Googled (51 page)
Authors: Ken Auletta
Tags: #Industries, #Computer Industry, #Business & Economics
Today, Google appears impregnable. But a decade ago so did AOL, and so did the combination of AOL Time Warner. “There is nothing about their model that makes them invulnerable,” Clayton Christensen, Harvard business historian and author of the seminal
The Innovators Dilemma,
told me. “Think IBM. They had a 70 percent market share of mainframe computers. Then the government decided to challenge them. Then the PC emerged.” Seemingly overnight, computing moved from mainframes to PCs. For a long while, Microsoft seemed unstoppable, he said, only to be diverted by government intervention and the emergence of Linux and open-source software. “Lots of companies are successful and are applauded by the financial community,” Christensen said. “Then their stock price stalls because they are no longer surprising investors with their growth. So they strive to grow but forget the principles that made them great—getting into the market quickly, not throwing money at the wrong thing. When you have so much money you become so patient that you wait too long. Again, look at Microsoft. No one can fault them for not investing in growth ideas. But none of these have grown up to be the next Windows.” Maybe, he added, we are now beginning to “see this at Google.” The company has poured money into YouTube and Android and cloud computing and the Chrome browser, but has yet “to figure out the business model for each.”
The Innovators Dilemma,
told me. “Think IBM. They had a 70 percent market share of mainframe computers. Then the government decided to challenge them. Then the PC emerged.” Seemingly overnight, computing moved from mainframes to PCs. For a long while, Microsoft seemed unstoppable, he said, only to be diverted by government intervention and the emergence of Linux and open-source software. “Lots of companies are successful and are applauded by the financial community,” Christensen said. “Then their stock price stalls because they are no longer surprising investors with their growth. So they strive to grow but forget the principles that made them great—getting into the market quickly, not throwing money at the wrong thing. When you have so much money you become so patient that you wait too long. Again, look at Microsoft. No one can fault them for not investing in growth ideas. But none of these have grown up to be the next Windows.” Maybe, he added, we are now beginning to “see this at Google.” The company has poured money into YouTube and Android and cloud computing and the Chrome browser, but has yet “to figure out the business model for each.”
Of course, these are the what-ifs. Today, and for the foreseeable future, few of Google’s detractors would disagree with Fred Wilson, who said of Google, “There is no end in sight to the value they are creating.” The value can be measured in rising profits and searches, but to quantify Google’s success just in this fashion is to view the young company through a zoom lens rather than a wide-angle. The close-up misses how Google has transformed how we gather and use information, given us the equivalent of a personal digital assistant, made government and business and other institutions more transparent, helped people connect, served as a model service provider and employer, made the complex simple, and become an exemplar of the oft-stated but rarely followed maxim, “Trust your customer.” Because it is
free,
Google will be difficult to assail.
free,
Google will be difficult to assail.
No one can predict with certainty where Google and the digital wave is heading, when it will crest, or who it will flatten. If the public or its representatives come to believe Google plays favorites, aims to monopolize knowledge or its customers, invades their privacy, or arrogantly succumbs, in the words of Clayton Christensen, “to the falsehood that you can grow and grow because of network effects,” then it will be more vulnerable. If Google maintains its deposit of public trust—continuing to put users first—and if it stays humble and moves with the swiftness of a fox, it will be difficult to catch.
Other companies have profoundly disrupted the business landscape. Think of the Ford automobile or the Intel chip. We can, however, be certain of this: Nowhere in the three billion daily searches it conducts, the two dozen or so tetabits (about twenty-four quadrillion bits) of data it stores, the more than twenty million books it plans to digitize, will we find another company that has swept so swiftly across the media horizon.
