Larry and Sergey's Corporate Vision - The Google Guys

The Google Guys: Inside the Brilliant Minds of Google Founders Larry Page and Sergey Brin

Chapter 4 Larry and Sergey’s Corporate Vision

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

—John Keats

In 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.

Just Another Stanford Thing

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, 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.

Competitors, however, generally claim that Page Rank was no big deal. Says Robert Davis, the former CEO of the search engine Lycos, “A lot of people talk about their great technology, and frankly, I think that had little to do with their success. PageRank was not that innovative. Lycos did the same thing; it was the core of Lycos’s technology.”

Eric Brewer, a computer science professor at UC Berkeley who was one of the creators of the search engine Inktomi, echoes those thoughts. “Most of what is written about Google is inaccurate. For one, that PageRank was what made them successful. It’s a lot of hogwash. It’s very important to have an invention and market it, but it’s just marketing.”

This view has some merit. At the very least, PageRank wasn’t the only thing that put Google ahead. There’s always an element of luck involved in any successful start-up, and Larry and Sergey had their share. For one, they walked into a huge vacuum in the market, and were buoyed by their own hubris and single-minded obsession. They had complete faith that search alone would make a great company at a time when every other company that professed to do search was giving up on it.

The problem was that nobody had figured out how to commercialize a search engine. The prevailing view was that the flaw of a search engine was that it simply sent users away from their sites—and the ads they hoped visitors would click on. This started the age of “portals,” a misnomer that implies a door to the Internet but was really something of a “walled garden” in which searchers would (the companies hoped) linger before heading off to other sites. All of the portals, including AOL and Yahoo, focused instead on providing as much content in their portals as possible. They had no incentive to build a better search engine and had largely given up on trying to improve the technology.

Larry and Sergey knew that this was the wrong approach. To them, finding the right information through a search engine is much more important than having a single portal trying to produce all the content that meets users’ needs. The other search engines, said Sergey, “lost sight of that. It’s why we started Google in the first place . . . . We want to get you out of Google and to the right place as fast as possible.”4

Andrew Anker, cofounder of Wired Digital, which created the HotBot search engine (he’s now at blogging company Six Apart), puts it another way: “The lucky thing for Google is that the others messed up.”

Simplicity in a Complex World

True, but how did Larry and Sergey avoid messing up? By following their ideas of what a search engine should be, without compromise. Some of the things they did were quite simple, and quite by accident. These included creating a clean, spare home page with nothing on it but a search box and thirteen words. “The end result is it became a wonderful consumer experience,” says Davis. “It was clean, it was quick, it was easy.”

Web design expert Jakob Nielsen had been preaching for years that this was exactly how Web pages should be designed, because most people are lost in a maze of confusing technology, and they pine for simplicity. Even today, most professional Web sites are so cluttered with ads, pictures and video, and busy text that it’s hard to find what you’re looking for. Simplicity is one of the differences that make products from Google and Apple so popular.

The early team at Google quickly learned how important a simple design was. Marissa Mayer, VP of Search Products and User Experience, describes in a company blog entry an unusual response she started getting from one Google fan. Late one night in the summer of 2000, she came across an e-mail that consisted of just a number: 37. She had no idea what it meant. So she searched through her e-mails to see what other mail that person had sent. They were all single numbers: 33, 53, and then one that she found very telling: “61, getting a bit heavy, aren’t we?” The first e-mail added a comment: “What happened to the days of 13?” She also realized that each message arrived on the day she launched changes in the home page. The e-mailer was counting words on the page and complaining that it was getting too cluttered.

Mayer thought she was doing everything she could to keep the home page simple, but she had never thought to count the words. That has been her approach ever since. The current number is 28. Larry and Sergey now insist that this is the maximum they will allow. In the summer of 2008, Mayer wanted to add the word privacy as a link to the company’s privacy policy. But, she writes in her blog, “Larry and Sergey told me we could only add this to the homepage if we took a word away—keeping the ‘weight’ of the homepage unchanged at 28.” She looked at the copyright line at the bottom of the page and decided to drop the word Google, since the owner of the copyright was obvious.

