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The Importance and Difficulty of Culture in Start-ups: Google again…

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I confirm I do not like the “how to” books or the ones helping you with recipes, methods. There are exceptions but I always struggle with them. (Same with audio or videos by the way). And same thing about culture. What is it? How do you build it? Here is an element of why it’s tough for me and others: “There are three things they never tell you about culture. First thing is they never tell you anything about culture. No one talks about culture and no one ever tells the need to have strong culture. So there’s tons of articles about building a great product, there’s tons of articles on growth and adaption, and a few things about culture. It’s a mystical thing that’s soft and fuzzy. That’s the first problem. The second problem is it is hard to measure. Things that are hard to measure often get discounted. These are two very hard things. The third thing, the biggest problem, it doesn’t pay off in the short term. If you wanted to start up a company and sell it in one year, the one thing I would tell you to do is fuck up the culture. Just hire people quickly. Culture makes you hire really slowly, makes you deliberate about your decisions that in the near term can slow progress.” This is taken from How to startup a start-up. It’s from Brian Chesky, Founder, Airbnb in class 10.

This being said, there’s a great book about company culture. It’s How Google Works, which I mentioned already in a recent post, Entrepreneurship from First Principles. So let me extract a couple of notes from my reading.

HowGoogleWorks-cover

No real businesss plan
“One of the biggest reasons for our success, though, is that the plan we delivered to the board that day in 2003 wasn’t much of a plan at all. There were no financial projections or discussions of revenue streams. There was no market research on what users, advertisers, or partners wanted or how they fit into nicely defined market segments. There was no concept of market research or discussion of which advertisers we would target first. There was no channel strategy or discussion of how we would sell our ad products. There was no concept of an org chart, with sales doing this, product doing that and engineering doing some other that. There was no product roadmap detailing what we would build and when. There was no budget. There were no targets or milestones that the board and company leaders could use to monitor our progress. […] We left that out for the simple reason we didn’t know how we were going to do it. When it came to management tactics, the only thing we could say for sure back then was that much of what [we] had learned in the twentieth century was wrong, and that it was time to start over.” [Page 10]

Smart creative
“The main reason for the lack of business plan is Google population made of Smart Creative. When we contrast the traditional knowledge worker with the engineers and other talented people who have surrounded us at Google over the past decade-plus, we see that our Google peers represent a quite different type of employee. They are no confined to specific tasks. They are not limited in their access to the company’s information and computing power. They are not averse to risk taking, nor are they punished or held back in any way when those risky initiatives fail. They are not hemmed in by role definitions or organizational structures; in fact, they are encouraged to exercise they own ideas. They don’t keep quite when they disagree with something. They get bored easily and shift jobs a lot. They are multidimensional, usually combining technical depth with business savvy and creative flair. In other words, they are not knowledge workers, at least not in the traditional sense. They are a new kind of animal, a type we call a “smart creative,” and they are the key to achieving success in the Internet Century.” [Page 17]

Key attributes of smart creative: expert in doing, comfortable with data, sees a direct line from technical expertise to product excellence to business success, hard-working, understands the user or consumer’s perspective, always questioning, not afraid to fail, self-directed, open, thorough. Communicative, eager and able.

Mentor
“When they learnt all this, they decided to write this book as if they were mentors. Lew Platt, HP’s CEO explained why he was investing so much time to help out a young executive at another company: “This is the way Silicon valley works. We’re here to help you.” Steve Jobs explained that Noyce helped him discover the tricks. Schmidt agrees that “it’s what you learn after you know it all that counts” and he believes “we had a front-row seat and used it to relearn everything we thought we knew about management, i.e. how to grow a business, attract and motivate smart creative, which start with a culture, then strategy. Business plans aren’t as important as the pillars upon which they are built” [Pages 21-23]. Culture stems from founders, but it is best reflected in the trusted team the founders form to launch their venture. [Page 30]

Slogans (believe in them)
– Keep them crowded
– Work, eat and live together
– Messiness is a virtue
– Don’t listen to the HiPPOs (*)
(later there is “your title makes you a manager, your people make you a leader”)
– The rules of seven (hierarchy is not good but flatness neither)
– Do all reorgs in a day
– The Bezos two-pizza rule
– Exile knaves but fight for divas
– Overworked in a good way
– Establish a culture of Yes
– fun, not Fun
– You must wear something
– Ah’cha’rye
– Don’t be evil
(*): Highest Paid Person’s Opinion

Strategy
Bet on technical insights, not market research
Don’t look for faster horses
Optimize for growth
Specialize
Default to open, not closed
Default to open, except when…
Don’t follow competition

The CEO needs to be the CIO (Chief Innovation Officer).

