Column: Who's Really Running Google?

Letter From Silicon Valley
06.05.06, 6:00 AM ET

This is the first in a series of dispatches from Silicon Valley from Forbes magazine Senior Editor Elizabeth Corcoran.

BURLINGAME, CALIF.--Imagine that the earth's magnetic field flip-flopped: Instead of compass needles pointing north, they'd quiver around the "S."

That's what's happened in Silicon Valley. Since the early 1990s, entrepreneurs and engineers in the Valley have compulsively looked north toward Redmond, Wash., peeking over the shoulder of Microsoft. Writing a business plan? Start by finding out what Microsoft is doing. Dreaming up a product? Better calculate how much time you have before Microsoft makes it part of its operating system.

Now the compass needle has swung south and points to Mountain View, Calif., home of the Googleplex. Microsoft is still around, of course, just like the Grand Canyon. But it's not likely to slink around in the middle of the night and trip you up. Microsoft has become more predictable. Now it's Google that people obsess over; Google that has become the great vacuum cleaner of talent, sucking up all those "really, really smart" people; Google that dreams up dozens of nifty ideas a year and plugs them into its dominant search engine.

In a Microsoft-oriented world, it was easy to figure out who was in charge: First , and later . But who's running Google?

Eric Schmidt, of course, is the chief executive, the guy who cheerfully called himself the "adult supervision" when he signed on. And he puts on a good face for the outside world: "The only way we'll deal with our growth and scale is with a systematic approach to each and every thing we do," he declared at Google's press jamboree in May. The company's focus, Schmidt assured reporters, is really on search. "We have more people working on search than ever before," he said.

But as charming as he is, Schmidt runs Google about as much as much as the Dalai Lama runs the world's spiritual life.

Google hardly has a classic corporate command structure. Instead, Google executives seem to carry themselves with all the authority of an overindulgent parent, constantly worrying about what employees think. Before Google announced that the company would obey the Chinese government by censoring the results of some searches, senior executives knew they'd take heat from human-rights advocates for the decision. They could cope with that. More nerve-wracking, however, confided one senior executive, was what people inside the company would say.

This attitude draws snickers from outsiders. "I've heard that they have a lot of cacophony in the development process. I'm not surprised," deadpanned Microsoft's Ballmer at a recent Silicon Valley gathering. "It's important to have lots of flowers--but important to have coherence, too."

Peek inside the Googleplex, and what you'll see looks more like swarm behavior than a military drill. In many families, everyone has to pitch in and do some grungy work to keep the household running. But at Google, every engineer acts like the favorite child. From a Google employment Web site: "Because great ideas need resources to grow into reality, at Google you'll always get the resources you need to make your dreams a reality." (As my 9-year-old son would say, "Swe-eet!")

According to Peter Norvig, who directs Google research, "We rely on the Lake Wobegon Strategy, which says, 'Only hire candidates who are above the mean of your current employees.' " Managing people who are told from the minute they pick up their ID card that they're probably smarter than their boss is like supervising the wind. Ever think your boss was wrong? Well, if you're smarter than he is, then clearly you must be right. The logical conclusion: Just ignore him.

Once inside the Google tent, engineers are free to spend 20% of their time on projects that they're passionate about. But hey--no one's standing around with a time sheet. Just imagine the conversations:

Google boss: "Hey, how about getting that Google toolbar to work with the next version of Firefox?"

Engineer: "Oh, that." Yawns. "Yeah, I'll get to it. Right now, I'm passionately working on a mash-up that will help you plot a trip to Elvis festivals all over the world!"

Even Schmidt has conceded that the balance between gotta-do's and wanna-do's has gotten a bit out of whack. Google managers recently surveyed their workers and discovered that they weren't quite spending 70% of their time on the company's "core" areas--namely, search and advertising. "So, we're taking steps to encourage people to shift their energy back to that 70%," Schmidt assured reporters.

Schmidt has been through this before, with mixed results. He spent his formative years at Xerox's Xerox Parc, that incubator of brilliant ideas that sadly made only marginal dents in the corporation's bottom line. And at Sun, Schmidt helped promote Java, which turned out to be quite handy for much of the tech world but did little more for the company than provide a cool advertising campaign. By the time Schmidt reached Novell, that company was in dire need of forceful leadership. But oddly enough, all the leadership in the world rarely produces innovation--just better execution of what you already know how to do.

What those experiences have shown, time and again, is that innovation comes from contrarians, from the folks who pick a different path, who could care less about the rules, who aren't good soldiers.

One of Schmidt's great strengths is that he accepts that fact. As a result, he has defined his job not so much as leading Google but as running interference for it--placating the investment community, soothing nervous regulators and policymakers and doing whatever it takes to create a magical force field protecting Googleteers, so they can follow their instincts and invent new stuff.

The Internet, Schmidt has said, turns power relationships upside down. That's true inside the ultimate Internet company--Google--as well as out on the raw and woolly Web. As long as the masses are running Google, innovation will flourish. When management forcefully steps in, the pace of change will slow.

So, no, Schmidt isn't in charge--and for that, we should all thank him.

http://www.forbes.com/2006/06/02/internet-microsoft-google_cz_ec_0605valleyletter_print.html
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