CHAPTER
FIVE
Innocence or
Arrogance?
(2002-2003)
Eric Schmidt now fully shared Page and Brin’s faith
in Google’s ascendancy. What set Google apart, he came to believe,
is that while people like him always assumed “Google would be an
important company, the founders always assumed that Google would be
a defining company.” The scope of Google’s ambition was presaged by
something Page said when he and Schmidt spoke before a Stanford
class in 2002. “If we solve search, that means you can answer any
question,” Page said. “Which means you can do basically
anything.”
Their audacity was
displayed in May 2002 when Google made its most ambitious—and
riskiest—deal yet. With its new AdWords in place, Google was eager
to start syndicating ads, and even though it was doing about 150
million searches a day, it wanted to do more. AOL would be their
vehicle. Because AOL later went into a tailspin, it’s often
forgotten how dominant the company was. Webheads would sneer that
using AOL was “the Internet on training wheels.” Yet it was AOL’s
user-friendliness that helped popularize the Web—and which
attracted thirty-four million paid subscribers in 2002. For Google,
AOL was a ripe target, a giant portal with an enormous audience.
But search rival Overture was doing AOL’s searches and advertising,
and besides, as AOL’s then executive vice president, Lynda
Clarizio, said, “No one knew who Google was.” Overture’s contract
ended in May 2002, and the founders were determined to snare
it.
“I want us to bid to
win!” Page declared at an executive staff meeting, according to
Susan Wojcicki.
“You’re betting the
company if you do that,” Kordestani warned.
“We should be able to
monetize the pages,” Page responded. “If not, we deserve to go out
of business.”
With $10 million in
the bank, Google promised AOL 85 cents of each advertising dollar
collected, and guaranteed a minimum annual payment of $150 million
in revenues. “We could have gone bankrupt,” Brin said.
“Overture offered
more money,” said former AOL president Robert Pittman. But Google
offered a better search engine, a more inventive approach to
reaching smaller advertisers, and higher minimum guaranteed
payments.
Google won the bid,
to the surprise of many industry watchers. It was a milestone,
“probably the biggest” deal Google has ever done, Brin said. “Every
time you did a search on AOL, it said ‘Powered by Google,’”
recalled Nick Grouf, CEO of Spot Runner, an Internet based
advertising agency. “By cutting a deal with Google, what AOL did
was surrender the front door to its walled garden” of consumer
data. The deal “affected how we thought about doing partnerships
and deals,” said Tim Armstrong. And the partnership would become a
huge moneymaker for both Google and AOL.
The deal enlarged
Google’s appetite. Schmidt remembers the day in 2002 he walked into
Page’s office and Page surprised him by showing off a book scanner
he had built. It had been inspired by the great library of
Alexandria, erected around 300 B.C. to house all the world’s
scrolls. Page had used the equivalent of his own 20 percent time to
construct a machine that cut off the bindings of books and
digitized the pages. “What are you going to do with that, Larry?”
Schmidt asked.
“We’re going to scan
all the books in the world,” Page said. For search to be truly
comprehensive, he explained, it must include every book ever
published. He wanted Google to “understand everything in the world
and give it back to you.” Sort of “a super librarian,” he said.
“Where are all the books?” Page asked.
“The Library of
Congress,” Schmidt said.
“Good, we’ll do a
deal with the Library of Congress!” Page said.
“You’re Larry,”
Schmidt said. “Nobody gives a shit about you.”
“Well, how can we get
to the Library of Congress?” Page asked.
They arrived at the
answer simultaneously.
“We call up Al Gore,”
Schmidt said. “He’s friends with the guy who’s in charge of the
Library of Congress.” At the same time, Page proposed to his alma
mater, the University of Michigan, that Google would pay to
digitize the seven million books in its library. After Page had the
university’s consent, he flew to Washington to make a deal with the
Library of Congress. Google would soon sign up Stanford, Oxford,
and the New York Public Library, among others. They established an
internal team under the joint direction of Dan Clancy, who had a
Ph.D. in artificial intelligence and had worked at NASA, and Adam
Smith, a former investment banker who had served as vice president
of new media at Random House. Clancy offered another reason to
support the effort: to promote reading among young people who did
their reading online. “I sampled college students and asked, ‘How
many of you went to a library in the last year?”’ Only half raised
their hand. “There’s so much information on the Web that students
accept secondary sources.” He hoped to combat this. Adam Smith saw
their effort “as a book-promoting vehicle,” bringing the work of
authors to a wider audience. About 90 percent of the more than
twenty million books ever published were out of print, and Sandler
and Smith had a goal of digitizing ten thousand books each
day.
