers that he alloted them a marketing budget of two hundred thousand dollars.)

Weeks later, Schmidt asked Brin, “Sergey, how much money did you spend?”

“A million and a half dollars,” said Brin.

“Sergey, you said one million!”

“No, you didn’t give me a precise figure!” said Brin.

“What does that tell you about them?” Schmidt said of the founders. “He had the idea. He assembled the activity. He figured out who his opposition was—which was me, in a friendly way. He told me about it because he wanted my support. And he evaded my guidance. And as a result, built a multimillion-dollar business.” (By 2004, AdSense would produce about half Google’s revenues.) Schmidt paused to chuckle again, then said, “You see why I work with these people!”

The chuckle is appropriate, for Google would not have succeeded without a measure of luck. As Larry Page confessed to a Stanford class, discovering the advertising formula that would work “probably was an accident more than a plan.” A reminder that timing, serendipity, luck—not just a smart strategy or brilliant execution—sometimes determines success. With programs like AdSense, Google did not aim to build a huge Web-based political constituency, but it did. As its advertising dollars rained on Web sites, Google was hailed as a benefactor. Not only was Google not evil, it was beneficent. Google would call these content Web sites partners, and give them about two-thirds of the ad dollars, with Google pocketing the rest. Many small businesses would be discovered and thrive. It was largely overlooked at the time that automated AdSense cut out the advertising middleman. Or as Wojcicki told me, “It changed the way content providers think about their business. They know they can generate revenues without having their own sales team.” In the online world, Google was potentially dis-intermediating not just the media buying agency but the sales forces of content companies.

AdWords and AdSense would solve the mystery of how Google could monetize its search engine. For the first time, in 2001, Google turned a profit: $7 million on revenues of $86 million. The next year, revenues more than quadrupled to $439 million, and profits jumped to $100 million. Google’s search index included three billion Web documents. Not surprising, among the top ten searches on Google in 2001 were these: World Trade Center, Osama Bin Laden, anthrax, and Taliban.

In 2002, Urs Hölzle, who is now Google’s senior vice president of operations, was undecided whether to return to his tenured faculty position at the University of California at Santa Barbara. AdWords made that decision simple. Google had finally found a way to make money. “Now we could fund all these things we couldn’t fund before,” he said, “2002 was when we said, ‘We can afford to spend more on machines!’” This was also the year Google discovered, as Eric Schmidt would tell me several years later, “We are in the advertising business.” Ignited, the Google rocket took off.