The important thing is that Mayer and other senior employees know what Larry and Sergey want, and know that the duo’s final decision on any important issue is usually the right one. No other search engine even tried the spare approach to Web design until Google showed them the way. And once Sergey and Larry found that it worked, they carried it through to every search results page—something that virtually no other Web site has found the need to do. Just try typing and into a browser and compare the results.

Focus on the User (Duh)

This simple idea is part of another quirk Larry and Sergey have: putting their users’ needs ahead of everything else. It’s rule number one that Larry and Sergey list under the heading “Our Philosophy” on the company Web site: “Focus on the user and everything else will follow.” Larry and Sergey knew what people on the Internet hated—ads disguised as search results; intrusive pop-up ads; messy and noisy Web sites. Offering more of the same would simply not serve the interests of their users.

It’s a cliché to promise that the customer always comes first. Any corporate executive you ask will claim this philosophy as his company’s own. But the sad truth is that amazingly few follow it. Ask anyone who has waited for a cable company to get her system running, or wandered the aisles of a superstore looking for the item she wanted to buy, or sat on hold for an hour waiting for a customer support staff that has been cut back because business is slowing in a bad economy. Most retail stores follow a different philosophy. They study what items people tend to buy together, from bread and peanut butter to tissues and makeup, in order to figure out how to arrange these items most effectively on the shelves. But effectiveness is not measured by how efficiently customers can find the items. It’s measured in how long it takes customers to wander the aisles in search of what they want, under the premise that the longer people wander the store, the more likely they are to find and buy something they didn’t know they wanted. Larry and Sergey are dedicated to a simple idea: making things simple and straightforward.

Seemingly, the focus on users comes at the expense of advertisers. Larry and Sergey insist that the site sports a limited number of ads, and that each must be limited to a few lines of text with no multimedia enhancements. That is for the benefit of users. It’s another way to keep the site simple and allow users to focus on what they came to do—find great search results.

But it turned out to be great for advertisers as well, contrary to conventional wisdom. Restricting the number of ads and making them easy to see makes each ad stand out more and gets people to click on them more often. Many critics insist that most Google users can’t tell the difference between ads and search results. This drove up the bids on ad placements, creating an unexpectedly rich revenue stream for Google.

At the time Google was launched, the other search engines made the ads as intrusive as possible, displaying as many flashing, animated, and obtrusive features as they could cram in—a technique that most professional Web sites still employ today. The ads are a big part of the reason many Web sites today are slow to load. And people are more likely to shut off the ability to play multimedia ads or graphics altogether than to click on them.

Monier asserts that this philosophy made a big difference in Google’s appeal. “That is absolutely the success,” he says. “Search is about speed. It’s a utility, it’s a service, something that should be easy, available, very fast. All those things they’ve done. They’ve not compromised. By insisting on that approach, that’s how they came up with the formula for advertising.”

Controlling Chaos

At first, many of these decisions made no sense whatsoever to Google’s venture backers. The venture capital community is a small and gossipy group. Several have told me over the years that Google’s backers—in particular Mike Moritz—have fought with Larry and Sergey over these decisions. (John Doerr and Mike Moritz turned down requests for interviews for this book.) Just like any executives at a successful company, VCs get set in their ways and develop a formula for how to grow a company, and Larry and Sergey threw away the formula. Limit the number of advertisers? That was sure to be a move that would decrease revenues. But since Larry and Sergey had kept a controlling interest in the company to themselves, there was little the VCs could do about it.

The venture capitalists had one card to play to get Larry and Sergey under control. When they funded Google, the one concession they got was that the company would have to hire a seasoned executive as CEO. But the boys dithered on that promise for as long as possible. Frustrated, Moritz threatened to pull Sequoia’s funding if Google did not conform. He later admitted to GQ, “It was not a pleasant conversation. In the heat of things, I rattled m y saber loudly.”5

In a 2000 interview, Sergey described the type of CEO they were seeking. “The model we look for is [ founder and CEO] Jeff Bezos. He’s very smart. He’s a good motivator. Larry’s better than I am [at that], and Jeff is better than he is. He’s very fun, very pleasant to be around.”6

Finally, in 2001, they found Eric Schmidt, a forty-six-year-old CEO at Novell and a man cut largely from the same cloth as Larry and Sergey.