But in their rush to
fulfill this mission, Google did not first pause to extensively
consult with American publishers and authors who owned the
copyrights to many of these books. “If we had done that,” Brin
said, “we might not have done the project.” Because they didn’t do
that, Google would later have a lawsuit to contend
with.
THE FOUNDERS USUALLY
FOCUS on different things. Page devotes more time to how consumers
interact with Google, hence his chosen title, president of
products. Brin spends more time on technology, hence his title,
president of technology. The titles can be misleading, because “we
overlap a lot,” said Brin. It’s also inexact because each founder
has unpredictable interests or quirks. Brin, for example, thrusts
himself into the middle of strategy sessions for many business
negotiations, which is welcomed by his fellow executives. He is
also a principal proponent, according to vice president of people
operations Laszlo Bock, of Google’s massage programs and child care
centers, while Page is more assertive about which engineers to
hire, the food served, and the size of cafeterias. Within Google,
this sometimes creates confusion. For example, Bill Campbell, who
is in many of the key meetings, said he believes Brin is most
focused “on the end user experience” and that Page is more focused
on “the product development process to get there.” On the other
hand, employee number 1, Craig Silverstein, thinks Brin “brings
more of an operational focus.”
“We’re pretty lucky
because we have both of us plus Eric,” said Brin. “We are able to
choose the things to focus on. It’s a great luxury.” Because “I
can’t escape being a bit of a tech nerd,” Brin said, he spends a
lot of time on technology. But so does Page. “These things are
subtle. We overlap a lot.”
What both bring, said
Nick Fox, the group business manager, ads quality, is “an ability
to push you down paths you wouldn’t have thought about before.”
When Fox first joined Google and watched Page and Brin at TGIF, “I
thought they must be two guys who had a great idea and got lucky.”
But he quickly concluded they always had “great insights,” and an
ability to provoke thought. He offers this example: They were in a
meeting discussing new ways to advertise with search and how to
move beyond the text ads Google relied upon. Brin was holding a
plastic bottle of water, and said, “Let’s turn this bottle upside
down. If I’m a butcher and I’m trying to get customers into my
store, maybe a text ad is not an effective way to get customers
into my store. But maybe if I was able to film a video of myself
showing all the fresh food and great prices and I’m just talking
about my store with a lot of passion, maybe this is the way I can
get people to come into my store.” It was not the typical auto
dealer ad announcing a President’s Day sale, Fox said. “You don’t
think about ads of people talking passionately about their store.”
For various reasons, such ads are still not part of search, but to
Fox that is less important than the ability of the founders to
“turn the way people think about something upside
down.”
Alissa Lee
encountered this upside-down approach. In the first five years of
Google’s life, one or both founders insisted on interviewing each
applicant. Brin was introduced to a Harvard Law graduate, Alissa
Lee, by David Drummond, who was the company’s outside counsel in
the late nineties and became Google’s corporate counsel in 2002.
Lee was a contracts lawyer, and in the course of her interview,
Drummond remembers, Brin said, “‘I really need to see how you will
practice law. I need you to draw me a contract. Don’t spend a lot
of time on it. Draft it and send it to me and to David so we can
review your work.’” And then came the Google test: “‘I need the
contract to be for me to sell my soul to the devil.’” Brin
remembered his request and recalled: “I just figured that if I’m
interviewing an attorney I should validate their work
product.”
Lee remembered
repeating the question, not sure she had heard it correctly. Brin
told her he wanted the contract e-mailed to him in the next thirty
minutes. “Amid the surreal oddity of it all,” she recalled, “I had
forgotten to ask him all sorts of lawyerly questions, like what
sort of protections he needed, what conditions he wanted to attach,
and what he wanted in return for his soul. But then I realized that
I had missed the point. He was looking for someone who could
embrace a curveball, even relish it, and thrive in the process of
tackling something unexpected. I’m not sure he actually looked at
what I sent him, but something in my crazy sale agreement or in my
response must have satisfied him.”