ACKNOWLEDGMENTS
This book was born two and one half years ago. I aspired to profile a company at the epicenter of the digital revolution, a company whose rise would also tell the story of how “new” media disrupted “old,” and offer a glimpse into the future of media. Google was my chosen vehicle, but the company was reluctant to cooperate. Google’s founders and many of its executives share a zeal to digitize books, but don’t have much interest in reading them. They worried that cooperating on a book was an “inefficient” use of their time. I made the argument that my task was to understand and explain what they do and how they were changing the media world, and that they should look upon my project much as they look upon search. If my book was good, it would rise to the top of search results, becoming a common reference. After months of my kicking at the door, they opened it.
I could not have told this story without their cooperation. I made many weeklong visits to the Google campus in Mountain View, conducted a total of about 150 Google interviews, including 11 with CEO Eric Schmidt. I recorded each of these interviews; names and dates are contained in the endnotes. With the sole exception of one vice president, I interviewed everyone I asked to see, including Sergey Brin and Larry Page and Google directors, often more than once. With the blessing of his superiors, David Krane, who was one of Google’s early hires, orchestrated and attended most interviews. He was a fountain of historical facts, and not once did he interrupt or intrude on an interview.
I was frequently asked by Google employees whether they would like this book. I always said that if I did my job there would be things that would displease them. No one at Google saw this book before publication. I am grateful to Google for its willingness to risk transparency. I am also grateful to about 150 individuals outside Google who granted interviews, many of them representatives of traditional media.
At Penguin Press, Ann Godoff has championed this project and been an irreplaceable partner on this as on previous books. Nick Trautwein lent his appreciable surgical skills to the editing of this book and stayed on top of everything. I am grateful to the rest of Ann’s team, including her competent assistant, Lindsay Whalen; the marketing team assembled by Tracy Locke, especially the ever-industrious and cheerful Sarah Hutson; to copy editor Susan Johnson, who meticulously pored over every syllable; and to attorney Gary Mailman, who carefully vetted this book.
This book began at my journalistic home,
The New Yorker,
which published my initial 2007 magazine piece, “The Search Party.” Editor David Remnick bestows on his writers the luxury of time, a keen editorial eye, and a sense that he is in the managerial dugout cheering. The editorial support writers receive at
The New Yorker,
from senior editors who read and comment on galleys to fact checkers who exhaustively exhume every sentence to copy editors who meticulously smooth prose—and from my longtime editor there, Jeffrey Frank—fills me with awe.
The New Yorker,
which published my initial 2007 magazine piece, “The Search Party.” Editor David Remnick bestows on his writers the luxury of time, a keen editorial eye, and a sense that he is in the managerial dugout cheering. The editorial support writers receive at
The New Yorker,
from senior editors who read and comment on galleys to fact checkers who exhaustively exhume every sentence to copy editors who meticulously smooth prose—and from my longtime editor there, Jeffrey Frank—fills me with awe.
Lisa Chase gave a careful and close initial reading of the manuscript and reminded me what a gifted editor she is. Lawrence Lessig read the manuscript with the care he brings to legal briefs, and his comments were acute. Barry Harbaugh meticulously fact checked the manuscript. I wrestled for months to come up with a title. It took my friend Nora Ephron about thirty seconds to cut through my morass and suggest, “Googled.” Another old friend, Milton Glaser, who designed the jacket of my first book, volunteered to design this jacket, and did so overnight. Kenneth Lerer offered valuable advice, as did his business associate, Jonah Peretti. I have received generous help from many other friends, including Tully Plesser, Susan Lyne, and John Eastman. My agent, Sloan Harris, has been a stalwart; you want him in your foxhole. Amanda Urban, as always, was my most demanding and provocative reader.
These are the folks who share credit; any blame is all mine.
NOTES
Prefacexi
YouTube, with ninety million unique visitors:
Nielsen VideoCensus, April 2009.
xi
“
The Internet...
makes information
accessible
”:
author interview with Hal Varian, April 1, 2009.
xii
“
Our goal
is to change the world”:
author one-on-one interview with Eric Schmidt at a forum sponsored by the
New Yorker
and the Newhouse School at Syracuse University June 11, 2008.
xiii
could become
a hundred-billion-dollar media company:
author interview with Eric Schmidt, September 12, 2007.
