What could a late entrant like Microsoft do to impede Google? Schmidt, having spent much of his career in opposition to Microsoft, and having supported the government’s antitrust prosecution of the software giant, explained how Microsoft could use its dominant Internet Explorer browser or Windows operating system, on which search engines depended, to cripple Google. Discussions like this, said Mayer, helped persuade Google to build its own applications and, eventually, its own browser, to ensure its independence.
Schmidt also helped focus Google internally. When he discovered that nearly half of Google’s searches were coming from outside America, yet there was no concerted effort to sell ads against these searches, he seized the opportunity. He prodded Omid Kordestani to travel overseas, jokingly saying, “I’ll call you Monday morning at the United terminal and tell you what plane to get on.” Kordestani gained so much weight from eating fast food while on the road that when he returned from his successful trips abroad he would touch his belly and laugh, “Body by United!” Among Schmidt’s signal accomplishments, said Paul Buchheit, was that he kept Page and Brin “focused” and “kept things on track.” Often at meetings, he said, Page and Brin would suddenly change the topic at whim. “Eric would say, ‘No, we need to come to an understanding right now.’”
Soon after Schmidt’s arrival, the troika was romanced by Yahoo’s new CEO, Terry S. Semel, who had come to a Web business after twenty-four years as co-chairman and co-CEO of Warner Bros. Semel came to Yahoo at a time when Internet stocks had plunged; Yahoo’s stock had fallen from a market value peak of $127 billion to $12.6 billion. His arrival aroused the righteous anger of many in the Valley, who were suspicious of “outsiders.” He was dismissed as a representative of old media, as a troglodyte, a Hollywood suit. But the old media warhorse knew how to calm an anxious company, handing out backslaps, compliments. He was a self-proclaimed content guy, and wanted Yahoo to create more of its own, not just license the content of others. And he wanted to sell more ads. He brought in a former ABC network executive, Lloyd Braun, to oversee new content, and an experienced sales team led by Wenda Harris Millard. “Terry brought two things,” said Bobby Kotick, now the CEO of the game company Activision Blizzard, who served on the Yahoo board. Semel was “genetically predisposed to making money,” and if he was presented with one hundred ideas, he could spot the one or two that would make money. “He brought that. And he just brought the maturity and wisdom that comes from experience. He asked the simple question: ‘How do we make money?’”
Semel had huge gaps in his knowledge of the digital world and of Yahoo. He was shocked to learn that Yahoo had lost ninety-eight million dollars the year he arrived. Ron Conway recalled a dinner with Semel on his first day at Yahoo. He said, “Semel did not know Yahoo owned part of Google” in the form of the warrants it banked when it signed its search engine contract with Google. An avid deal maker, Semel became intrigued by Google, particularly after Jerry Yang and David Filo, Yahoo’s founders, urged him, he recalled, to “go meet these guys.”
Semel joined Page, Brin, and Schmidt for dinner in the Google cafeteria. Semel began the discussion: “Help me with something. We’re your biggest customer in the world, right? We both know what we pay you for the whole world is less than ten million dollars, right?”
“Yes,” they concurred.
“So what’s your business?” Semel asked. “You don’t really have a business.”
“We love what we do,” Page and Brin responded.
“Maybe we should buy your company?” said Semel, who thought it was enough of a business to throw out a billion-dollar purchase price tag.
“No, no. We don’t really want to sell our company.”
Semel walked away convinced “one hundred percent they did not want to sell.” He also walked away with assurances from Schmidt that Google was working on “their own technology” to monetize search. Later that year, when Overture approached Yahoo with their patented monetization technology and offered Yahoo a revenue guarantee, Semel signed a contract for Overture to sell its ads. Google was upset, but Semel said that in the first full year, Overture generated two hundred million dollars of advertising revenues. By 2003, Overture separately approached Yahoo and Microsoft with an offer to be acquired. Microsoft declined to bid. (They later reversed course and started up their own search engine.) In the end, Semel acquired two search engines, Overture and Inktomi, and Yahoo dropped its search license agreement with Google. (It was beginning to become clear what a colossal blunder it had been for Yahoo to farm out search in order to focus on building its portal traffic, relegating Yahoo to a weak second place in search. By buying Overture, Yahoo also inherited its April 2002 patent infringement lawsuit against Google.)
Google was growing fast, and the founders worried they’d divide into cliques and lose their cohesive culture. Stacy Sullivan, who had been hired in 1999 as the first employee in human resources, and Joan Braddi, Omid Kordestani’s trusted deputy, were asked to assemble a disparate group of early Googlers to devise a coherent mission statement of core principles the company could embrace. Twelve employees gathered in the cafe, each from a different department. The discussion went in circles for several hours, with Sullivan dutifully writing cliches on a whiteboard. Some wanted the group to enunciate a set of rules: Don’t mistreat people; Don’t be late; Don’t lose user focus; Play hard but keep the puck down. The engineers in the room weren’t interested in codified dos and don‘ts because they reeked of corporate America and offended their sense of efficiency. They also took too long to read. After hours of exasperating discussion, Paul Buchheit blurted, “All of these things can be covered by just saying ’Don’t be evil.”‘
Within a day, engineer Amit Patel, Google employee number 7, wrote the slogan in impeccable handwriting on whiteboards all over Google’s offices. The slogan became viral. When opposing an idea at internal meetings, Googlers would proclaim, “That could be evil.” The slogan became Google’s rallying cry, a way to distinguish itself from other corporations and Microsoft in particular, a way to harness the goodwill Google enjoyed as a free service bringing the world’s information to everyone’s fingertips. To former Intel chairman and CEO Andy Grove, the slogan was too vague to define a boundary, and smacked of self-righteousness. “Do you think Hitler thought he was evil?” Grove said he thought at the time. “It’s too vague, too self-serving, self-defining. ‘I’m not evil, therefore I’m not evil.’”
Eric Schmidt was happy with the slogan, though, and happy with what he was accomplishing at Google. Years later, he sat on one of three canvas-backed directors chairs jammed into the closet-sized conference room dubbed “the directors room” that is next to his office in Building 42. The view from a narrow vertical window overlooked a Google parking lot; the white brick wall to his left held a whiteboard containing mathematical formulas; to his right were several framed newspaper clippings, including one headlined “The Grown-Up at Google.” He admitted to feeling that he had grown as an executive since his days at Novell. “Most people who worked with me ten years ago,” Schmidt said, “would have said, ‘He’s smart, a nice guy, but he can’t lead.’ What is the distinction between then and now? Toughness.”