“She was a clear
hire,” said Drummond. Today Lee is Google’s associate general
counsel.
John Doerr
encountered a similar upside-down approach when Page asked him what
he thought of Google’s buying a Boeing 767.
“I think that’s a
terrible idea,” said Doerr.
“Why?”
“For the ethos and
egalitarian nature you want to have in the company,” Doerr
answered, “you’re never going to get away from the public
perception of two Silicon Valley entrepreneurs owning a personal
767.”
“Look at the
numbers,” Page said, showing Doerr a sheet of paper revealing that
for seven million dollars they could purchase the 767, and for
another ten million dollars they could install improved engines and
a new interior. “A totally upgraded 767,” Doerr realized, “cost
less than a G-5.” And it could fly longer distances and accomodate
thirty-five people, transporting engineers and the founders or
Schmidt around the world to visit Google sites. “They went ahead
and did it.” They later purchased an additional plane, a Boeing
757.
WITH INTENSE PRODDING
from the founders, the Google engineering shop was innovating at a
furious pace. Among the new projects developed at this time were
Desktop Search, Froogle (later changed to Google Product Search),
Google Maps, Google Print (renamed Google Book Search), Google
Docs, to allow users to create and edit documents, presentations,
and spreadsheets, and Pyra Labs, a site to facilitate the creation
of blogs. The founders were particularly enthusiastic about the
idea for a new e-mail system. Unlike providers such as AOL,
Google’s e-mail would be free, and would allow its users to easily
search their own e-mail archives for content and contact names. And
while Yahoo’s free e-mail offered its users 4 megabytes of storage,
Google’s Gmail would provide 1 gigabyte, 250 times as much. To the
engineers, it seemed clear that this was enough storage that a user
would never have to delete e-mails. In the interest of efficiency,
the first version of Gmail did not include a delete button. This
had an unforeseen effect: Users feared that Google would peek at
e-mails. And Paul Buchheit’s e-mail scanning software—the same
program that had grown into AdSense—only fanned this fear. For
Google, it was a way to make money from e-mail by placing ads when
certain keywords were typed. But critics said it was an invasion of
privacy, that Big Brother was watching everything. Google’s
engineers failed to absorb the lesson of Microsoft’s Passport
program. Introduced in 1999, the program stored personal
information and allowed access via a log-in name and password. Its
release triggered a storm of protests, complaints that Microsoft
would access this personal data for its own business reasons.
Perhaps a reason Google failed to absorb the lessons of Passport
was because Google believed its intentions were noble and that
Microsoft’s were probably not.
Terry Winograd, the
Stanford professor, was a consultant on Gmail and described a “huge
debate” over the program. “We said, ‘People want to delete things.
There should be a delete.’ Larry, among others, said, ‘We want them
to start thinking differently.’” Page said that because Google was
offering so much storage, users could keep everything, and went on
to argue: “If you delete stuff, you might later on decide you want
it. Plus, you spend time thinking about whether I should delete
this or not.” The “engineering optimization side,” said Winograd,
claimed this was an inefficient use of users’ time.
The Electronic
Privacy Information Center, a public interest research center in
Washington that focuses on privacy and civil liberties issues,
demanded that Gmail be shut down, declaring that it was “an
unprecedented invasion into the sanctity of private
communications.” Of course, a computer, not a human, was scanning
the e-mail, as most e-mail providers do to prevent spam. At first,
the founders and Schmidt tried to defend the no-delete button and
the advertising feature of Gmail, believing the small tempest would
pass. It did not, and Google was forced to add a delete button. For
Winograd this was an early sign of troubles to come. He has
enormous respect for his former students (and gratitude for the
Google stock grants that made him a rich man), but what he saw in
the Gmail debate was that Google relied so much on science, on data
and mathematical algorithms, that it was insensitive to legitimate
privacy fears—and, later, to fears they would dominate the search
market. Winograd describes his two former students as impatient:
“Larry and Sergey believe that if you try to get everybody on
board, it will prevent things from happening. If you just do it,
others will come around to realize they were attached to old ways
that were not as good.” The attitude, he said, “is a form of
arrogance: ‘We know better.’ The idea that somebody at Google could
know better than the consumer what’s good for the consumer is not
forbidden.”