3
With his suit and tie
:
Karmazin Google meeting described in author interviews with Karmazin, May 13, 2008, and August 22, 2008; Nancy Peretsman, May 1, 2008; Eric Schmidt, April 16, 2008, and September 15, 2008; Sergey Brin, September 18, 2008; and Richard J. Bressler, September 26, 2008.
3
Short and pugnacious
:
Ken Auletta, “The Invisible Manager,”
The New Yorker,
July 27, 1998.
4
Google’s private books revealed
:
from August 2004 Google IPO registration with the Securities and Exchange Commission.
4
Karmazin’s destination
:
description of 2400 Bayshore Parkway offices from visit by author, April 18, 2008; author interviews with David Krane, April 18, 2008, and with Marissa Mayer, September 18, 2008; and from Google video of headquarters, provided by Google.
6
25.2 billion Web pages
:
WorldWideWebSize.com
, February 2, 2009.
7
It was Google’s ambition
:
Schmidt and Page speech at Stanford on May 1, 2002, as seen on YouTube.
7
several hundred million daily searches
:
Schmidt and Page speech at Stanford on May 1, 2002, as seen on YouTube.
7
the number of daily searches is now 3 billion:
internal Google documents.
7
“our
business is highly measurable”:
author interview with Eric Schmidt, September 15, 2008.
8 $3
million spent: Advertising Age,
September 11, 2008.
8 $172
billion spent in the United States on advertising, and the additional $227
billion spent on marketing:
Zenith OptimediaReport, April 2009.
9
Mayer ... remembered the meeting vividly:
author interview with Marissa Mayer, September 18, 2008.
9
“If Google makes”:
author interview with Eric Schmidt, April 16, 2008.
9
“the
long tail”:
Chris Anderson, the
Long Tail: Why the Future of Business Is Selling Less of More,
Hyperion, 2006.
10
“
aggregate
content”:
author interview with Larry Page, March 25, 2008.
10
from
a peak
daily newspaper circulation:
Nicholas Carr, Big
Switch: Rewiring the World, From Edison to Google,
Norton; and The Project for Excellence in Journalism, “State of the News Media Report,” March 2007.
10
those networks... attract about
46
percent of viewers:
Nielsen data on the 2008-9 season, May 2009.
12.
“The innovator’s dilemma”:
Clayton M. Christensen,
Innovator’s Dilemma,
Harvard Business School Press, 1997.
12.
“Your choices suck”:
author interview with Mel Karmazin, May 13, 2008.
12 “
I
will believe in the 500-channel world”:
Sumner Redstone speech before the National Press Club, October 19, 1994.
13
Vinod Khosla ... once told:
“An Oral History of the Internet,”
Vanity Fair,
July 2008.
13
“a tsunami”:
author interview with Craig Newmark, January 11, 2008.
14
Nielsen reported:
The Nielsen Company, “Three Screen Report,” May 2008.
14
In
2008
,
more Americans:
press release from the Pew Research Center for People & the Press, December 23, 2008.
14
the number one network teleuision show:
Nielsen Media Research.
14
an estimated
1.6 billion:
Universal McCann study, “Wave.3,” March 2008, and John Markoff, the
New York Times,
August 30, 2008.
14
newspapers, which traditionally claimed nearly a quarter:
JackMyers.com
.
14
lost 167,000 jobs: Advertising Age
report from the Bureau of Labor Statistics, February 18, 2008.
14
two hundred billion dollars:
Myers Advertising and Marketing Investment Insights, annual advertising spending forecast, September 15, 2007.
14
plunge below 20 percent:
McCann Erickson Worldwide chart of percentage of ad dollars by media, 1980-2007.
