by Steve Levy
The meeting over, the young executives offered T-shirts to the reporters. They both looked hugely relieved.
Though Kamangar had done a good job with the business plan, Brin and Page knew that they needed an experienced hand to run Google’s business operations, ideally someone with a reputation that would bring credibility to the company. From Kleiner Perkins came a recommendation for a thirty-five-year-old Iran-born executive named Omid Kordestani. He was working for Netscape, which had recently been purchased by AOL, and was looking for a new job. As the engine rooms of the tech boom hadn’t yet begun taking water, Kordestani had plenty of choices. One of the most enticing was Apple, newly revitalized with the return of Steve Jobs. Kordestani took a breakfast meeting with Jobs, who gave him a dizzying, messianic pitch. But Kordestani preferred a start-up. He was sufficiently experienced in Silicon Valley ways to know that scruffy former grad students recommended by top VCs were more likely to deliver treasures than even the wizard of Cupertino.
So one evening after work—still wearing the jacket and tie he wore to work at Netscape—he dropped into Google’s Palo Alto office over the bike shop. Sergey took Kordestani into the little conference room—and fell silent. Finally, he addressed Kordestani, who was patiently sitting across the Ping-Pong table, and admitted that he’d never tried to hire a business executive and didn’t know what he was looking for. “Well, let me help you,” said Kordestani, never at a loss in social situations, and he began to talk about what qualities they might consider in a vice president of business operations. Brin called in Urs Hölzle and everyone else still hanging around the office. They all went out for dinner at the Mandarin Gourmet in Palo Alto. Kordestani picked up the tab—not a bad investment, considering that the stake he was granted by accepting the job at Google would be worth $2 billion within a decade.
The VCs thought it would be a good idea for Google to do some marketing to increase traffic and brand recognition—its competitors were running TV ads—but Brin and Page resisted. “Marketing was always the poor stepchild at Google, because Larry and Sergey really thought you can build a company without it,” says Cindy McCaffrey, who joined in 1999 to head communications.
Still, on the recommendation of one of its early investors, Google hired a temporary vice president of marketing in August 1999. Scott Epstein had early experience marketing products like Miller Beer, Gorton Fish Sticks, and Tropicana. Later at Excite, he built a multimillion-dollar campaign around the Jimi Hendrix song “Are You Experienced?” His time at Google was brief and rocky.
“They were contrarian,” Epstein would later say of the Google founders. “They rejected everything that smacked of traditional marketing wisdom.” Larry and Sergey had their own spin on spin. In 1999, at Burning Man (the posthippie festival in Death Valley that Page and Brin regularly attended), they’d been impressed that someone had projected a laser image onto a nearby hill. Wouldn’t it be great, they asked Epstein, if we could laser google onto the moon? More plausible was their suggestion that Google underwrite shows on NPR, and thus began a long history of public radio sponsorship.
To create his marketing plan, Epstein wanted to get a good sense of how consumers viewed Google. This would help him identify the traits to emphasize in his branding efforts. He set up focus groups in San Francisco, Chicago, and Atlanta. Page accompanied him for some of the sessions. With his obsession on pleasing users, Page was interested in people’s impressions about Google search. But Epstein remembers that Page was most engaged when they rented a Hertz car in Atlanta. It had a new NeverLost navigation system, and Page griped about how this feature or that was poorly executed. He’d do it better. (Eventually Google would create its own navigation system.)
After a few months, Epstein came up with an elaborate plan, including TV ads, and presented it to the board. The board rejected it.
“It really came down to this,” McCaffrey later said. “We have a limited budget. Do we want to put that money into the technology, into the infrastructure, into hiring really great people? Or do we want to blow it on a marketing campaign that we can’t measure?” Larry and Sergey told Epstein that his interim stint was over.