Only die-hard Google
bashers, however, would deny the idealism that drives many of the
decisions Brin and Page have made at Google. In the wake of 9/11,
Krishna Bharat, an Indian-born engineer who joined Google in 1999
and today has the title principal scientist, was moved by the awful
events of that day to ponder its lessons. One lesson, he believed,
is that Americans were largely ignorant of other peoples and
creeds, including radical Islam. There was too little international
news in print or on television. Bharat said he wanted to “broaden
horizons, allowing people to see other perspectives, to see what
the Arab street is saying today. It is hard for the New York Times to do justice to that.” Devoting his
20 percent time to this project, Bharat devised a program that
would be known as Google News, initially offering free access to
almost five thousand worldwide news links. The placement and
selection of stories is made, Google announced, by “computer
algorithms, without human intervention.” Google News would be
ad-free, meaning Google would lose money from this effort. Like
digitized books, Google News was advanced as a promotional and
sales vehicle. It would, Google said, broaden newspaper readership,
and allow newspapers to sell advertising once a user clicked on the
newspaper’s link. “We send traffic to newspapers,” Bharat said.
However, newspapers didn’t all jump up and down with
glee.
One of the major
dissenters was the Associated Press. Founded in 1846 to provide
news stories to newspapers in exchange for annual fees, the AP had
begun to extend this franchise online, selling national and
international news to portals like AOL, MSN, and Yahoo. But as Jim
Kennedy, the AP’s vice president of strategic planning, described
it, Google News was sifting news stories, “making copies and taking
pieces of this content and posting it as if it were their own
news.” Google claimed it was fair use, said Kennedy, since it was
posting only part of the article and providing a link. Google said
it was both creating reader traffic and promotional value for the
news sites. The AP, which is a wholesaler of news, claimed Google
was commoditizing their content and insisted on a license
agreement. Google resisted, and the AP considered bringing a
lawsuit.
Did Tom Curley, the
CEO of the AP, think Google was naive? “No, there is nothing naive
about these guys,” he said. “They have a very, very aggressive
legal view. They have pushed the envelope.... They know exactly
what they’re doing. They have the greatest business ever invented.
They are taking everybody else’s work and they are figuring out how
to do a deal with most other people in which heads, they win, and
tails, most everyone else loses.” He cited the 80 or so percent
Google said it pays its large content partners in the AdSense
program. Since Google sells the ads, he said, it charges a
commission of about 15 percent off the top, leaving about
two-thirds—not 80 percent—for the content creators. “That’s not
enough.”
Eric Schmidt disputes
this portrayal. “This is a company that [at the time] had only
three or four business development people,” he said. Those people
alerted Schmidt that the AP felt Google was stealing their content,
he said, but “we had a lawyer at the time who advised that this was
fair use.” Google refused to pay. The AP claimed that for news
Google was becoming “an end user,” not a search site that sent
people elsewhere. The idea, Schmidt said, had “never occurred to
us.”
Reeling from
shrinking revenues, newspapers fretted that Google was depriving
them of compensation for their content. They feared Google was
expanding from search to the news business. And they were offended
that Google thought an algorithm could perform the work of an
editor. “Google is driven by engineers who believe that what is
most popular is most valuable,” said L. Gordon Crovitz, then the
publisher of the Wall Street Journal.
When the space shuttle Columbia
disintegrated, killing its crew of seven, the Google algorithm
allowed the story to rank low and thus disappear from Google News.
“Their presentation of news devalues brands. Unlike traditional
journalism, it does not communicate to readers the level of
authority or authenticity of information.” Over time, he said,
Google would blur an understanding of which journalism was most
reliable, making news more of an undifferentiated commodity. But
the wails from newspapers and publishers were fairly muted
throughout 2002 and 2003. The anxiety Mel Karmazin felt after his
2003 visit had not yet gripped the old media.