One of the best chapters is the one entitled Innovation. “To us, innovation entails both the production and implementation of novel and useful ideas. Since “novel” is often just a fancy synonym for “new”, we should also clarify that for something to be innovative, it needs to offer new functionality, but it also has to be surprising. If your customers are asking for it, you aren’t being innovative when you give them what they want; you are just being responsive. That’s a good thing, but it’s not innovative. Finally “useful” is a rather underwhelming adjective to describe that innovation hottie, so let’s add an adverb and make it radically useful, Voilà: For something to be innovative, it needs to be new, surprising, and radically useful.” [Page 206]

[NB. These are the 3 criteria for real patentability: novel, non-obvious and applicable]

“But Google also releases over five hundred improvements to its search every year. Is that innovative? Or incremental? They are new and surprising, for sure, but while each one of them, by itself is useful, it may be a stretch to call it radically useful. Put them all together, though, and they are. […] This more inclusive definition – innovation isn’t just about the really new, really big things – matters because it affords everyone the opportunity to innovate, rather than keeping it to the exclusive realm of these few people in that off-campus building [Google[x]] whose job is to innovate.” [Page 206]

And innovation is critical: “A few years ago, a major consulting firm published a report advising all companies to appoint a Chief Innovation Officer. Why? Allegedly to establish a “uniformity of command” over all the innovation programs. We’re not sure what that means, but we’re pretty sure that “uniformity of command“ and “innovation” don’t belong in the same sentence (unless it’s the one you’re reading now). […] Innovation stubbornly resists traditional, MBA-style management tactics. Unlike most other things in business, it cannot be owned, mandated, or scheduled. Innovative people do not need to be told to do it, they need to be allowed to do it“. [Page 209]

InnovationAtGoogle

If you really do not want to read this very good book, here is an alternative:

PS: a small detail. The last section is about acknowledgements. It is usually boring, here it’s not. Just because it is more than 7 pages with more than 100 names mentioned…

Entrepreneurship from First Principles

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I just began two books which might be the two most important start-up books of (September) 2014. Surprise, surprise, one is about Google, the other one written by Peter Thiel. I will certainly come back to talk about them individually but let me just give two quotes from their first pages which are surprisingly similar…

Google-Thiel

In How Google Works, Larry Page explains: “When I was younger and first started thinking about my future, I decided to either become a professor or start a company. Either option would give me the freedom to work from first principles. This autonomy of thought is behind almost everything we do at Google, behind our greatest successes and some of our impressive failures.” [Page xiii]

Peter Thiel says in Zero to One: “The paradox of teaching entrepreneurship is that such a formula necessarily cannot exist; because every innovation is new and unique, no authority can prescribe in concrete terms how to be innovative. Indeed, the single most powerful pattern I have noticed is that successful people find value in unexpected places, and they do this by thinking about business from first principles instead of formulas.” [Page 2]

More to come about
– How Google Works by Eric Schmidt and Jonathan Rosenberg – Grand Central Publishing (September 23, 2014)
– Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel and Blake Masters – Crown Business (September 16, 2014)

Ray Kurzweil has mostly wrong predictions

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As often, Marc Voinchet had a remarkable broadcast this morning on France Culture. First a great guest, Cécile Lafontaine for her book The body market, the commodification of human life in the era of bioeconomy (in French only – my translation of the title) which goes beyond the adressed topic by asking questions about the tensions between the individual and society. It provides excellent answers to the debates opened by Thiel. But here I stop and let you discover the interview if the subject interests you.

FranceCulture-Matins

In addtion Xavier de la Porte wrote an excellent chronicle that I copied directly from the website of France Culture on the French part of my blog (in order to be able to translate it here): The brain is not one million lines of code.

When we look at what the digital world has to say about the body and life, there is a high likeliness to find quickly intimidating predictions: “Soon we will all be cyborgs” and “In 2045, we will have completely merged with the machines.” A specialist in this kind of statements is a guy named Ray Kurzweil – which I mentioned here already. Pretty awesome inventor, wise businessman, Kurweil became in the last twenty years the promoter of a movement called transhumanism – which considers that humankind will soon merge with machines, thus giving rise to post-humanity – ideas that Kurzweil sold worldwide with books and conferences, ideas that he also sells to super-powerful companies: Google has hired him to run a program on teaching language to machines. The problem with Kurzweil – and many transhumanists – it is their strength of conviction that passes through a scientific-techno-philosophical discourse which we feel is not right, but without knowing exactly where. But recently , I came across evidence that Kurzweil says non-sense. I enjoyed my discovery and I want to share this joy with you.

It has to do with an important aspect of transhumanism: the belief always repeated that very soon we can duplicate our brains into computers. Kurzweil believes that this will be possible in 2020, and moreover, he has stored the brain of his deceased father in that perspective. And in order to support his thesis, here is the type of speech that Kurzweil gives: “The code of the brain is in the genome. The human genome is 3 billion base pairs, six billion bits, which is about 800 million bits after compression. After eliminating redundancies […] this information can be compressed into approximately 50 million bits. But the brain is about half of that, about 25 million bits, or one million lines of code.” And here, in a ruthless and intimidating demonstration, Kurzweil shows us a million lines of code suffice to duplicate the function of the human. (I say “sufficient” because it is just one million lines of code; for comparison, Microsoft Office 2013 is 45 million lines of code).

