Sign up to get Steve Denning's FREE newsletter


You'll get tips, tricks and advance chapters from Steve's forthcoming book. Click here to sign-up for newsletter.

Storytelling In The News: #131

The story of Google going public

April 26, 2004

Some months ago, we noted the article in which of Nobel-Prize-winning economist Daniel Kahneman commented on whether those people who lost their shirt in the dot-com crash have actually learned anything. Kahneman said, "Oh, many people will admit that they made a mistake.

But that doesn’t mean that they’ve changed their mind about anything in particular. It doesn’t mean that they are now able to avoid that mistake."

Now as Wall Street salivates at the prospect of Google launching an IPO and possibly becoming a $20-25 billion company, Kahneman's advice is salutary.

The founders of Google built a business out of selling paid ads alongside search results, which turned Google into a money machine. Most important, they provided fast and reliable results, propelling Google from handling less than 1% of Web searches in 2000 to over 50% today.

While most analysts are envisaging a bigger and ever more brilliant future, BusinessWeek points out the competitive threats to Google:

* Yahoo is leading the assault. In February, the portal giant fired up a new search engine that analysts say nearly matches Google's performance. More worrisome, Yahoo CEO Terry S. Semel is driving Yahoo to the next frontier, customized search. Instead of today's one-size-fits-all searches, he wants to offer queries tailored for an individual's tastes, interests, even location. Advertisers are ready to pay royally to reach this type of targeted audience. And Yahoo is off to a big head start in gathering the personal information necessary to deliver such customization. It has amassed 141 million customer profiles; Google next to none. "They're quite vulnerable," says Michael A. Cusumano, professor of management at Massachusetts Institute of Technology.

* Even if Google sidesteps that threat, it faces another, perhaps more daunting one. Microsoft is working to leverage every bit of its Windows monopoly in the effort to win the search market. Ballmer and Chairman William H. Gates III are working to embed search capabilities into nearly every aspect of future versions of the operating system. Have a question? Search the Web and the hard drive too from a Word document, an instant chat box, even an Excel spreadsheet. No need to pay a visit to a search site. If Microsoft makes good on this sweeping expansion, it could turn Googling into a quaint ramble down memory lane.

* Google's trials would strain even a battle-hardened outfit geared for war. But the company still operates under freewheeling management, a vestige of its peaceful prosperity as a private company. Under a ruling triumvirate, no one exec has clear control. CEO Eric E. Schmidt, 48, was hired three years ago to provide experienced leadership. But his role, as he describes it, sounds more like a chief operating officer's than a CEO's. He says he handles "the day-to-day stuff," making sure the right people are talking and reaching out to partners.

* Decisions emerge from three-way negotiations between Schmidt and co-founders Page and Sergey Brin. It's the founders who chart Google's path, wielding veto power on strategy and technology moves. Engineers, meanwhile, work in the same culture of controlled chaos that built the startup. All are free to pursue pet projects. The result is an engineer's dream -- but hell for planners. Some investors find the approach unsettling. "They do not sound even remotely like a fiercely competitive world-class company, [but] rather kids playing in a sandbox," says one Google investor, who plans on selling shortly after the IPO.

As BusinessWeek notes, the kids will have to grow up fast. Dot-com investors will also have contain their "irrational exuberance" if they don't want to lose their trousers as well as their shirt.

Read the Wall Street Journal

Postscript April 2010

In retrospect, of course, Google has done very well for its investors. Its search engine and ad revenue have proven difficult to emulate. Yahoo has stumbled and Microsoft is still struggling to catch up with Bing.

Nevertheless Google itself, while being a fountain of creative ideas with GoogleMaps, Gmail and many other web gadgets, has found it difficult to turn these ideas into revenue. It is still searching in effect for "the next Google".

Learn more about leadership and business storytelling

Read The Leader's Guide to Storytelling.

Read the Introduction
Watch the video
& pick up these amazing gifts!

Join our on-line
discussion group:

the World
of Work"