Nor was Google
focused on extinguishing external fires: it had its own internal
flare-ups to douse. The founders continued to be uncomfortable with
Eric Schmidt’s efforts to impose streamlined management, fearful it
would squelch Google’s entrepreneurial spirit. Google was a company
rocketing to financial success on the brilliance of its founders
and engineers, yet hobbled by them as well. “Larry and Sergey
didn’t like management,” Schmidt said, and they let the new
managers know this. They were, he said, “unduly
harsh.”
In early 2003, Google
had four product managers: Salar Kamangar, Marissa Mayer, George
Harik, and Susan Wojcicki. To oversee them as senior vice
president, product management, Schmidt recruited Jonathan
Rosenberg, who had been a senior manager at Apple and other tech
companies. Page and Brin were restive with still more managers
being added, and Schmidt was caught in the middle. A series of
summit meetings was held, with no resolution. Schmidt was not then
convinced that relying on four product managers was the best
approach. But, he said, “at the time, Larry was having a
relationship with Marissa. It was a very complicated set of issues.
Eventually, Marissa announced that we should rank all our projects.
A great idea. Unfortunately, the top one hundred on the list had
three hundred things on it.” And then “there was this huge to-do
because Larry doesn’t agree with the list, and the engineers are
not working on what they’re claiming to be working on, and the
management, which he doesn’t like anyway, is getting away—getting
too bureaucratic.” Page asked everyone to prepare a list of exactly
what he or she was working on and insisted on getting the reports
directly, said Schmidt, in order “to completely avoid being
filtered by all these management types, which includes
me!”
This was round two of
the founders’ unease with Schmidt. Page and Brin would whisper to
other Google executives, said one recipient of these whispers,
“What does Eric do?” This executive believes Page wanted to reclaim
his CEO title. Sometime in the summer of 2002, Coach Campbell again
intervened. With the fervent support of John Doerr, the coach set
out to make the marriage work. Before 2003 was very old, the three
men achieved harmony. Asked in 2008 to describe the most important
milestones in Google’s success, Doerr does not cite the myriad
deals with Yahoo, AOL, or revenue gushers like AdWords or AdSense.
Instead, he said, “The biggest milestone was for Larry and Sergey
and Eric to conclude they were going to work together. It did not
happen overnight. They learned to adapt. Bill was very helpful in
that, and I was too, in a less key way.”
By the end of 2003,
the Google rocket was cruising. Its search now controlled 60
percent of the market outside the United States, which produced
nearly a third of its revenues. Many of its search
competitors—AltaVista, Infoseek, Excite, HotBot—had crashed or
would soon crash. Yahoo and Microsoft had jumped into the search
business, but Google soared far above them. Already it was common
to say “I’ll Google it,” rather than, “I’ll search
it.”
Google’s employee
roster nearly tripled in size between 2002 and 2003, reaching 1,628
at the start of 2004. Like a child outgrowing his clothes, the
company had become too big for its two-building campus on Bayshore
Parkway in Mountain View. Its new campus, christened the
Googleplex, was a stone’s throw from the old one, faced the same
mountains and desertlike expanse, and sprawled over so much
territory that Google provided bicycles for employees to travel
between buildings. It is a measure of Google’s confidence in its
own future growth that the company leased 1.5 million square feet
of office space in four multistory buildings that once housed
Silicon Graphics, and would eventually purchase an additional
fifty-six buildings and 2.5 million square feet of building space
on sixty nearby acres in Mountain View.
Although its growth
was extraordinary, Google remained below the radar of most media
companies, unlike Microsoft in the nineties or IBM in the eighties.
“Don’t be evil” was a heartfelt, galvanizing slogan for Googlers,
but it was also an effective way to brand Google as a nonthreat
ening, almost cuddly, company. Google had bumped into book
publishers and the AP, but it was not yet widely perceived as
anything more than a narrow search company. As a private company,
it was not required to reveal its profits or aims, and so the
menace Google might pose to the old media—to broadcast and cable
television, to advertising, to movies and print and telephone—was
not yet apparent. This was about to change.