Except that for once, someone came forward to explain that Kurzweil told non-sense. This person is called Paul Zachary Myers. He is a recognized biologist at the University of Minnesota, specializing in developmental genetics and writes a blog called Pharyngula. And it is on his blog that Myers explains very calmly why what Kurzweil says is wrong. Here is his demonstration. The premise of the reasoning of Kurzweil is “The code of the brain is in the genome.” Totally wrong, says the researcher. The code of the brain is not encoded in the genome. What is in the genome is a collection of molecular tools which is the regulating portion of the genome, which makes cells sensitive to interactions with a complex environment. During its development, the brain unfolds through interactions between cells, interactions which we understand today a small part only. The final result is a brain that is much more complex than the sum of nucleotides that encode a few thousand proteins. One can not deduce a brain from the protein sequences of its genome. How will these sequences express is dependent on the environment and the history of hundreds of billions of cells, interdependent on each other. We have no way to calculate in principle all possible interactions and functions of a single protein with tens of thousands of others who are in the cell, which is the essential first step in the execution of the unlikely algorithm of Kurzweil. In support of his argument, the researcher takes a few examples of some proteins and shows how the interactions are numerous, complex and mostly still unknown.

What is very interesting is that Myers states that he is not hostile to the idea that the brain is a kind of computer, and we will be able to artificially reproduce one day its functions. But he says that he does not need to say stupide nonsense, as does Kurzweil and build hisreasoning on false premises. And here is for you, Kurzweil. If only more researchers could take more time to bring their expertise to question the transhumanist speech, it may save us to hear many absurdities and attend another commodification of human life, which is about seeling biotechnology dream.

Dogfight: the dynamics of competition in fast-growth markets.

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Following my previous post about Dogfight and the Apple vs. Google war in the mobile world, here is an excerpt I found interesting. You can also find it on Wired: Apple vs Google: Did Apple Learn Anything From Its War With Microsoft?

gorillagame

The reason why this is interesting is that it reminds me an old book I read in my Index years. The Gorilla Game by the famous Geoffrey Moore. Moore explains why in high-tech high-growth markets, there is usually space for only one major player. Apple and Google in the mobile world might be a historical aberration. Read why below…

DogFight

“Jobs said he never saw the similarity between his fight with Android and his fight with Bill Gates and Microsoft in the 1980s. But just about everyone else inside and out of Apple did. Android and iPhone were in a platform war, and platform wars tend to be winner-take-all contests. The winner ends up with more than 75 percent of the market share and profits — and the loser ends up scrambling to stay in business.

In the Microsoft/Apple fight, Microsoft won by more widely distributing its software, which created a bigger selection of applications to buy, which attracted more customers. Once customers had spent hundreds of dollars on applications that ran on only one platform, it was much harder to get them to switch. Ultimately, everyone started using computers running Microsoft DOS and then Windows because everyone else was doing it. This wasn’t lemming-like behavior, but completely rational. Computers were only useful if work performed on one machine could be used on another machine.

This was almost precisely the Android strategy. In 2010, the Android ecosystem was still far from robust. The Android app store was badly organized, and developers had a tough time making money there. Apple’s three-year head start had allowed it to sell nearly 60 million iPhones, create a store with more than 200,000 applications, and establish a developer ecosystem that had been paid more than $1 billion over two years. But because any phone manufacturer could make an Android phone, the size of the Android platform was exploding. By the end of 2010, it was as big as the iPhone’s. And it seemed like only a matter of time before Google fixed the problems with its app store.

More worrisome to Apple was that Rubin could succeed without having to convince many iPhone customers to switch. The number of people worldwide switching from cell phones to smartphones in the coming years was going to be so enormous that he just needed to focus on that group — not necessarily on iPhone customers — to get a dominant smartphone market share. It seemed unfathomable that Jobs would lose two battles the same way a generation apart. But with so many similarities between the two dogfights, it was hard not to think about it.

There have always been good reasons to believe that the Apple/Google fight might not play out like Apple versus Microsoft: Developers seem more capable of writing software for two platforms than they were in the 1980s. The platform-switching costs are much smaller, too. Back then, PCs cost more than $3,000 and each software title cost more than $50. Now the costs are less than a tenth of those. A new phone with a carrier subsidy costs $200, and each app costs less than $3 and is often free. Also, third parties — the carriers — continue to have a vested interest in making sure consumers have as many ways to connect to their network, and pay them money, as possible.

But what Google and Apple executives have always understood is that if the battle turns out that way — if somehow their mobile platforms can harmoniously coexist — it will be a historical aberration. Because of the press coverage surrounding the Microsoft antitrust trial 14 years ago, a huge amount of analysis has been devoted to how Microsoft built its Windows monopoly in the PC business: If you get enough people using your technology platform, eventually it creates a vortex that forces almost everyone to use it. But these economic forces have not been unique to Microsoft. Every major technology company since then has tried to create the same kind of vortex for its business.

