CHAPTER
FIFTEEN
Googled
Media companies can be divided into two broad
categories: the few who create waves, and the many who ride them—or
drown. The elite companies that generate waves are rare, the wave
riders common. A company can be successful—Cisco, Dell, Oracle—yet
not fundamentally alter the behavior of consumers or other
companies. Dell’s approach to efficiently making computers was an
innovation, not a disrupter; it did not alter the way consumers
behave. Steve Jobs and Apple are wave makers; companies like
Dell—or Quincy Smith’s CBS and Irwin Gotlieb’s GroupM—attempt to
ride the wave; newspapers crash into them. The Apple wave started
with the Apple II, which launched the PC era in 1977; followed in
1984 by the Macintosh, with its innovative graphical user
interface; followed by Pixar studios, which transformed movie
animation; followed by the iPod and iTunes and the iPhone. It’s
probably safe to say that Intel and HP created waves. Ditto Amazon.
There are those who say Microsoft doesn’t qualify because it rode
the waves others invented, but it is inarguable that it has thrived
for three decades and changed computing. It is much too soon to
know whether companies like Facebook, YouTube, Twitter, or
Wikipedia will have a lasting impact.
It is not too early,
however, to call Google a wave maker. The planet has been Googled,
with the company becoming, as Larry Page has said, “part of
people’s lives, like brushing their teeth.” Google has eliminated
barriers to finding information and knowledge. “The Internet,” Hal
Varian said, “makes information available. Google makes information
accessible.” The Google wave has crashed into entire industries:
advertising, newspapers, book publishing, television, telephones,
movies, software or hardware makers. Its power is measured by the
companies that fear it and the public that adores it. Google has
fostered the growth of the Web by nurturing Web sites with its
AdSense and AdWords programs, which have delivered advertising
dollars and enabled small businesses to reach new customers.
Google’s way of building its business—make it free and attract
users before figuring out a way to make money—became the template
for Web start-ups from Facebook to YouTube to Twitter to Ning.
Google is responsible for creating an entire new industry of search
marketers and search optimizers who gather by the thousands several
times a year under the umbrella of Search Engine Strategies (SES);
these companies set out to outwit Google’s algorithms so they can
advise companies how to jump to the top of search or advertising
results. Google has created a new model for an innovative business
culture. Its search results provide a graph of our times, revealing
which subjects preoccupy us; by studying search data on Google
Trends, economists believe they can spot trends and better predict
consumer behavior. By making information available, Google has
facilitated political participation, as YouTube demonstrated
throughout the 2008 presidential campaign. It has made
institutions, from governments to corporations, more transparent.
And with its open-source Android phone and cloud computing and
YouTube and DoubleClick, it threatens to extend its considerable
reach.
“Fifteen to twenty
years ago, entrepreneurs would have said, ‘I want to be the next
Bill Gates and Microsoft,’” Michael Moritz said. “Today people’s
great ambition is to be the next Google. They went from zero to
twenty billion dollars in revenues in four hundred weeks! Google
has become the front door to the world for many people, the place
they go for information. They are probably the most visible service
concocted by mankind. Was Henry Ford more recognized in 1925? I
doubt it. Because of the Internet, Google has leapt geographical
boundaries.” Perhaps the only company visible to more of the
planet’s occupants, he guesses, is Coca-Cola.
During the 2007
Zeitgeist Conference, a prominent media executive in attendance
whispered a question to me. He was clear, he said, about the
immense value Google was producing for itself. What he said he
didn’t understand was this: What value was Google producing for
society, other than shifting money from the pockets of traditional
media to Google’s? During a long interview with Sergey Brin that
day, I relayed the question. Brin had an easy answer if he wanted
it; on the front page of that day’s San Jose Mercury News was a
story about the jobs his company had created and the auxiliary
businesses that benefited from what the headline called “The Google
Effect.” But Brin chose to make a broader point: “It’s very simple.
People with the right information make better decisions for
themselves. People presented with the right commercial
opportunities will buy things suited to them.”
