Cringley wrote a piece the other day called The Final Days of Google: It is going to be an inside job. Basically, he puts forth the idea that many potential entrepreneurs at Google will cash out their options at some point, leave the company, start ventures of their own, and, eventually, one of them will unseat Google as the undisputed corporate heavyweight champion.
Cringely's basic statements are right on the money, but his interpretations are simplistic.
...Google founders Sergey Brin and Larry Page are sure (and for good reason) that their crew will generate in this 20 percent time thousands of ideas and technologies that the company can commercialize for decades to come.
It is a brilliant strategy and one that would appear to be almost foolproof. Alas, that's not so, for Google's strategy for business immortality is fatally flawed and will ultimately kill the company.
Yes, the "20% time" and other idea manufacturing that Google does certainly constitute a brilliant strategy. But Cringely believes that Google is somehow planning to hoard all of these ideas:
Google quite properly will pursue 10 projects per year and five of those will fail both because they are expected to and also because they were never worth pursuing in the first place. This leaves 390 orphaned projects of which 35 are absolutely stunning but unrecognized and 355 are pretty darned good. What happens to THOSE ideas?
They fester.
No, I don't think so. The Google guys are smart enough to know that they cannot keep all of the good ideas in house forever, whether or not they decide to pursue them. Google just wants first dibs and earns this right by fostering a creative, free development environment. If they thought they could keep it all to themselves, they would not offer the options exit plan with Morgan Stanley that Cringely writes about.
Will a culture of resentment develop among Google employees whose ideas are rejected? Sure, it's possible. Every big company takes on a life of its own; this is inevitable. Many employees may become bitter rather than strike out on their own. However, to suggest that because Google generates a lot of business ideas, they will somehow cause mass numbers of employees to defect misses the whole point of this strategy.
Here's a very specific example. Step2 does a lot of business with Google. The AdWords program has been very successful for us. We got started with AdWords because an astute Google sales rep named Adam Goldberg called me a few years ago and sold us on the program. Adam guided us through the setup process and followed up regularly to make sure things were going well. All along, he kept giving us good advice and helping us optimize our campaign.
Adam is a really smart guy. (I wish I was that smart.) While he was working with us and other clients over the years, he noticed that Google was doing a lot to generate traffic and great top-line sales for its advertisers. But the advertisers really had no easy way of calculating true ROI on their AdWords campaigns. It was even more difficult to figure out which specific keywords were performing better than others at generating actual profits.
Adam figured that all of the performance data that Google was providing to its advertisers could be combined with the advertisers' own profitability and sales data to analyze true ROI down to the keyword level. This was a big deal because if campaigns could be managed using such granular ROI measurements, then it would allow advertisers to optimize their campaigns with much greater efficiency. Waste could be eliminated, and spending could be increased where justified.
After developing the idea, Adam did what every Googler does -- he pitched it to management. They liked it, but they told him that it was not a direction they wanted to go. What happened next is important: They gave Adam their blessing to leave Google and pursue the idea on his own. Today, Adam and some very talented programmers run a company called ClearSaleing in Columbus, Ohio. We do business with them, and their product is amazing.
The point of this story is that Google does not hoard all of its ideas. They do not foolishly believe that they can stop good ideas from leaving. Contrary to Cringely's thesis, they actually encourage people to leave from time to time -- with ideas that were hatched at Google.
Believing in your core business is the true lesson of Google's long-term success. As I have stated time and time again, their core business is advertising. Everything they do drives users to encounter or create relevant content, and relevant content is a channel for serving relevant advertising.
Innovation and entrepreneurship go hand in hand. Google uses both to grow their business. The side effect is the creation of additional businesses. Some might even become competitors. Will this be their downfall? Perhaps one day it will, but my guess is that the end will come later, much later, because of this strategy.
Sunday, December 23, 2007 at 11:14AM 