It was how Jobs had dominated the music-player business with the iPod. It was also how Google in 2004 started to embarrass and challenge Microsoft for dominance in high tech and pushed Yahoo! to the brink of implosion. Google’s top-quality search secured the most search traffic. That gave it the best data about user interests. That data made its search advertisements appearing alongside the search results the most effective. That virtuous circle encouraged more search traffic, more data, and even better search ads. No matter how much Microsoft and Yahoo! tried to attract traffic with lower ad rates and improved search results, Google was always able to offer a better deal.

eBay did the same thing to the roughly two dozen other online auction companies, such as OnSale and uBid. By allowing buyers and sellers to easily communicate and rate one another, it built a self-policing community. That fueled a rapid growth in bidders. The more bidders eBay acquired, the more reliable its prices became. The more reliable eBay’s prices became, the more new bidders wanted to use it. The more bidders wanted to use eBay, the less they wanted to use competitors’ sites. Facebook’s social media platform is the most recent example of the power of platform economics. Its superior technology allowed it to offer users better features than competitor MySpace. Better features made Facebook more useful. The more useful it was, the more data users shared. The more data users shared, the more features Facebook could offer. Soon people were joining Facebook just because everyone else was joining Facebook.

As the mobile platform wars go forward, Google’s and Apple’s ecosystems might be able to coexist long term and generate big profits and innovation for both companies. But given recent history, they will have to fight it out as if it won’t happen that way. “It’s like the battle for the monopolies that the cable guys and the phone guys got 30 to 40 years ago,” said Jon Rubinstein, the longtime top Apple executive and former CEO of Palm. “This is the next generation of it all. Everyone — Apple, Google, Amazon, and Microsoft — is trying to build their walled garden and control access to content and all that. It’s a really big deal.” And it’s not the kind of thing Apple or Google can afford to be wrong about.” [Pages 142-145]

Dogfight: How Apple and Google Went to War and Started a Revolution

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While reading Dogfight: How Apple and Google Went to War and Started a Revolution in the public transportation, this morning, I just took a short pause and looked at the two young people in front of me. They were both using their iPhone and I thought about the revolution which occurred in less than 10 years. Not many ebooks yet, no more newspapers and a few older guys like me still reading books. But most were using their smart phone…

DogFight

Dogfight describes the behind-the-scene history of a giant battle (I am not sure it is a war) between Google’s Android and Apple’s iPhone. No need to give a complete a account, but just a few points. For example Fred Vogelstein writes (page 13): “One of the things that I didn’t expect when I took on this project was how hard it is to conceive and build the products that Steve Jobs liked to casually pull out of his pocket onstage. Whether you are an Apple engineer, a Google engineer, or any engineer, building products that change the world isn’t just work. It’s a quest. It leaves its participants not only tired the way all jobs sometimes do but mentally and physically exhausted – even traumatized – at the end. Part of Jobs appeal as a leader and a celebrity was that he successfully hid all this from public view. He made innovation look easy. […] Before there could be smartphones and tablets we all now buy and take for granted, there was yelling, screaming, backstabbing, dejection, panic, and fear over what it would take to get these projects off the ground.”

And Vogelstein shows also the dirty politics and huge internal fights such as the one between Tony Fadell and Scott Forstall.

feature_scottforstall43__02__768x415

On the shoulders of giants…

The politics also exist at Google and there was similar tension between the iPhone team led by Vic Gundotra and the Android team led by Andy Rubin. The fight was really at its highest between Apple and Google, between Jobs and the triumvirat Schmidt, Page & Brin.

Rubin-Gundotra-Pichai
Andy Rubin, head of Android, Vic Gundotra, head of social, Sundar Pichai, head of Chrome in 2011.

It seems Google was embarrased by Jobs’ attitude (page 102): “They believe that there are very few firsts in Silicon Valley – that all innovation are built on the shoulders of others […] One piece of evidence the Googlers used to make their point in their negotiations with Jobs was a 1992 video of James Gosling, a famous Sun Microsystems engineer and inventor of the Java programming language, showing off the Star7. This crude-looking handheld device had a 200KB radio; a four-inch, LCD, color TV screen; and speakers from a Nintendo Game Boy. Even then, before anyone but the richest executives had a mobile phone or had seen a Newton handheld, Gosling was showing off a machine not only with a touchscreen but with inertial scrolling. The harder you flicked the screen, the faster it scrolled through items.”

