A GOOGLE CRISIS: The
date is July of 2001.
Out of the blue, Larry Page, co-founder and CEO of Google, sends a cryptic email summoning
all Google engineers and project managers to meet outside his office to share some unexpected
news.
Within a matter of minutes, all 130 of Google’s engineers and project managers would form
a huddle around Page’s office anxious what the news could be.
Did Google get sued by Yahoo?
Was AOL threatening a hostile takeover?
Was the company about to run out of funding?
As these thoughts raced through engineers minds, Page candidly stepped out of his office.
And with his usual horse voice, he would firmly announce that all project managers were fired
effective immediately.
All engineers were to report to some newly hired engineer named Wayne Rosing.
Everyone was stunned.
This wasn’t about the state of Google or the future of the company.
This was about Page’s personal hatred for managers.
You see, Page strongly felt that Google had hired the best engineers in the world and
that these brilliant individuals didn’t need untechnical morons telling them what
to do.
He felt that engineers should be able to choose what they work and set their own paces, and
he was hoping that Google’s engineers would agree.
But, to his surprise, it was actually the engineers that would speak back.
One engineer named Ron Dolin snapped back that what Page was doing was “completely
ridiculous” and “totally unprofessional”.
Page as gobsmacked.
Surely, other engineers would understand the freedom of having no managers and support
the purge.
Maybe, they just needed a bit of time to adjust, so Page woud adjourn the meeting and hoped
things would settle down, but they didn’t.
Within just a few weeks, projects would start lacking resources, redundancy would fall off
a cliff, and engineers were craving 1 on 1 feedback from a direct superior.
Unsurprisingly, VC funders were pissed, and it didn’t take long for HR to step in.
They would reinstate all of Google’s fired project managers and before you knew it, there
was someone new on the chopping block: co founder Larry Page.
A man named Eric Schmidt was to become the new CEO and Chairman of Google and Larry Page
would be relieved of all duties.
Instead, he was to take on a more advisory role behind Eric.
Page was devastated, he had just been Steve Jobsed, kicked out of his own company and
basically given a pity role as an advisor.
But, looking back, this was for the best as Eric Schmidt would take Google from being
a brilliant startup to being a tech empire.
He would lead the company for the next 10 years and make Google the leader in email,
video sharing, search, maps, cloud, browsers, mobile, and more.
He would grow a fortune of $25 billion for himself as he spearheaded Google into becoming
a multi hundred billion dollar company.
But, almost as magically as he appeared at Google, he would vanish as this is the story
of the forgotten CEO that saved Google from its own founder: Eric Schmidt.
THE WHITE KNIGHT: While Eric was an outsider, he was by no means
unqualified.
Eric was born in Falls Church, Virginia on April 27, 1955 to two academics.
His mother Eleanor had a masters in psychology way back in the 1950s and his father was an
extremely well respected economics professor.
He not only taught at Virginia Tech and John Hopkins University, but he would go on to
serve in the US Treasury under President Richard Nixon.
Little to say, Eric had a pretty strong background which allowed him to excel at school and attend
Princeton University.
There he would receive a bachelors in electrical engineering in 1976 before moving onto UC
Berkeley to get a masters.
Eric got a masters in Electrical Engineering and Computer Science in 1979, but it seems
that one of his graduate school projects was even more valuable than the education itself.
You see, Eric would design and implement a network called Berknet that linked up the
computer centers of two departments, the CS department and the EECS department.
This project would actually evolve into becoming a PhD thesis about managing distributed software
development.
And Eric would cash in on this PhD in 1982 also from the UC Berkeley.
During his academic years, he would jump around a bunch of IT companies from Bell Labs to
Xerox’s famous Palo Alto Research Center.
But, his real career in tech didn’t start till 1983 when he joined Sun Microsystems
as their first software manager.
This is quite ironic as this was the exact position that Larry Page would try to eliminate
at Google 20 years later, but let’s just say that Eric would more than prove that this
position was more than just a placeholder at Sun.
Eric would rise up the ranks like a madman first being promoted to director of software
engineering before being promoted to vice president of software products and then vice
president of general systems.
Eric followed this up with a promotion to president and finally a promotion to Chief
Technological Officer.
During his 14 years at Sun, Eric oversaw the creation of one of the most respected tech
empires of the 1990s.
Now of course, Sun would get crushed by the dotcom crash and be completely forgotten about,
but that’s a wholenother story.
I guess you could say that it’s a good thing that Eric left at the top in 1997 and took
on a position as CEO and Chairman of Novell.
If you’re not familiar with Novell, they were actually the second largest producer
of software at one point, only beaten out by Microsoft.
But, by the late 90s, they were a declining giant, and Eric was brought in to turn around
the company.
He would oversee a major transition in network technology from IPX to TCP while trying to
fend of Microsoft.
It seems that he was actually pretty successful as the company was in a good enough position
to acquire some beaten down dotcom companies like Cambridge Technology Partners.
But, Eric wasn’t able to get much further than that as right after this acquisition,
he would be called into babysit Larry Page and Sergey Brin.
A SAVIOR STEPS IN: Like Steve Jobs, Larry Page and Sergey Brin
were actually able to choose who would take on the position of CEO, and it was them who
chose Eric.
Thankfully for Google, Eric wasn’t another John Sculley.
While Google’s board and investors did pressure Eric to reign in Larry and Sergey, Eric didn’t
give into this pressure.
You see, though Eric was hired to be a babysitter, he felt that it was much more suitable for
him to take on the role of personal assistant.