By way of
illustration, Brin described a trip he and his wife had made to
Africa. With sophisticated digital cameras in hand, the two of them
often jump on the private, customized Boeing 767-200 or 757 that
Brin and Page purchased and that transports them to different
continents. “One day in Zambia the driver was telling me how he was
trying to get all the parts to a computer,” Brin said. The driver
couldn’t locate some parts he needed, and those he could find were
five times as expensive as they were in the United States. “He was
trying to get a DVD-Rom drive. I said, ‘In the U.S. they cost about
thirty dollars.’ He said, ‘What?’ He was about to spend two hundred
dollars on a DVD-Rom. Imagine if there was information there? He
would have been able to get that DVD-Rom drive for forty bucks.
He’d be more efficient at his job, and it would help communities as
a whole. I certainly believe that information creates value, rather
than displaces it.”
Google search is of
enormous benefit to other companies as well. Referring to the
Internet as “a magic box where whatever you want to do, it’s all
there,” Marc Andreessen credited Google with making the box “more
magical. Google makes the world a much better place because it
makes everything findable. Many companies spend a lot of time and
effort to make their stuff more findable on Google. It’s a huge
source of traffic and income. Facebook used to be closed off from
Google—you had to be logged into Facebook to see people’s profiles.
But then Facebook started publishing public profiles so that when
you search on Google for someone, their Facebook profile pops up in
the search results. That generates additional incoming traffic and
therefore money for Facebook.” Web site owners report that Google
search often sends them 80 to 90 percent of their vistors. With
Google as the Internet’s prime navigator, there still remains the
question Nicholas G. Carr asked in a 2008 blog post: “Is the
company an exemplar or a freak?”
Itay Talgam did not
mean to address this question when he appeared at Google’s 2008
Zeitgeist Conference, but he inadvertently offered an answer.
Talgam, a renowned Israeli orchestra conductor, stood on a small
semicircular stage wearing a wrinkled cotton polo shirt with a
sweater draped over his shoulders, his sparse hair shooting in
several directions. For a half hour, his presentation of how
conducting could be a metaphor for transformational management
hushed the audience. Music is “noise,” he began, and what the
conductor does is “make a large group of people work in
harmony.”
Scanning a century’s
worth of conductors, he chose to discuss five. Each was
outstanding, he said, but only two were transformational. The
lights went down and on a large screen appeared a video clip of the
autocratic Riccardo Muti, whose stern face and robotic baton
movements brought forth from his orchestra no “joy,” and suppressed
the development of individual artists. Muti’s “expression never
changes,” Talgam said. “He tells everyone what to do. He is a
micromanager.” The second conductor was Richard Strauss, who seemed
to be in another place as he mechanically moved his arms, granting
his orchestra more freedom but imposing no authority and offering
no inspiration. The third was Herbert von Karajan, who never looked
at his orchestra and also failed to inspire. The fourth was Carlos
Kleiber, whose face was filled with rapture as he conducted and
who, Talgam said, “creates a process” and “a feeling of freedom”
while also conveying “authority.” Notice, he said, the way Kleiber
shot a disapproving glance at a soloist.
Talgam saved his
favorite conductor for last. With the fifth clip, we were treated
to a video of Leonard Bernstein welcoming an orchestra of high
school students from around the world who had been granted one week
under his direction to perform Stravinsky’s The Rite of Spring. The first day of practice, the
makeshift orchestra was discordant. But Bernstein did not wield a
baton as a symbol of his “authority,” Talgam noted. Instead, he
stopped the music and spoke of the feelings Stravinsky sought to
evoke, of the smell of spring grass, of waking animals. “He
empowers people,” Talgam said, “by telling them that their world is
larger than they think.” Cut to a week later, and the high school
orchestra sat attentively before Bernstein, who looked on with
obvious satisfaction as an assembly of young strangers achieved
musical harmony. Without a baton, arms folded, Bernstein conducted
only with facial expressions—a curled lip and lowered head for the
basses, a raised eyebrow for the higher strings, a nod to the
horns, an extravagant smile for the finale. Talgam did not need to
tell the audience what they had seen. It was a sublime management
seminar demonstrating how unusual leaders liberate those who
follow. Bernstein was the boss, but he was not an autocrat. He
managed to coax the best out of his orchestra, to make them part of
a community.