Schmidt is a light-haired, mild-mannered, extremely smart man with a Ph.D. in electrical engineering and computer sciences from UC Berkeley. He wears John Lennon spectacles and looks like Lennon’s nerdy opposite. Unlike Larry and Sergey, he also has poise, eloquence, and a relaxed, self-deprecating demeanor.

Schmidt first met Larry in 2000, at the PC Forum industry conference, when they appeared on a panel discussion together. Larry presented search results to show off Google, but Schmidt was unimpressed. “He was very shy,” Schmidt recalls. “A nice enough person, but what I remember most was thinking that search engines are not very interesting and that he was shy. I clearly did not understand anything at the time of what was going to happen.”

His first encounter with Sergey was over the phone. Sergey called him in October of 2000 because an employee they wanted to hire, Wayne Rosing, had listed Schmidt as a reference. The conversation started at 9:00 P.M. and went on for fifty minutes. “I had never had a reference check go on for fifty minutes,” Schmidt says, laughing. “Sergey was enormously interested in Wayne, but I remember noting that, just in general, he had this enormous curiosity.”

That same month, Schmidt ran into Google investor and board member John Doerr, who informed him that Schmidt was on the short list to take over the CEO job at Google. Schmidt, who was CEO of Novell at the time, told Doerr he wasn’t interested. Doerr kept insisting that he meet with Larry and Sergey.

Finally, Schmidt took Sergey up on an offer to visit them at their office. Schmidt agreed, he says, “just out of curiosity.” He went to their headquarters, which was at the time, ironically, in an old Sun Microsystems building. The visit wasn’t what he had expected. There was food on a little table and a projection of Schmidt’s biography on the wall. “I thought, well, that’s pretty interesting,” Schmidt says. “It was not the normal way I had been dealt with in my career. It was one of those things in life you know is just different. Interesting and different.”

The conversation was even more interesting. Schmidt didn’t know that the meeting was a job interview, and it didn’t seem like one. They debated many issues in technology, including a project under way at Novell to make a market for storage services for video, “which they thought was pretty stupid,” says Schmidt. “They didn’t say that but they basically argued against the premise.” Their argument was there was a huge amount of fiber-optic cable lying unused since the dot-com crash, and if someone started using that cable on the Internet, video could be streamed live, thus eliminating the need for temporary storage. “I left feeling that something interesting was going to happen,” Schmidt says.

At the end of 2001, Schmidt agreed to merge Novell with the information technology company Cambridge Technology Partners, and decided to step down as CEO, which left him free to join Google. He and Larry and Sergey negotiated through January. “Larry and Sergey seemed strange. They argued over all sorts of strange things. Every question was interesting, and every question was debated.”

Although he did not understand Google’s potential at the time, and insists he would have been happy if it had remained a small company, Schmidt decided to accept the offer. “I made the decision based on their precociousness,” he says. “I had this tremendous sense that I wanted to stay because it was just so interesting. It was obvious that I should join Google.”

Larry and Sergey insisted on spending a lot of time with any CEO candidate, which meant taking Schmidt skiing for a day. Schmidt thought this was ridiculous, and agreed to meet them at the Il Fornaio restaurant in Palo Alto instead. To test their knowledge, he compiled a list of questions that a CEO should know the answers to. The dinner lasted three hours. “They had good answers for everything,” he says.

Just to bait them, he asked, “ ‘Why hire me? You seem to have everything under control.’ Larry looked at me and said, ‘We don’t need you now, but we will need you in the future.’ Which I thought was the right answer.”

Ask Schmidt how two young men with no business experience developed such keen corporate instincts, and he says, “I think they were born with it. They had remarkably good judgment for such young people. It’s intelligence, but also street smarts, insight. It’s very impressive. It took me twenty years to develop the insights they had learned in two or three.”