15
it took telephones seventy-one years ... just five years:
Progress & Freedom Foundation report, January 16, 2008, and “The Decade of Online Advertising,” DoubleClick, April 2005.
15
thirty-four technology stocks:
charts provided to the author by Yossi Vardi.
15
1 million job applications:
author interview with Lazslo Bock, August 22, 2007.
15
Its revenues
...
from advertising and other Google statistics:
Google’s SEC filing for fiscal year ending December 31, 2007, Google Amendment No. 9 to Form S-1, filed with the SEC August 18, 2004, and Google 10-K filed with the SEC, December 31, 2008.
16
daily advertising impressions:
Google Product Strategy Meeting attended by the author, April 16, 2008.
16
Google’s hundreds of millions of daily auctions:
reported in its Google 10-K SEC filing for the year ending December 31, 2007.
16
index contained:
Google’s third-quarter earnings report, October 16, 2008.
16
billions of pages per day:
Google internal documents for March 2008, presented at an April 16, 2008, Google Product Strategy Meeting attended by the author.
16
tens of billions:
May 2007 revenue report, the Interactive Advertising Bureau.
16
YouTube
...
twenty-five million unique daily visitors; DoubleClick posted seventeen billion:
Eric Schmidt presentation to Google employees, April 28, 2008.
16
Google’s ad revenues in
2008: “Media Spending 2006-2009 Estimates,” JackMyers. com, January 29, 2008.
16
“We began”:
Google 10-K filed in 2008 for the period ending December 31, 2007.
16
“We are in the advertising business”:
author interview with Eric Schmidt, October 9, 2007.
17
likens Google to
...
Andy Kaufman:
author interview with Marc Andreessen, May 5, 2007.
17
“I sometimes feel”:
author interview with Eric Schmidt, March 2, 2007.
17
seventy million dollars:
Adam Lashinsky, “Where Does Google Go Next?”
Fortune,
May 26, 2008, and confirmed by Google.
18
conveys a sense of freedom:
author interview with Krishna Bharat, September 12, 2007.
18
Burning Man’s ten stated principles:
Burning Man Web site.
18
“Google is
a
cross”:
author interview with Peter Norvig, August 21, 2007.
18 She described the culture as “flat”: author interview with Stacy Savides Sullivan, August 21, 2007.
19 the best U.S.
company to work for: Fortune,
January 2008.
19 salaries are modest: SEC 14-A filing, March 24, 2009.
19
stock option grants:
Google 10-K filed with the SEC for the fiscal year ending December 31, 2008.
19
more applicants are accepted by Harvard... packet about each:
author interviews with Lazslo Bock, August 22, 2007, Leesa Gidaro, September 12, 2007, and David Drummond, March 25, 2008, and Google orientation for new employees, October 8, 2007, attended by author.
20
consisted of 130 people
: author interview with David Krane, August 22, 2007.
20
a total of eight hours of his time:
author interview with a senior executive at Google.
20
a blog explaining why he left:
“Why Designer Doug Bowman Quit Google,” Google Blogoscope, March 21, 2009.
20
“knowledge workers”:
author interview with Hal Varian, March 28, 2008.
20
“In some ways”:
author interview with Paul Buchheit, June 9, 2008.
21
user experience matters most:
author interview with Matt Cutts, August 20, 2007.
21
“church/state wall”:
author interview with Larry Page, March 25, 2008.
21
four thousand dollars a day:
Jason Calacanis blog from AdSense, July 28, 2008.
21
one thousand employees have received this subsidy:
supplied to the author by Google.
22
“moral force”:
author interview with Eric Schmidt, June 11, 2008.
22
“great values”:
author interview with Al Gore, June 10, 2008.
23
“How can you”:
author interview with Eric Schmidt, September 12, 2007.
23
Winograd . . . recounted a discussion at a TGIF:
author interview with Dr. Terry Winograd, September 16, 2008, confirmed by another Google executive.
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