It was no accident
that Google invited Talgam. This sense of being connected to
something larger is central to its culture. Employees share offices
and work in teams. Google strives to make employees feel that they
are part of a network. When Patrick Pichette became CFO, he relied
on a wisdom-of-crowds approach to cost cutting. He set up a Web
page and invited employees to make suggestions to eliminate waste,
which he said unearthed many of the best ideas. Google uses a
variant of this network approach when it test-markets whether its
users like blue or yellow, one beta product or another. Of course,
this faith in quantification is what drove some designers to leave
the company and to blog about their frustrations.
These forms of
communication are characteristic of what Anne-Marie Slaughter, the
former dean of the Woodrow Wilson School of Public and
International Affairs at Princeton, has described as “the networked
world,” a world that Google has been instrumental in advancing.
Diplomacy requires “mobilizing international networks of public and
private actors”; CEOs are acutely aware of “the shift from the
vertical world of hierarchy to the horizontal world of networks”;
the media increasingly is composed of “online blogs and other forms
of participatory media” that “create a vast, networked
conversation.” Society itself is networked, with “the world of
MySpace” creating “a global world of ‘OurSpace,’ linking hundreds
of millions of individuals across continents.” This world is one
where a more open America, and a more open company, has distinct
advantages.
Google has devised a
management system that liberates its employees. The “Googly” way,
said Laszlo Bock, Google’s vice president of people operations, is
simply to treat employees better. “Google is a platform to say,
‘You can trust your folks.’ We want to be an example to other
companies. The key is the 20 percent time, not the free food. There
is a feeling here of intellectual freedom.” Even though there was
some grumbling from Googlers in 2008—about costly child care, the
closing of the Phoenix office—most recognized their work life was
charmed. How many companies gifted its employees with new stock
options to replace those that had become worthless? Asked what
impact Google’s employment policies have had on other companies,
Page said, modestly, “It’s hard for me to know. I’ve never worked
anywhere else. But I feel that we have had an impact. We certainly
got a lot of attention for the things we do for employees, and
that’s positive.” It also means, he added, “Our competitors have to
be competitive on some of these things.”
Marissa Mayer claimed
that half of Google’s products materialize from the 20 percent
time. This has fueled innovation at Google, and has helped wreak
havoc on old media companies. The engineers who come to Mayer’s
office seeking encouragement and company support for their projects
often start with the same assumption Page and Brin do: that the
tried-and-true ways of doing things are outmoded.
Google Voice, a suite
of mobile phone services, provides a good illustration of how the
company’s engineers think. They began with their favorite question,
Why? If we use the Internet for phone calls, they wondered, why
can’t all telephones have a single number? Why do we need multiple
answering machines? Why do we need to switch phone numbers when we
move? Why do we need to wait to listen to phone messages? Why can’t
we convert them to text messages instead? Why can’t we record phone
conversations if the other party consents? Why can’t our phones
block telemarketing calls or make sure certain people are screened
out? Because it’s over the Internet, why can’t most calls be
free?
For its beta test, in
2007, Google introduced for a relatively small group a service that
would work as Google Voice does. It was called GrandCentral, the
name of a start-up Google acquired a few years earlier. With their
regular phones, in the initial GrandCentral pilot project, users
called into a voice mail service, then pushed a button to get a
dial tone. They were now on the Internet. It was free and
convenient. Users liked it but Google treated it like a “maybe”
product, making no commitment to expanding the service. The
snickers from those who thought the Google test must have failed,
as David Pogue noted in the New York
Times, became sneers.
In March 2009, Google
Voice was announced, and the sneers turned to gasps. Everyone in
the telephone business—from telephone companies to new entrants
like cable companies to eBay’s Internet phone service, Skype, which
imposes small charges on calls made on regular phones—had reason to
be concerned. Google would at first give away the phone service for
free, with a nominal charge for long distance calls, and hoped one
day to sell the service to corporations at a low price.What was an
advance for consumers was a potential setback for these companies.