… Jobs and God

Most Silicon Valley people were (and still are) fascinated by Jobs. Vic Gundotra belongs to that group (page 98): “One Sunday morning, January 6th, 2008 I was attending religious services when my cell phone vibrated. As discreetly as possible, I checked the phone and noticed that my phone said “Caller ID unknown”. I choose to ignore. After services, as I was walking to my car with my family, I checked my cell phone messages. The message left was from Steve Jobs. “Vic, can you call me at home? I have something urgent to discuss” it said. Before I even reached my car, I called Steve Jobs back. I was responsible for all mobile applications at Google, and in that role, had regular dealings with Steve. It was one of the perks of the job. “Hey Steve – this is Vic”, I said. “I’m sorry I didn’t answer your call earlier. I was in religious services, and the caller ID said unknown, so I didn’t pick up”. Steve laughed. He said, “Vic, unless the Caller ID said ‘GOD’, you should never pick up during services”. I laughed nervously. After all, while it was customary for Steve to call during the week upset about something, it was unusual for him to call me on Sunday and ask me to call his home. I wondered what was so important? “So Vic, we have an urgent issue, one that I need addressed right away. I’ve already assigned someone from my team to help you, and I hope you can fix this tomorrow” said Steve. “I’ve been looking at the Google logo on the iPhone and I’m not happy with the icon. The second O in Google doesn’t have the right yellow gradient. It’s just wrong and I’m going to have Greg fix it tomorrow. Is that okay with you?” Of course this was okay with me. A few minutes later on that Sunday I received an email from Steve with the subject “Icon Ambulance”. The email directed me to work with Greg Christie to fix the icon. Since I was 11 years old and fell in love with an Apple II, I have dozens of stories to tell about Apple products. They have been a part of my life for decades. Even when I worked for 15 years for Bill Gates at Microsoft, I had a huge admiration for Steve and what Apple had produced. But in the end, when I think about leadership, passion and attention to detail, I think back to the call I received from Steve Jobs on a Sunday morning in January. It was a lesson I’ll never forget. CEOs should care about details. Even shades of yellow. On a Sunday. To one of the greatest leaders I’ve ever met, my prayers and hopes are with you Steve.”

More to come maybe when I am finished with Dogfight…

Something rotten in the Silicon Valley kingdom?

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I have already recently discussed the difficulty Silicon Valley has in talking about or dealing with politics, for example in The promise of technology. Disappointing? and even more in Silicon Valley and (a)politics – Change the World. I was referring to two articles (which I considered as exceptionally great) written by George Packer in the New Yorker in 2011 and 2013. It is an article published on January 27 on the same web site, Tom Perkins and Schadenfreude in Silicon Valley by Vauhini Vara which motivates me in asking the question: Is there something rotten in the Silicon Valley kingdom?

NewYorkerHeader

All this is rather indicative of a serious situation that deserves the attention. Four days earlier, Le Monde published the article by Jérôme Marin, In San Francisco, anti-Google protests go too far. The summary of all this can be done simply, but I encourage you to read these articles (especially those by Packer whose depth analysis is really of interest):

Many new millionaires (in particular employees of Twitter and Facebook), and even some billionaires (see Technology Billionaires in 2013) contributed to the recent acceleration of the gentrification of San Francisco. However, the authorities of San Francisco rather encouraged the phenomenon and to a large extent, the debate begins to rage. On the one side a population that expresses its frustration at this new situation by blocking the famous private buses carrying these high-tech employees from their home to their office (see A Google bus blocked, anger rises in San Francisco by the same Jerome Marin) or a Google employee at his home. On the other side, the “slip” of Tom Perkins comparing these protests to attacks of the Nazis against the Jews…

2-800_streetview_picture-640x526

These reactions illustrate a increasingly visible debate between the proponents of the Invisible Hand (let the rich be richer and the market will self-regulate for the benefit of all) and opponents increasingly exacerbated by the consequences of the global deregulation. As if Occupy Wall Street was moving to Silicon Valley. As Americans usually react fast, the city of San Francisco has taken the decision to have these private buses pay for the use of public bus stops. Vauhini Vara also mentions that Mark Zuckerberg has become the largest private donor in 2013 in the USA (with $1 billion …) and Sergey Brin ranks fifth .

My opinion is of little importance and I’ll let you judge. Let me just add (and you will understand where I am assuming that you care!) that large U.S. companies pay ridiculous amounts of tax lawfully using the possibilities offered by the law of international trade. In 2011, Le Monde published USA: profit does not necessarily mean tax, and waht follows comes from it:

Out of 280 companies among the 500 largest U.S. companies, 111, or 40%, enjoyed an average tax rate of 4.6%. There must be a rational explanation for this particular treatment you must think, falling profits for example, justifying a lower tax burden? The problem is that according to the data compiled in this report, this argument does not hold. The 111 companies we are talking about even recorded a total greater than the benefits of th oher companies combined. Between 2008 and 2010 the telecom operator Verizon has accumulated $32.5 billion in profits, the conglomerate General Electric totaled 10.4 billion profits, and toy manufacturer, Mattel, won over a billion dollars over the period. However, none of these companies did pay federal income tax.

“This is not a report against businesses, the study says in its preamble. Instead, like most Americans , we want the business to go well. In a market economy, we need managers and entrepreneurs, as we need workers and consumers. But we also need a better balance in terms of taxation.”

U.S. billionaire Warren Buffett recently called on governments to make him pay more taxes at the individual level for a greater tax fairness. Will multinational companies be capable of the same citizen behavior?

Since I started by mentioning that Sillcon Valley has changed the world, I conclude from memory with a quote I heard on France Culture this morning: “If you do not change the course of History, it is History that will change you.”

