Google is well-known for its unique philosophy, culture and innovative spirit. From Android smart phones/tablets, wearable devices to self-driving cars, Google continues to push the boundaries of what is possible with technology.
On October 2, 2014, Eric Schmidt, Google Executive Chairman and Former CEO, joined co-author and Google Advisor Jonathan Rosenberg to discuss “How Google Works“- the title of their new book. The two Google executives engaged in conversation with Sal Khan, Founder of the Khan Academy. The dialog took place at a Commonwealth Club of Silicon Valley event in Santa Clara, CA, in front of a full room of approximately 400 attendees.
Discussion then Q &A:
For sure, Google is a very different kind of company. Schmidt said he recognized that his first day on the job. Rosenberg took a bit longer- within his first 90 days at the company.
Hired as the new CEO, Eric knew he couldn’t teach Google employees how to think, as they were already very bright. But he could teach them how to manage the work environment.
“It’s important to know who the owners are. Founder led companies (e.g. Google, Apple, Facebook, etc) are a great strength of Silicon Valley,” Eric opined. Schmidt believed he was in a partnership with Google founders (Larry Page and Sergey Brin) to help them achieve their vision for the company.
“If you’re helping someone else to achieve their vision, it’s going to be a great partnership,” Eric said. “Manage to what’s possible is a better way to lead,” he added.
What is a “smart creative” and how is that different from what we imagined the Silicon Valley tech worker in the past?
The “How Google Works“ book was started after Eric told Jonathan “there’s some kind of a problem here.”
“People coming out of universities are ready to work for creative organizations that could possibly change the world. Yet almost everyone who comes out of undergraduate and graduate school finds the organizations they’re joining to be sclerotic, unchanging, and poorly led. It’s a huge wack to our young professionals. Moreover, it’s a big disconnect between the training/inspiration of our young people and the institutions/organizations they’re joining.”
“Smart creative,” a term coined by Jonathan, starts with a person who’s highly technical, but has some level of business savvy with an interest in the business. They’re also passionately curious and savvy with the tools of manipulating data and creating prototypes. “Unlike most technical people, they quickly produce and show you a prototype,” Jonathan said.
How to give the employee autonomy to make them feel they have a voice in decision making and guiding the organization?
Eric: “We don’t want random things occurring at random places.” A review process was needed. “So we instituted a set of Tuesday Google product strategy meetings, which were brutal.” In the early years, there were a list of top 100 (or 300) things the company was working on. It was maintained by Marissa Mayer- now CEO of Yahoo.
More on Schmidt’s partnerships with Google founders Larry and Sergei and triumvirate of leadership:
“You should judge leadership teams by their accomplishments, not by their rhetoric… The most successful companies – in tech and (suspect) world-wide were more than one person. Even though the media often lionizes a single individual, there are always a few people who collectively have the same incentives.”
Eric mentioned Steve Wozniak complementing Steve Jobs at Apple, even though the latter got almost all of the credit for Apple’s success.
Schmidt continued, “We all knew we were fighting to win. We may have disagreed on a tactic, but it’s a wonderful thing…We knew roughly what the other cared about and we agreed not to surprise the other on something important.” That partnership model is a good one and scales to three or four people.
“Google X (their research organization) is a great business and will change people’s lives,” according to Eric. It’s creation (about five years ago) was a decision of Google’s two founders. The first Google X project was to work on autonomous cars. Contact lenses that help monitor blood sugar is another research area.
The importance of automating the behavior of a refrigerator was a joke by the founders, but the decision to launch Google balloons wasn’t. It was to facilitate Internet access using existing handsets in third world countries. Many of those people don’t even have access to newspapers, libraries or any printed publications.
The secret to continuing growth at Google was said to be the company’s ability to recruit new leaders, starting with 22 or 23-year-old tech graduates who became product managers. Over a 5 or 10 year period they became executives.
Flexibility to move (to different jobs or assignments within the company) and espouse a model of innovation by proto-typing and experimentation was also key, Jonathan said. If management stays out-of-the-way, you get a Darwinian process of successful projects, he added.
Medical device monitoring and transdermal patches using mobile phones were said to be a start-up area that’s being well-funded today. The cell phone is used to automatically call a doctor, if the transdermal patch comes off or there’s another type of warning sign.
What will surpise us about Google in the next 10 years?
Jonathan: It may be platforms that other companies will create using Android. For example, there are psychology apps being developed for teenagers to gauge depression tendencies. Other Android based health care applications will be very promising too.
Eric said he has “consistently underestimated the use of software to redo systems.” The ability to mix and match software modules together are going to produce products/services that are very useful. Uber is a great example. It uses Google maps and Google is an investor in this taxi alternative. Getting education right for kids will produce a quantum change in learning we’ve never seen before, Schmidt added.
Asked by an audience member who his personal heroes are — in the tech industry and outside it — Schmidt quickly replied: “For me, it’s easy. Steve Jobs…Considering the impact he had on society, we could all aspire to be a small percentage of Steve,” he said of Apple’s late co-founder. “Exceptional people are worth hanging out with, because there’s a good chance they’ll change the world,” he added. Steve Jobs certainly did that by starting the PC revolution and re-inventing the music and cell phone business, not to mention creating the media tablet.
While Jonathan said he greatly respected Steve Jobs, he selected a personal hero – Milo Medin – who hired him to work @Home- the original ISP to the cable companies – where he worked before joining Google in 2002. Rosenberg’s boss there drew a vision of what broadband access could look like someday. “Jonathan, with enough thrust, anything could fly,” Medin said. Today, there are 70M people who have cable based broadband Internet access. Comcast is the largest ISP in the U.S.
Are we in a tech bubble or should we be in one? What advice do you have for start-ups to survive the bust?
Jonathan: “Look at the Mary Meeker (Kleiner – Perkins) slides and compare the valuations we have now vs what we had then (1998-2000 tech bubble).” People are buying everything online today and soon they’ll be doing that on their mobile phones. When much of e-commerce moves to mobile phones, the valuations (of the e-commerce/web software companies) will be even more justified.
Eric doesn’t believe there’s a tech bubble even though valuations are high:
“There’s always an argument that ‘it’s different this time.’ If you want to make that argument it goes something like this:…First, the NASDAQ isn’t as high as it was in 2000.
Valuations have been going up, because if you have an Internet-based product (or service) you can achieve global distribution (scale) very quickly…The market is rewarding those companies that get scale with higher valuations.” [Presumably, the higher valuations apply to both publicly traded and private/start-up companies]
What was the challenge of building Google and its culture? Could it have been done in another country (i.e. other than the U.S.)?
Eric: “The culture of the company is set at the top (presumably by the founders and chief executives).” Sometimes it misses the mark, like Enron.
Jonathan: “Enron had a famous slogan: ‘to build unrivaled partnerships, perseverance, and hard work, etc…to generate shareholder value for their investors.'”
Eric: “That was not real (and neither was Enron). Companies have real cultures and the employees will tell you what it really is….” If you are a new hire, ask existing employees what the corporate culture is and then try to make it better. “Today, you have an opportunity to change the corporate culture, person by person, by changing your hiring practices and tell people who your company expects something different.” Evidently, that was one way Google maintained its culture of tech innovation.
For more details and to hear Schmidt and Rosenberg address more questions from the audience, please play the audio at:
Personally, I learned a great deal from this lively conversation. Complements to the Commonwealth Club for hosting it and to the moderator and panelists.