They were being Googled.
Once again, Google’s
engineers proved their brilliance. They had devised the simplest,
most cost-efficient way to accomplish a task. What impact Google
Voice might have on the thousands of jobs in the telephone industry
or on local communities was not a question the engineers asked. Nor
did they ask about privacy. Because Google would be gathering data
on the calling habits of its customers, there were obvious privacy
questions. Nor did they ask what the ramifications were for a
society if Google Voice succeeded and became as dominant in
telephony as Google is in search, online advertising, YouTube, or
digitized books. These questions were beyond the pay grade of the
engineers.
Many Valley
companies, and others, have modeled themselves after what Chris
Anderson calls “the biggest company in history built on giving
things away.” In his book Free,
Anderson cites the many companies that offer free services, from
Twitter to Facebook to MySpace to Yahoo’s photo-sharing service,
Flickr, to e-mail services to Wikipedia to craigslist to news
aggregators like Digg to the free shipping and returns offered by
the online shoe retailer Zappos. By offering free services, Google
has reinforced the notion that traditional media now wants to
combat—that digital information and content should be free. “This
is the Google Generation,” writes Anderson, “and they’ve grown up
online simply assuming that everything digital is
free.”
Many Valley companies
have now copied Google’s 20 percent time, including the one Bill
Campbell chairs, Intuit. Facebook offers subsidized housing for
employees who live within a mile of the office, free meals,
parking, gym memberships, laundry services, and a host of other
benefits that mirror Google’s. “Google has raised the bar for
everybody in the Valley,” said Campbell. “Everyone has to respond
to the pressure that said, ‘If the engineer is good, we better hire
him before Google does.”’
Of course, Google has
borrowed as well as led. Stanford president and Google director
John Hennessy, who once chaired his university’s computer science
department, believes some Google ideas—such as the 20 percent
time—can be traced to Stanford “and the academic world,” where
Stanford graduate students like Jerry Yang and David Filo on their
own time in the computer lab concocted the idea for Yahoo. Page and
Brin have acknowledged that they took cues from the generous way
Genentech treated its medical scientists, including a 401 (k) plan
that matched up to 5 percent of their salaries; this was one of the
reasons they recruited its CEO, Art Levinson, to join Google’s
board. Google has a pet dog policy—allowing dogs to accompany
owners to campus, providing an outdoor space, offering veterinary
services—that Larry Page said was copied from
Netscape.
Nor is Google unique.
Netflix drives its employees hard but among other generous
benefits, it lavishes unlimited vacation time on them. The
e-commerce site Zappos encourages employees to point out any other
employee who does outstanding work; that person then gets a
fifty-dollar bonus from the company. Zappos also employs a
full-time “life coach” who lets employees vent and serves as a
corporate shrink.
Google has done
something else that sets the best companies apart: it earned its
customers’ trust. Google regularly ranks among the world’s most
respected corporate brands. All companies endlessly talk about
achieving brand status, but few attain it. They fail because they
often confuse brand with name recognition; they don’t recognize
that brand is a synonym for trust, which is not something that can
be purchased with a rich marketing budget. Most consumers trust the
information in the New York Times, the
Think Differentness of Apple, the taste of Coca Cola, the safety of
a Volvo, the bargain prices at Wal-Mart or Southwest Airlines. If
we think of the Internet as a copying machine that produces free
information, as one of the founders of Wired magazine, Kevin Kelly, wrote on his blog,
then “how does one make money selling free copies?” Kelly’s answer:
“When copies are free, you need to sell things which cannot be
copied.” The first of these, he said, was “trust,” which is not
duplicable. “Trust must be earned, over time.”
That trust is
founded, in part, on a feeling that a company both serves noble
ends and yields wealth for its shareholders. Recall the “Letter
from the Founders” that was part of Google’s 2004 IPO, in which
Page and Brin declared, “Google is not a conventional company. We
do not intend to become one.” They said they would focus on users,
not investors, and that they’d be concerned not with “quarterly
market expectations” or paying dividends but rather with protecting
Google’s “core values.” In a Q&A published as part of Google’s
prospectus, Brin said the company’s aim was “greater than simply
growing itself as large as it can be. I believe large, successful
corporations ... have an obligation to apply some of those
resources to at least try to solve or ameloriate a number of the
world’s problems and ultimately to make the world a better place.”