I’M Feeling Lucky, not just another book about Google

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As a follow-up of my post Safe choices aren’t always good choices, here is my full account of I’M Feeling Lucky – Falling On My Feet in Silicon Valley by Douglas Edwards. As I said then, I thought it might be just another book about Google. It is not. The lessons are amazing. And here are examples.

A first illustration comes from a conversation between Douglas and Larry Page: “I realize that more often than not you’ve been right about things. I feel like I’m learning a lot and I appreciate your patience as I go through that process.” […] “More often than not?” [Larry] asked me. “When were we ever wrong?” he didn’t smile as he asked his question or arch an eyebrow to signify annoyance. He simply wanted to know when he had been wrong so he could feed that information into the algorithm that ran his model of the universe. [Pages ix-x]

Douglas was employee number 59 [Page xv]. He left in 2005, so his account of the Google story is extremely rich and shows how exceptional it was. “Other signs pointed to something out of the ordinary. Sequoia Capital and Kleiner Perkins were the Montagues and Capulets of Silicon Valley venture capital firms. An intense rivalry usually kept them from investing in the same startup”. [Page 7] [This is not so true as you may see from When Kleiner Perkins and Sequoia co-invest(ed).]

As a marketing person, he also has an interesting vision of engineers. “Neither Larry nor Sergey had been to business school or run a large corporation, but Larry had studied more than two hundred business books to prepare for his role running Google as a competitive entity”. [Page 141]

“Impulsive and opinionated, Ray [employee #6] will always personify for me Google engineering id, a lone cowboy patrolling the electronic frontier in shocking-pink shorts, facing down the black hats and making them blink, then riding off into a sunset that was only as colorful as he was”. [Page 152]

“The ideal success rate was seventy percent, which showed we were stretching ourselves. Missing targets would not factor in performance reviews, because if they did we would take too few risks”. [Page 55] … “Starting with something that’s more ambitious will get you something that’s reasonable. But if you don’t put the goal post way out there, people are already taking fewer risks and are less ambitious about how big the idea should be. It was another reason Google valued intelligence over experience.” [Page 105] “Think big. Stay flexible. Embrace data. Be efficient and economical in the extreme. [Page 113]”

There is a funny account of MentalPlex, an April Fool that upset some people but which was apparently quite creative, an “Ante-temporal search that anticipated user requests”. [Page 97-103] At the end of the post, you can have a look at how it looked like.

Part II is about growth and it is a change from the chaotic experimental company Google was. Not a dramatic change, but a change. The main lesson I keep from part I is that Google did many things in the opposite way that business books or experienced managers would tell you. Always doubtful, always skeptical with obvious truths. In particular anything which is not engineering or which cannot be backed by data.

“Larry’s decision to let user-created ads go live on our site without review convinced me he occupied some alternative and severely distorted reality”. [Page 185]

“There were people my age at Google when I joined and people older than me within a few months. Hardware engineer Will Whitted had been fifty-four when he started, and he saw no gap between his thought process and that of his younger colleagues. “I think that I think younger, which probably means more irresponsibly than most people do” he confessed. “There were people at Google who had the opposite problem – who were a little younger than me, but perceived by people who mattered as old-thinking. To be slow and overly-conservative, and it got them in trouble.” Those who succeeded, as I was trying to do, needed to be open to new ideas regardless of their source or seeming defiance of logic.” [Page 187]

“Would Google never tire of succeeding with big ideas that I found patently ludicrous? It was starting to make me feel like a crotchety geezer yelling at kids to get off his lawn.” [Page 190]

“What matters is whether we are doing the right thing, and if people don’t understand it now, they will eventually come to understand it.” It was a lesson that would shape Google’s attitude towards the public from that point on. Sure we had upset people with MentalPlex, but at least some us conceded their kvetching might have had cause. With Deja, we were clearly on the side of the angels. The public just did not get it. Even when we worked our asses off, spent our own cash, and tried to do something good for them, they bellowed and ranted, bitched and moaned. Since users were being so unreasonable, we could safely ignore their complaints. That suited our founders just fine – they always get with their guts anyway.
I’ve been asked if Larry and Sergey were truly brilliant. I can’t speak to their IQs but I saw with my own eyes that their vision burned so brightly it scorched anything that stands in their way. The truth was so obvious that they felt no need for the niceties of polite society when bringing their ideas to life. Why slow down to explain when the value of what they were doing was so self-evident that people would eventually see it for themselves?
That attitude was both Google strength and Achilles’ heel. From launching a better search engine in an overcrowded field to running unscreened text in Adwords, the success of controversial ideas gave momentum to the conviction that initial public opinion was often irrelevant. [Page 212]

You might remember how shocking Sept 11 was for Americans. But Google’s reaction to Sept 11 was moderate with Alon Cohen’s looped ribbon. Doug is showing how Google has been at the same time extreme with experimentation and much cautious about users than paranoid people might think…
Google-Ribbon

