This week I’m at NASA’s Green Flight Challenge in our new home town of Santa Rosa, California. It’s a contest for efficient flight using alternative energy that I’ll be writing more about later in the week. Much of the $1.65 million in prize money comes from Google, the subject of this column. I’ve been giving a lot of thought to Google’s strategic path under once-and-future CEO Larry Page and think I’ve got a couple things figured out. Google is right now in the process of changing, well, its process. Page is rebuilding the company but not doing a very good job of explaining himself, so I’ll just have to handle that here.
The image we all have of Google is that of a money machine based on PageRank and AdWords with a huge number of other products and projects thrown-in, hardly any of which make the company any money. Some of these projects, like Android and GMail, have enormous followings and significant market shares, but they still do little better than break-even. Many of the eternal beta projects seem to be more experiments or simply larks. Google under Page’s predecessor CEO Eric Schmidt seemed to be a hodge-podge company lacking a sure hand at the tiller.
This was, I think, by design. Schmidt (and Page and Google co-founder Sergey Brin) were smart enough to know in those early hyper growth days that the next big thing for Google could just as likely be something they didn’t see coming, so they supported rampant experimentation. Well companies mature and the second coming of Larry Page represents a change in that policy.
The old idea was to let a thousand flowers bloom then throw big money behind the most promising of those flowers. And that worked for awhile, yielding products like GMail, but the maturing of Google as a company and the Internet as an industry is forcing the company into a new business model. This is not to say that engineers won’t still be allowed to spend time on their own projects, but that the company realizes now that it can no longer rely on serendipity to provide its next hits.
If you have no constraints, no limits, then all ideas are welcome and can be equally promoted, at least for awhile. But that’s not the situation faced by Larry Page earlier this year when he again became Google’s CEO. What Larry saw was Facebook’s dramatic success in a market segment where Google had been notably unsuccessful. That’s why Page led with making all Google bonuses partially dependent on the company’s success with social networking products. Larry led with the carrot, then slowly added some sticks.
What we’ve seen is a huge conceptual change in Google with the demise of formerly high-flying divisions like Google Labs and even closing down profitable acquisitions like Slide. The end of Slide, which appeared to happen precipitously a couple weeks ago was actually five months in the making.
Google is cutting all the projects that look like they’d at best peak with $20-50 million in annual profit and concentrating on those that are either bet-the-farm strategic priorities like combating Facebook or promise to yield billions in profits. Gone are the five-man teams operating in separate digs, replaced by thousand-man teams dedicated to specific and well articulated goals.
Think about it. A lot of the criticism of Google here and elsewhere has been about lack of focus, lack of standardized interfaces, oddly positioned products that sometimes conflict with or oppose each other. Google was run as an insurgency. And now Larry Page is determined to turn Google into an army. Each conflict to come will be approached with a Manhattan Project development effort.
Social is the first battle to be fought this war but I am sure Larry has others planned. He’s promoting a new class of generals (vice presidents, I guess) and giving them the power and resources to get their jobs done with thousands of developers and billions of dollars each. Instead of doing a hundred things and making money from two of them, Google will soon be doing a dozen things and making money from 10 of them, or at least that’s the plan. And it’s a good one, because even geeks grow up sometime.
But they are keeping the free food, right?