They would try to serve, as Eric Schmidt said, as “a moral force.”
The combination of free services, coupled with principled stances
like its refusal to allow advertisers to rent space on its home
page, or its insistence on a customer service that communicates to
users that Google wants to get them to their destination quickly
and without trapping them, have helped convince consumers that
these goals were genuine. When the tsunami struck Southeast Asia in
December 2004, Google made a billboard on its home page to alert
searchers to the various international relief efforts they might
assist. In 2008, Google Flu Trends began tapping the company’s
database to predict flu incidents well ahead of the health warnings
issued by the Centers for Disease Control. “Who would have
thought,” said Steven Rattner, then managing partner of the venture
capital firm Quadrangle, “that a bunch of computer geeks would turn
out to be the best marketers of the twenty-first century?” Little
wonder, then, that Google in 2009, as in prior years, was again
ranked by Fortune as one of the
“World’s 50 Most Admired Companies.”
Bill Gates, like Page
and Brin, has always believed a corporation should be concerned
with looking over the treetops. Before Page and Brin were out of
college, he refused to deliver dividends to Microsoft’s
shareholders, believing this money should be reinvested. But unlike
the Google founders, Gates thought a company like his had one
obligation: to increase its wealth. He also once said that he would
not begin to make large personal charitable gifts until he had
stepped down as CEO and could concentrate on making intelligent
choices. He changed his mind in part because his marriage to
Melinda French Gates broadened his thinking and gave him a partner,
because his parents’ generous charitable endeavors had an impact,
and because age had mellowed him. Starting in 2000, long before
Google established its own effort, the Gates Foundation has been
extraordinarily generous and smart about leveraging its resources
to affect real change. More recently, Gates has enlarged his view
of a corporation’s role. In a speech to the 2007 graduating class
at Harvard, and again in a January 2008 address to business and
government leaders attending the World Economic Forum in Davos,
Gates called for a “creative capitalism” that relies on market
forces to address the needs of poor countries. In an interview with
Robert Guth of the Wall Street Journal,
Gates spoke of the shortcomings of capitalism. He said he was
troubled that innovations in education or health care tend to skip
over poor people, and he proposed that successful companies spin
off businesses that have “a twin mission” of making money and
“improving lives.”
Over the years, it
has not been unusual to hear Silicon Valley companies sound like
social service agencies. In 1995, the newly founded Yahoo declared,
“We believe the Internet can positively transform lives, societies
and economies.” Craig Newmark, the founder of craigslist, extols
“nerd values,” by which he means that he is intent on keeping his
listings free for most of his users and refuses to enrich himself
by selling his company or taking a large salary. Social idealism
has been a core value in the culture of the Internet, from the
insistence of Tim Berners-Lee, who believed that the Web should be
open and that he would not patent it or enrich himself; to the
open-source movement; to Wikipedia, which follows a democratic
faith in “the wisdom of crowds” and has adopted a nonprofit
model.
Before one dismisses
these approaches as the gauzy thinking of left-wing populists,
consider how often traditional companies now promote their own
“corporate social responsibility”—in part to ecumenically emulate
Andrew Carnegie, in part to bathe in the favorable publicity, in
part to profit from some of these endeavors, and in part as a
reaction against almost daily ethical business lapses. Companies
like the Gap and Hallmark donate a portion of their profits to
fight AIDS; Starbucks gave comprehensive health care to its
employees, including part-timers. General Electric devised what it
called an ecomagination strategy to address climate change and reap
profits from it. WPP started issuing a Corporate Responsibility
Report in 2002, and has promised to reduce its carbon footprint by
20 percent. One of America’s most powerful marketers, Jim Stengel,
in late 2008 left his job as global marketing chief for Procter
& Gamble to fund a private consulting venture to advise
companies how to build trust in brands. His task, he said, is to
create “emotional equity,” by which he means that consumers will
believe the company cares not just about their dollars but about
them. This is what P&G did with Pampers, consulting parents and
designing diapers that felt more like cloth and kept babies warmer.