You can skip this section if you have already read “Safe choices are not always good choices“.
[Pages 256-258] “When Google finally recognized its failure in implementing a CRM software to manage customer emails, “composing a list of CRM vendors didn’t take long. Fewer than half a dozen major players offered stable, well-tested systems. […] Larry has a college friend, David, who would advise us on desirable features and then added, by the way, he and a buddy were building a CRM product called Trakken. […] Interested? Interested in an untested CRM product still in development with one tiny client? Sure that’s just what I was looking for – another risky technology with no support and no track record behind it. I thanked David for his help and, because he was a friend of Larry, assured him we’d be happy to send him our request for proposal. [Meanwhile they analyzed established players.] I felt confident I could convince Larry and Sergey to loosen the purse strings and do it right this time: spend money for a high-quality, stable system from a respected vendor. I hoped Larry’s friend had taken the hint and forgotten about us. [He had not] I didn’t want him to complain to Larry when his hopes were dashed. I decided to head him off at the pass by talking to Larry myself. “Actually,” Larry recommended “you should hire these guys. They’re really smart. They’ll work hard to build the product and we can invest in their company. […] They’ll be very responsive.” I could say I was stunned, outraged, incredulous, but that would be an understatement. I couldn’t believe Larry was going cheap again instead of buying reliability. When I informed the other vendors, they thought I was either corrupt or an idiot. […] “If you can believe you can build an email tool like resembling ours in thirty days, you are mistaken. It has taken us four years and twelve hundred customers.” […] I’d still be cursing Larry’s decision today if not for one small thing: Larry was absolutely right. […] Within a couple of months we had the CRM system we wanted built to our specs, fully stable and intuitive to use. […] So what did I learn from all this? I learned that obvious solutions are not the only ones and “safe” choices aren’t always good choices. I had thought that due diligence meant finding the product most people relied on, then putting pressure on the vendor to cut the price. It never occurred to me to talk to Larry not to do that. We had different tolerances for risk and different ideas about what two smart people working alone could accomplish in a complex technical area – and that is why I spent seven years working in mainstream media while Larry found a partner and founded his own company. Two smart guys working on complex technical problems, it turns out, can accomplish a hell of a lot”.

“Yet, once again, risk reaped rewards. The willingness to suffer a few quickly eradicated indignities opened up enormous gates to international audience growth. The world tolerated awkward translations and the occasional insult in order to access Google’s search technology. It was a reminder that perfecting the polish was not as important as giving people access to the product behind it. The results we returned and the speed with which we returned them were ultimately all that mattered. They were the essence of Google’s brand”. [Page 263]

[Pages 290-92] “The hour I spent with (Larry) and Sergey probing their vision for Google gave me my best look at their motivations and aspirations for the company. Larry wanted Google to be a force for good, which meant we would never conduct marketing stunts like sweepstakes, coupons and contests, which only worked because people were stupid. Preying on people’s stupidity, Larry declared, was evil.
We need to do good. We need to do things that matter on a large scale. When I asked for examples, he mentioned microcredit in Bangladesh (…) and talked about changing business systems to make them environmentally friendly while saving money. He also talked about distributed computing, drug discovery and making the Internet faster. And that wasn’t all.
We should be known for making stuff that people can use, he said, not just for providing information. Information is too restrictive. In fact, we shouldn’t be defined by a category but by the fact that our products work – the way you know an Apple product will look nice and a Sony product will work better but cost more. We’re a technology company. A Google product will work better.
(Then they talk about personal information, sensors, storage, cameras, and user-generated data.)
Not once did the subject of making money come up. I was probably a naïve-middle-aged dreamer, because looking back at it now, I see there was nothing truly extraordinary about what Larry described. But when I walked out of his office I believed that for the first time in my life, I had been in the presence of a true visionary. It wasn’t just the specifics of what he saw, but the passion and conviction he conveyed that made you believe Larry would actually achieve what he described. … My respect for our two capricious, obstinate, provocative and occasionally juvenile founders increased tenfold that day”.

[Page 324] “The experience confirmed the power of prototyping to give definitive answers far more quickly than theoretical discussions. Google learnt a lesson: the prototype had been put together not for a specific project but just because it was found interesting. The real value is that people will do things that everyone thinks are a waste of time. That’s where the big opportunities are. It’s an opportunity because other people don’t see it. Google itself was a canonical example. No other company had thought search was important. If they had, Microsoft or Yahoo would have invested more heavily in technology and Google would never gained such a big head start”.

[Pages 387-389. Finally…] “There was no longer a role at Google for what I did. I would wind things down. I picked March 4, 2005 as my last day: “Three, Four, Five.” I liked the architectural purity of it. […] I had started at a small company as a big-company guy. Now I was leaving a big company as a small-startup guy. And I like to think that, in some small way, I helped advance the human condition. Or at least that I did more good than harm.”