Schmidt has made a lot of progress in turning Google into a more professional organization, but without losing the ideals that make it unique. In his first year at the company, he wrote a list of standards and goals for himself that closely matched the ideals of Larry and Sergey: end-user happiness is defined by the quality of the search results. End-user happiness over advertising is defined by the quality of the ads. He also set the goal of developing Google’s partnership programs to get others to use its search engine, and creating the corporate infrastructure to support a billion-dollar company.

Schmidt turned out to be exactly the right person for the job—mainly because his ego was sufficiently in check to allow Larry and Sergey to continue their radical ways. Few CEOs recruited to a small company would take a backseat to the founders, but Schmidt did. There are plenty of CEOs in Silicon Valley who will modestly assure you that they’re not very smart, but most of them think they’re lying. Schmidt doesn’t play the part of a disarmingly underrated executive, he’s the role model for the real thing. For the first couple years he acted more like a department head than a CEO. He saw no need to interfere.

Schmidt liked the fact that Larry and Sergey took an analytical approach to decisions, were proud of the company’s technology, and knew that it was not possible to spend too much on building the technical infrastructure to support their ambitions. “I didn’t need to overshadow them,” he says. “I’m a collaborator, and I didn’t need the validation. It was their company and I didn’t in any way want to take away from the perception that it was their company.”

And besides, he did not think of his position as that of the ultimate boss. As major shareholders, Larry and Sergey control the voting rights of the board of directors, including the ability to fire the CEO. “Who works for whom?” Schmidt asks. “Do Larry and Sergey work for me or do I work for them? On the organization chart they work for me. But at the time I joined, they owned more than half of the company. Any CEO who walks into a company where the founders own half of the company and thinks those founders work for him is not paying attention to how a board of directors works.”

The most important result is that Schmidt did not screw up what Larry and Sergey had started. Too many start-ups have been destroyed by CEOs, brought in as hired guns, who start conforming to conventional wisdom. “I think Eric is the only guy who could be CEO of that company,” says Anker. “They are so overoptimized for technology. A standard CEO would be rejected. Eric can play both sides of the coin.”

The venture capital rumor mill also says that Google’s board was frustrated with Schmidt’s refusal to rein in Sergey and Larry, but Schmidt denies that this was the case. In the end, it didn’t matter. The three executives have learned to work together smoothly.

Today, Schmidt has become the public face of Google, while Larry and Sergey have retreated into the background to run Products and Innovation, to decide where to expand into new markets and when to retreat. Larry is now president of Products, while Sergey is president of Technology, roles that keep them heavily involved in Google’s future as the main arbiters of Google’s technology. Larry and Sergey almost never give interviews or attend conferences. And Schmidt rarely attends the Friday technology review meetings headed by Larry and Sergey. Which is just fine with Schmidt.

Difficult Partners

Schmidt has still not managed to get Sergey and Larry entirely under control. They can be almost impossible to work with, especially when dealing with business partners. They’re known for their reluctance to meet with other executives, showing up late for meetings and changing terms that others negotiate. “As negotiators, they are horrible to deal with,” says an executive at another company. “Their approach is to push you to the point where you will walk away. They’d hold you over a barrel because they had the power to.”

Not everyone at Google is difficult to deal with. Most of the people there responsible for relationships with others have a great reputation for being helpful and thorough. CEO Schmidt is highly personable and is involved—along with Larry and Sergey—in important negotiations, such as licensing the search engine to others and providing companies with ads. But Larry and Sergey can be stubborn. They know what they want, the ideals they wish to stick to, and the value of what they have at Google. “They’re impossible to deal with because they’re so convinced they are right,” says a former Google executive.

It can be frustrating, to be sure. Some companies, such as Verizon Wireless, have a huge reluctance to deal with Google and are more apt to sign deals with Google’s competitors. This could limit Google’s future potential as it becomes increasingly dependent on partnerships in order to expand into new markets.

So, the more amenable Schmidt is taking on more and more responsibility for working with third parties. “Larry and Sergey are good at anything they choose to be good at,” the CEO says. “Their role has evolved. Before we went public, they were doing everything. After going public, they retreated to work on the product side and the innovation side. Today, that ballet works.”

It is, however, a dance that is still evolving.