While Eric was exceptionally qualified, probably even more qualified than Larry and Sergey
at the time, he recognized that it was not his place to inject his own vision for the
company.
At the end of the day, this was Larry and Sergey’s company and he was simply hired
to help them execute their vision without pissing off the board or investors, and that’s
exactly what he did.
After he took over, he would give Larry and Sergey full freedom to continue leading the
company from a technical and visionary standpoint.
Eric would simply take care of all of the daily nuances and obstacles that came along
with running and scaling a startup.
Things like addressing investors, addressing the board, handling public relations, dealing
with HR, scaling the worforce, resolving conflicts, and launching products on time and on budget.
Basically, all of the boring stuff that comes along with being CEO.
But, while boring, this is the lifeblood of any company and especially an up and coming
startup like Google.
Also, if you have any doubts about just how much freedom Eric gave Larry and Sergey, here’s
how many acquisitions went down at Google.
Larry and Sergey would find something that interested them, they would buy the company,
and Eric would find out after everything was said and done.
This is actually how Google ended up with Android and Google Maps.
A regular CEO would probably be quite bothered by this, but Eric figured that Larry and Sergey
were the most incentivized to not ruin the company.
Aside from giving Larry and Sergey space, Eric also formed key relationships with other
tech companies.
For example, in late 2006, he would join Apple’s board of directors right before the launch
of the iPhone.
But, despite all this freedom, for the first few years, Larry always had a level of distrust
with Eric.
I mean after all, Eric was literally hired to replace Larry.
But, overtime, Larry would grow comfortable with delegating basically everything to Eric
other than the vision.
A great example of this was Larry’s waning meeting attendance.
Larry was never a fan of meetings, but he was intent on attending them in the early
days as he wanted to make sure that Eric didn’t overrule his voice.
But, by 2007, he would stop attending meetings altogether as he trusted that Eric would carry
out what he wanted.
By 2008, Larry would also stop doing interviews altogether stating that that was what Eric
was for.
Larry and Eric were getting along better than the board could have ever imagined, but this
golden period didn’t last forever at Google.
THE FALLOUT: As Larry and Sergey got to know Eric better,
they realized that while he was exceptional at execution, he wasn’t a risk taker.
Sure, he was willing to let Larry and Sergey mess around with acquisitions and run crazy
April Fools day pranks with Gmail and YouTube.
But when it came to something that could truly threaten the company, Eric would always choose
the conservative way out and one of the best examples of this was with Chrome.
Chrome was pretty late to the browser scene having not been released till late 2008.
But, this wasn’t because Chrome was an afterthought.
It was because Eric wouldn’t allow for Chrome.
Larry and Sergey had actually pitched Chrome to Eric for 6 full years, but he always rejected
the idea stating that the space was simply too monopolized and saturated.
It wasn’t until Larry and Sergey went behind Eric’s back and secretly developed a Chrome
prototype that Eric simply gave up on trying to stop them.
Now of course, Chrome would go on to be a roaring success, so this was definitely something
that Eric got wrong, but it’s not what pushed him out.
What pushed him out was his stance on China.
As you know, the CCP is the CCP, and you either play by their rules or you get out.
Throughout the early 2000s, Eric had worked painstakingly hard to play by the CCP’s
rules and get Google launched in China in 2006.
But, by the late 2000s, China was changing up the rules and they wanted Google to censor
certain topics.
While not ideal, Eric was more than happy to do this.
After all, he felt that it was more important for Google to stay relevant in what he describes
as the world’s largest consumer marketplace.
Larry and Sergey, however, disagreed.
They felt that it was more important for Google to stick by their motto of “Don’t be Evil”
and not allow for censorship.
Larry and Sergey would end up getting their way and Google would leave China in 2010,
but that didn’t shake the feeling.
For the first time, Larry felt that Eric was pulling Google in a different direction, a
direction that he didn’t want to go down.
It was clear to him that it was time for Eric to go and for himself to take the reigns once
again.
And given that Larry now had a relatively positive relationship with the board, thanks
to Eric, he was able to lobby for himself to become CEO once again.
Eric who was quickly approaching 60 didn’t really resist.
He’d been there for nearly 10 years and it felt like a natural time to move on.
So, he would leave of with the remark, “I believe Larry is ready, I'm sure he'll do
a fantastic job.”
And with that, Larry was CEO once again, but the truth was that he wasn’t really ready.
He instantly turned back to his old tendencies, but this time he had a different target.
He felt that the biggest limiter for Google wasn’t managers, but rather shareholders.
While he may very well have been right, let’s just say it’s not a great idea to make shareholders
an enemy as public CEO.
Larry would learn this the hard way, and he would only last a few years as CEO.
Pretty soon, he would promote Sundar Pichai to CEO leading us to the modern day Google.
ERIC’S LEGACY: At the end of the day, Larry and Sergey truly
are the visionaries behind Google, but their visions would have never materialized if it
wasn’t for Eric.
The reality was that while Larry and Sergey were brilliant engineers and forward thinkers,
they just weren’t all that great businessmen.
And if it wasn’t clear the first time around, it was definitely clear the second time around.
They needed someone to focus and execute on their ideas and that’s exactly what Eric
did.
To be honest, Eric still had a few good years in him at Google, but I suppose it all worked
out fine anyway.
All of the stock that Eric earned during his tenure made him the 72nd richest person in
the world with a net worth of $21 billion.
But, that’s arguably the smallest part of his legacy.
Did you know about Eric Schmidt?
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