************ GOOGLE MENTALPLEX – APRIL FOOL 2000 ************

Title_HomPg2

Enter your search terms…


…or browse web pages by category.
New!  Search smarter and faster with Google’s MentalPlexTM
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Safe choices aren’t always good choices

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I am reading I’M Feeling Lucky – Falling On My Feet in Silicon Valley by Douglas Edwards. I thought it might be just another book about Google. It is not. The lessons are amazing. And I will come back with many things I liked. One deserves a full article, and it is about “Safe choices aren’t always good choices”. The story is covered on pages 256-258.

When Google finally recognized its failure in implementing a CRM software to manage customer emails, “composing a list of CRM vendors didn’t take long. Fewer than half a dozen major players offered stable, well-tested systems. […] Larry has a college friend, David, who would advise us on desirable features and then added, by the way, he and a buddy were building a CRM product called Trakken. […] Interested? Interested in an untested CRM product still in development with one tiny client? Sure that’s just what I was looking for – another risky technology with no support and no track record behind it. I thanked David for his help and, because he was a friend of Larry, assured him we’d be happy to send him our request for proposal. [Meanwhile they analyzed established players.] I felt confident I could convince Larry and Sergey to loosen the purse strings and do it right this time: spend money for a high-quality, stable system from a respected vendor. I hoped Larry’s friend had taken the hint and forgotten about us. [He had not] I didn’t want him to complain to Larry when his hopes were dashed. I decided to head him off at the pass by talking to Larry myself. “Actually,” Larry recommended “you should hire these guys. They’re really smart. They’ll work hard to build the product and we can invest in their company. […] They’ll be very responsive.” I could say I was stunned, outraged, incredulous, but that would be an understatement. I couldn’t believe Larry was going cheap again instead of buying reliability. When I informed the other vendors, they thought I was either corrupt or an idiot. […] “If you can believe you can build an email tool like resembling ours in thirty days, you are mistaken. It has taken us four years and twelve hundred customers.” […] I’d still be cursing Larry’s decision today if not for one small thing: Larry was absolutely right. […] Within a couple of months we had the CRM system we wanted built to our specs, fully stable and intuitive to use. […] So what did I learn from all this? I learned that obvious solutions are not the only ones and “safe” choices aren’t always good choices. I had thought that due diligence meant finding the product most people relied on, then putting pressure on the vendor to cut the price. It never occurred to me to talk to Larry not to do that. We had different tolerances for risk and different ideas about what two smart people working alone could accomplish in a complex technical area – and that is why I spent seven years working in mainstream media while Larry found a partner and founded his own company. Two smart guys working on complex technical problems, it turns out, can accomplish a hell of a lot.

Andy Bechtolsheim talks at Stanford about the Process of Innovation

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This morning, I got up at 4am for an unusual event, a talk by Andy Bechtolsheim back at Stanford University. And it was great! I took a couple of screenshots and notes. For those who would not know Andy, here is more below. And I should also add that Bechtoslheim is from Germany, I had mentioned him in a past article: Europeans and Silicon Valley. There should be the full video on Stanford Youtube in a few days…

More than 30 years ago as a Stanford graduate student, Andreas “Andy” Bechtolsheim designed a simple but powerful computer workstation that would help define the modern technology era and launch Sun Microsystems. He’s since founded three more startups, including cloud-networking company Arista Networks, where he is now chairman. His investing foresight is legendary. Not only was he the first major backer for Google, but he’s also been an early-stage investor in VMware, Brocade and others. Bechtolsheim will discuss the process of innovation and describe its importance to Silicon Valley.

Bechtolsheim began his talk with some historical background on innovation. If you want to only read about the lessons, jump to the end! (I am aware some of the screenshots are low-res…). Recent (I mean in the last 50 years) innovations have their roots in semiconductors, networking and the Internet and (Open-source) software as well as in an acceleration in technology development (including Moore’s law and a faster adoption cycle of products.) These are two slides about the semiconductor roadmap:

Then he showed how the Internet from Arpanet, to the browser and finally to social networking has accelerated the innovation cycle.

More importantly, he gave some clues about what innovation is about, and why start-ups have an advantage here. Innovation is not about R&D not even about marketing. It is about bringing a needed product to customers:

And he illustrated his arguments with the Apple case:

– Apple does not make a lot of R&D

– Apple does not really study customers

So how does innovation work. Here are some clues:

And very importantly, he finishes with the innovation culture at Apple, Google, Amazon and the lessons learnt:

In conclusion, Andy had great lessons:
– Innovation is not about R&D or customers, it is about products.
– Timing is critical, so focus.
– Big companies are about evolution not revolution.
– Be the expert in your field and understand the market, both gives you (self-)confidence (to attract people.)
– Failure is not an issue in SV but fail fast. However outside of SV, you may have to hide for 30 years when you fail. In SV, not trying is the risk, not failing.
– He also discussed patenting, “a sore topic”.
– Following another question, he considered a major threat to innovation is the current weakness of venture capital (there is money, but the returns are not good and a lot of money goes in narrow fields – cleantech a few years ago, web2.0, etc)

Well the title was misleading. Innovation is not a process, it is a culture! If you like this, you have to watch the video…