And the Harvard Business School, in 2009, introduced a voluntary
oath, which 20 percent of the graduating class signed, pledging to
“serve the greater good” and avoid advancing “narrow
ambitions.”
True, do-goodism is
often a marketing ploy. True, the idealism one encounters at Google
can be tempered by its business realism, as when Google placated
the government of China, or denied that it wanted to snare a chunk
of the income of media buyers like Irwin Gotlieb. It is also true
that waves can inflict real damage. Google creates jobs, and it
also destroys them. This poses life-and-death questions for
traditional companies.
I asked Tom Glocer,
CEO of Thomson Reuters, “Does Google help or hurt Reuters?” For a
moment it seemed that Glocer was not going to answer. “My pause,”
he said finally, “is the pause of a time frame. To date, they’ve
been neutral to positive.” In the short run, Google has served as a
spur, compelling traditional companies to “raise the level of our
game,” just as Wall Street brokers had to improve their services
and information to compete against online services like E-Trade or
information sources like Yahoo Finance or CNBC. In the long run, he
continued, “What everyone’s waiting to see is whether ‘Do no evil’
is true to the credo, their real inner core, or is it just a
convenient sort of ’Don’t worry, Don’t worry‘—until they’ve built
up such an amazing personal database about all of our habits and
they then go to the New York Times and
say, ’By the way, if you want the search engine to include your
content, you’re going to have to start paying us.‘ ... They’ve
created with software a narrow strait through which most people
need to pass to do an activity that is at the root of much of what
we do on the Web.... The fear is that an increasing number of
businesses depend on Google to get their eyeballs. At a certain
point, Google can flip their business from being a utility” to a
gatekeeper that charges for access.
This power imposes
constant pressure on other companies. “You can’t wait for the wave
to get there. You’ve got to start paddling,” said Peter Thiel, who
was cofounder and CEO of PayPal, and is now president of Clarium
Capital Management, a global hedge fund and Silicon Valley venture
capital firm. “If you were running a railroad company in the 1940s
and people started to fly airplanes, what would you do?” I asked
Thiel what he would do if placed in charge of a traditional media
company. He said there were two choices. Either you push
consolidation and cost cutting much further than media companies
have done. Or you “do something radically transformative.” On
paper, the radical solution is more appealing. One question is how
to adopt a radical solution, such as for newspaper companies
publishing only a free Web edition, without destroying what you’re
trying to save. One impediment is that in the digital age the
transformation often depends on engineers, and media and
engineering, as we’ve seen, are from different planets. “This is
not a problem specific to media,” Thiel said. “When we started
PayPal in 1998-99, we asked, ‘Why can’t the banks do this?’ They
did try to copy us, but you needed engineers and the large
financial institutions were not able to build it. The caliber of
our engineers was significantly higher. Nothing against these
companies, but if you’re a talented engineer, why would you go to
work at CitiGroup? Why would you go to work at a place where your
contribution is not seen as central to the success of the
organization? If you’re a politician, you want to be in D.C. If
you’re a finance person, you want to be in New York. If you’re an
aspiring actor, you want to be in Los Angeles. If you’re an
engineer, you want to be in Silicon Valley”
Most traditional
media companies, including those that have a reasonably good
relationship with Google, are worried that they will be Googled.
But there is a larger context for their insecurity They are anxious
about technological innovations that can quickly disrupt their
businesses; about maneuvering in a world where corporate partners
are also competitors; about how rapidly their businesses can
change; about not being embarrassed by the omnipresent
bloggosphere. Not long after he relinquished his CEO job at Disney,
Michael Eisner flew JetBlue from Burbank to New York. “When I
landed, I opened my BlackBerry and there was my picture on JetBlue.