The fact was, the Google search engine marketed itself. As people discovered novel ways to use it, the company name became a verb, and the media seized on Google as a marker of a new form of behavior. Endless articles rhapsodized about how people would Google their blind dates to get an advance dossier or how they would type in ingredients on hand to Google a recipe or use a telephone number to Google a reverse lookup. Columnists shared their self-deprecating tales of Googling themselves. McCaffrey and her staff helped this name recognition process along with a list of “true story testimonials.” They included the long-lost father discovered after thirty-four years, the job seeker hired after an employer found his résumé through a Google search, the fourth-grader who finally found the information on the plant genus Dinizia needed to finish her rain forest project. A contestant on the TV show Who Wants to Be a Millionaire? arranged with his brother to tap Google during the Phone-A-Friend lifeline, instantly discovering that the city founded on the Trinity River was Dallas, and winning $125,000. And a fifty-two-year-old man suffering chest pains Googled “heart attack symptoms” and confirmed that he was suffering a coronary thrombosis. “You saved my life! Had I putzed around waiting for another website to display interminable graphics and banner ads, I might not be here today,” he wrote Google. It was the query that launched a thousand feature articles, marketing success that could not be bought—all to the good, because Google wasn’t making money.
The post-VC business plan anticipated three streams of revenues: Google would license search technology to other websites; it would sell a hardware product that would allow companies to search their own operations very quickly, called “Google Quick Search Box”; and it would sell ads.
Brin and Page themselves had made the very first licensing deal, with a company called Red Hat, a software company that distributed a version of the free Linux operating system. It earned Google around $20,000. The first substantial web partnership was with Netscape. Kordestani still had good contacts there. It was an ambitious move for Google, because the company did not really have enough equipment to handle the sudden boost in traffic. On the first day of the deal, early arrivals at headquarters discovered that there weren’t enough servers to run searches on both Google and the Netscape home page. So Google turned off its own home page—stranding its loyal home page users—until it could get more servers. “It showed we were a real business, doing the right thing and following through on our commitments,” says one early Google employee, Susan Wojcicki. (After sharing her home with Google, she had joined the company.)
Google’s first stab at selling advertising began in July 1999. When Jeff Dean arrived from DEC—a couple of months before he toiled in the war room to fix the indexing problem—Brin and Page told him that they needed an ad system. But they had no idea what a Google ad should be. Some at Google—including the director of technology, Craig Silverstein—thought that the whole effort was a distraction and that Google should outsource its ad system to some company more accustomed to waddling in the muck of Mammon. “I was like, ‘We’re not an advertising company, we’re a search company—let someone else worry about the advertising,’” says Silverstein. “It was good they did not take my advice.”
At the time the dominant forms of advertising on the web were intrusive, annoying, and sometimes insulting. The most common was the banner ad, a distracting color rectangle that would often flash like a burlesque marquee. Other ads hijacked your screen. Google wanted none of that. Brin and Page understood that because of the very nature of search—people are looking for things—Google could provide advertisers a terrific environment. The information in ads could even be as valuable to users as the results Google provided from search queries, they believed.
Dean worked with Marissa Mayer and another engineer to set up a system that could eventually be used for Go
ogle to sell such ads to big companies. Google ads would not offend eyeballs or sensibilities. They would be small blocks of text targeted to actual searches. The right keyword would trigger an appropriate ad. Google had an idea for its first test of the system—whenever it saw that a search query had relevance to a published book in print, Google would present a link that would connect to the page where you could buy the tome on the online bookstore Amazon.com. Even for a trial run, Google thought big. “We wanted a different ad for every book in the world,” says Jeff Dean.
Dean and his team went through the Amazon.com site to get descriptions of the top 100,000 sellers and extracted relevant keywords. By the fall, the system was running. Google itself placed those ads, perching them on top of the search results with a notation that they were “sponsored links.” Because Amazon paid an affiliate fee to anyone who sent a book buyer its way, Google’s plan was not only to be the first advertiser on its own system but to make money as well.
“It didn’t make much money,” admits Dean. Google was not yet drawing enough traffic to amass significant numbers of buyers, and Amazon’s affiliate fees—5 percent of the sale—weren’t all that high to begin with. “I think we made enough to buy the beer for TGIF [Google’s Friday-afternoon employee meeting] for a couple of weeks.”
