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Google Turns To Page: The Day Two Narrative
Google’s co-founders have long admired Apple CEO Steve Jobs, even though they now compete directly with his company. So I couldn’t help thinking that Jobs helped inspire yesterday’s announcement that Larry Page was taking over the helm at Google. (Jobs himself turned over the reins of his company this week to COO Tim Cook out of medical necessity.)
Back in 1997 when Jobs returned from exile to lead Apple it was drifting. Jobs then successfully shepherded the company he co-founded to where it is today: the second most valuable company in the US with a lineup of great products.
One of the remarkable features of Apple is its culture and the way it has continued to successfully innovate and compete even as the company has grown dramatically over the past decade. Several people have observed that Apple is “run like a huge startup.” In this way it seems to have defied the usual pattern: as companies grow they become more bureaucratic, conservative and slow.
The latter is a charge that has increasingly been leveled against Google by employees who’ve left the company. Some of those employees have left for Facebook, which seems to possess the fire that Google once had as a younger company. While Google is hardly drifting — look at its Q4 revenues — the desire to get some of its old startup fire back is one of the driving forces behind Page’s ascension.
This is one of the themes of the “day two” stories and narrative now emerging. Here’s the NY Times:
Under Mr. Schmidt’s helm, Google has prospered, but over the years, it has become less attractive to some engineers, who say it has become harder to develop new ideas while working there. The problem is one that all big companies face, but it is more pressing in Silicon Valley, where the most talented engineers tend to have the strongest entrepreneurial drive. Google has tried to retain dissatisfied employees with perks like giving them time to work on new projects. But some insiders say those incentives have lost effectiveness.
Another narrative and partial explanation for the shift — tension among the members the triumvirate and the need for clearer lines of authority — is laid out in a Wall Street Journal story that appeared last night:
An acquaintance of both men said there was no blow up but there has been tension for a while “over who has day-to-day decision making” authority. This person said this mainly results from Mr. Schmidt being more formal and process oriented. He “has more of a corporate mentality,” the acquaintance said.
If you regard Google as the most successful internet company on the planet, which it is by most measures, then the change at the top seems very strange — maybe even self-destructive. But if you see Google as a company faced with legal challenges at home and abroad, losing momentum to Facebook and having trouble recruiting and retaining top talent then this change makes more sense.
Eric Schmidt wasn’t “fired” as some are today suggesting, but it’s also clear that he wasn’t tired of the CEO job and itching to write his novel either.
Though Schmidt assures everyone that he’ll remain in a key role at Google going forward it emerged yesterday that he was selling more than $300 million worth of his shares. Though this is all part of the triumvirate’s “pre-arranged trading plan [and] . . . long-term strategy for individual asset diversification and liquidity,” it feels more like a reaction to the news. And with a diminished role it’s unlikely that Schmidt will remain at Google until 2024, as once promised.
Larry Page and Sergey Brin love the company they founded and no doubt are trying to fix the problems they see affecting its performance and outlook. For their part, investors are not at all phased by the CEO switcheroo; Google’s stock is up in pre-market trading.
Only in a year or so will we know whether this was a good move or a wrongheaded one, whether Larry Page, the new founder-CEO of Google, is more like Steve Jobs in 1997 or a less successful founder-CEO at another prominent internet company: Jerry Yang.