On JetBlue! In a blog saying, ‘Has something happened to Michael
Eisner that he can’t afford a private airline or a big-time
airline?’” He laughed about the incident, but used it to illustrate
how cell phone cameras and bloggers transform private actions into
public acts. The stage has widened.
The Internet and its
Google surrogate impose pressure on companies to simultaneously
play both offense and defense. Jeff Zucker, CEO of NBC Universal,
explained that to be a CEO in the digital age “feels incredibly
exciting, and incredibly scary.” He is aware of how quickly
businesses can collapse, as did Wang and Gateway and Compaq
computer, and of the ups and downs of companies like Motorola or
Sun or Yahoo. He is wary of too quickly embracing a fad, as CBS
seems to have done when it invested in Joost, a free Web site
offering licensed full-length TV programming. After winning coveted
innovation awards—and the commensurate buzz—when it was introduced
in 2007, today Joost stumbles and in mid-2009 exited the consumer
video market. Zucker is aware of the danger of throwing overboard
the wrong business, as the company that once owned the NBC network,
RCA, did when it decided at the start of the seventies to abandon
consumer electronics. Convinced that no new breakthroughs were
possible in consumer electronic products, RCA stood still while
Apple and Microsoft and Sony surged. “What we all worry about,”
said Zucker, “is destroying value as we innovate. And not letting
that paralyze you is really the pressure that I personally feel.
The scariness is not that I’m going to miss an opportunity, but
that the business model will be destroyed as we’re innovating.” The
“Innovator’s Dilemma.”
Every media company
is speculating on where the digital wave is heading and how to ride
it. This much is clear about Google: the company has a big
appetite. After I watched the 1,500-strong Google sales force
gather at the Hilton in downtown San Francisco, I met Eric Schmidt
in a hotel conference room. Pressed to describe Google’s growth
strategy, he was jaw droppingly candid. “All large media companies
are both distribution and content companies,” he said, and “we
really are competing with the distribution” side of these
companies. Google wants to be the agent that sells the ads on all
distribution platforms, whether it is print, television, radio, or
the Internet. To advertisers, he said, “We say, use us.” In
addition, he said, “As our technology gets better, we will be able
to replace some of their [large companies‘] internal captive sales
forces. They are not doing that much work; they are not automated.
So the eventual goal is, again, to replace some of these sales
functions by automation.”
So Google will
disintermediate the functions of these traditional media companies?
Schmidt disputed the word, but not the effect: “Disinterme diation
is not the correct word to use. It’s better sales
technology.”
He thought mobile
phones would probably be “a smaller target for us” because to get
on those platforms Google would have to pay large fees and cede
control to telephone companies. Perhaps the biggest future
opportunity for Google, he said, was YouTube. “If that works,” he
said of YouTube’s effort to sell advertising and, he admitted, to
become a content company, “then that’s the creation of the
equivalent of the CBS network in the 1950s. It’s the creation of
both content and a monetization mechanism.”
Sergey Brin told me
that it is Google’s willingness “to experiment,” to “take risks”
and “innovate”—to do the bold things Schmidt described—that will
continue to set Google apart. However, companies with large
appetites can get fat. Marc Andreessen believes Google aims “to do
everything,” but is dubious that they can succeed. Andreessen also
believes that in the digital age, technology alters the competitive
battlefield, just as it did in World War II. Germany in 1940, as
New York University professor Clay Shirky points out in his
provocative book Here Cornes Everybody,
was not the invincible power “etched in communal memory” Germany
teetered near bankruptcy; its army was smaller and its tanks were
inferior to France’s. So why did the German blitzkrieg succeed?
Because its tanks were equipped with a technology the French tanks
lacked: radios. These radios allowed Panzer commanders to share
intelligence and make quick decisions, leaving French commanders
standing still and guessing while German tanks moved in concert.
Even if the French had radios, Shirky writes, the Germans held
another advantage: “The French regarded tanks as a mobile platform
for accompanying foot soldiers. The Germans, on the other hand,
understood that the tank allowed for a new kind of fighting, a
rapid style of attack....” The technology advantaged Germany, but
so did a superior strategy that allowed Germany to
prevail.