Susan Wojcicki later admitted the real problem: “No one clicked on the ads.” But she felt that the experiment was a great success. “It was incredible that we were going to build an ad system at all. What, we didn’t have enough to do with search? Now we’re asking our engineers, ‘Can you develop subsecond delivery times in every language in the world for every specific keyword?’ It was impressive that they actually did it.”
One contingent unimpressed at this point was Google’s investors. By the time of the Amazon affiliate bust in January 2001, it was almost two years after the $25 million investment, and the company was yet to make any money from the 70 million daily searches on its site. One angel, David Cheriton, was joking to friends that all he’d gotten from his six-figure Google investment was a T-shirt—“the world’s most expensive T-shirt.” To the money people on Google’s board, the problem was no joking matter. According to one account, there was a real possibility that some of the funders would be willing to pull out if other investors stepped in to replace their stakes. Page and Brin took steps to seek out those funders. Shriram was helping the effort even as he begged the VCs to stay patient.
But according to Doerr, Google’s uncertain financial future wasn’t his primary concern. To his horror, only a few months after taking the $25 million from Kleiner Perkins and Sequoia, Page and Brin were welshing on their commitment to hire a CEO. “They called me up one day and said, ‘We’ve changed our mind. You know, we actually think we can run the company between the two of us,’” recalls Doerr.
Doerr’s first instinct was to get rid of his shares immediately, but he held off. By then he understood Page and Brin well enough to realize that the way to get them to change their course was by data. The data he had in mind were the firsthand exposure to the most brilliant founder CEOs in the Valley, all of whom, of course, were close to Doerr. He offered Larry and Sergey a deal: They would meet with these leaders and report back, and “after that,” he told them, “if you think we should do a search, we will. And if you don’t want to, then I’ll make a decision about that.” Page and Brin agreed to Doerr’s Magical Mystery Tour of high-tech royalty: Apple’s Steve Jobs, Intel’s Andy Grove, Intuit’s Scott Cook, Amazon’s Jeff Bezos, and others. Then they came back to Doerr. “This may surprise you,” they told him, “but we agree with you.” They were ready to hire a CEO.
One person, and one only, had met their standards: Steve Jobs.
This was ludicrous for a googolplex of reasons. Jobs was already the CEO of two public companies. In addition, he was Steve Jobs. You would sooner get the Dalai Lama to join an Internet start-up. Doerr and Mortiz kept pressing, and the founders reluctantly agreed to keep considering. An Intel executive came close but didn’t win them over. Then Doerr fixated on Eric Schmidt.
Schmidt, then forty-six, had been the chief technology officer at Sun Microsystems and was the CEO of the big networking company Novell. He was familiar with boardrooms and bottom lines. But the big factor in his favor was that he was an excellent engineer, with a Berkeley computer science PhD and geek renown as the coauthor of lex, a coding tool that was beloved by hard-core UNIX programmers. “He really understood computer science,” says Page. “We actually used lex at Google.” What’s more, Schmidt wasn’t a stuffed shirt. At Sun, there were famous stories of his workers making him the good-natured butt of their annual April Fool’s joke. In a video of the 1986 prank, you can see Schmidt, wearing glasses with lenses so huge that he looks sort of like a grown-up version of the nerd kid Steve Urkel in Family Matters, staring in stunned but admiring disbelief at the Volkswagen Beetle that his employees had fully disassembled and then reassembled in his office. To cap things off, Brin later said, “He was the only candidate who had been to Burning Man.”
When Doerr put Schmidt together with Page and Brin in late 2000, all parties saw the advantages of having Schmidt at Google. Even though they had disagreements in the hours of conversation leading up to the job offer, the Google cofounders respected his acumen and saw that his experience—ranging from start-up to heading a public company—would be a virtue. “He has an amazing group of skills,” says Page. For Schmidt’s part, he clearly got a charge from the energy and precociousness of the two Stanford dropouts, who were nearly twenty years younger than he.
From the start, Schmidt adopted a public stance toward the founders of unfettered admiration, a position he carefully maintained thereafter. “I fairly quickly figured out these guys are good at what they do,” he told me in early 2002. “Sergey is the soul and the conscience of the business. He’s a showman who cares deeply about the culture, the one who talks more, with a bit of Johnny Carson. Larry is the brilliant inventor, the Edison. Every day I am thankful I accepted this job offer.”
His anecdotes about disagreements with Sergey and Larry followed a consistent storyline: Schmidt expresses a tradition-bound preconception. The young men who, technically at least, report to him, reject the idea and demand that Google pursue an audacious, seemingly absurd alternative. The punch line? “And of course they were right,” Schmidt would say. What had seemed crazy was actually a canny assessment of how things worked in the new Internet-based economy! During joint public appearances with Brin or Page, when one of the founders blurted out an outlandish or intemperate remark, Schmidt would place an avuncular hand on the younger man’s shoulder and say, “What Larry really means is …” and offer a more measured interpretation.
“He kind of came in here like a visiting professor, not the classic CEO with command and control,” says Omid Kordestani. That deference would prove a winning strategy, even though for a couple of years there were serious adjustment problems, because the founders clearly suspected that they would have done just fine on their own. Kordestani remembers that as Schmidt’s arrival was impending, both founders expressed their anxiety to him. Ostensibly, the issue concerned the titles each of the founders would use to describe his respective role. On a deeper level Sergey was troubled, says Kordestani, because “he was hiring his own boss, in a way, knowing he wants to be the boss.” Brin took the title president of technology. Larry was even more troubled. Kordestani had to assure Page that he was still essential and Google would fail without him. Kordestani also reminded Page that he would no longer have to perform tasks that he didn’t enjoy, such as dealing with Wall Street and talking to customers. Page wound up describing himself as president of products.
As late as 2002, the founders still sounded bitter when explaining why Schmidt was hired. “Basically, we needed adult supervision,” said Brin, adding that their VC investors “feel more comfortable with us now—what do they think two hooligans are going to do with their millions?” The transition was rocky, but as the
years went by, Page and Brin seemed to genuinely appreciate Schmidt’s contribution. Page would come to describe the CEO’s hiring as “brilliant.”
The reaction to Schmidt at Google was instantly positive. His first exposure to the collected Googlers went well, as he smoothly answered questions for an hour at a TGIF. That day, search engineer Matt Cutts came home and told his wife (she of the porn cookies), “I think the value of our stock options just went up a lot.” But Schmidt still had to prove that he had the requisite flexibility—and tolerance for flakiness—that would make him an appropriate fit for Google. A test arose almost immediately.
In 2001, Amit Patel, who had focused on the importance of Google’s search logs, was in an office with four other people. He noticed that Schmidt was not sharing his relatively small office with anyone. So one day Patel ran into Schmidt and asked if he minded sharing his office.
It was a delicate query for Schmidt, because replying as a CEO at any other company in the world would reply—“No!”—would instantly mark him as “un-Googley.” Schmidt’s answer showed that he understood the implications of a refusal. “Sure,” he said. Patel figured that Schmidt was humoring him and that the new CEO would probably go to Patel’s boss, Wayne Rosing, and explain why such an arrangement wouldn’t work. But Rosing took Patel’s side.
The facilities people, fearing Schmidt’s disapproval, wouldn’t move Patel’s stuff into the CEO’s office. No problem. “The rule at Google is that you want to do something, you should do it yourself,” Patel says. “I took a desk and moved it myself into Eric’s office.” Schmidt was on a trip at the time but was forewarned by his administrator that upon his return he would find a cherub-cheeked search scientist in his office. His reaction was indicative of the adaptability that would stand him in good stead at Google—he went with the flow. Then, after six months had passed, “he found a space for me that wasn’t so crowded,” says Patel.