THE APPOINTMENT WAS GREETED with some skepticism. Schmidt’s critics said he was barely escaping from Novell. They sneered at the Mercedes he drove, the suits and ties he wore. They wondered whether he had the right skill set. “No one from his previous jobs,” said one industry insider who knows him well, “would say that Eric was an inspirational leader, a great speaker or salesman, a take-charge leader like Paul Otellini of Intel, Carol Bartz of Autodesk, or John Chambers of Cisco.” Skepticism about Schmidt was reinforced by the management structure announced by Google. Although Schmidt was named CEO, there was an unusual division of power. He, Brin, and Page would work as a team, and if there was a difference between the two founders over routine decisions, Schmidt would act as the tiebreaker. “We agreed that on any major decision, the three of us must agree,” he said.
When Schmidt arrived full time at Google there was some hissing that he was a stooge. “Eric doesn’t have a huge ego,” venture capitalist and former Fortune columnist Stewart Alsop told GQ. “He’s willing to suffer the myriad small indignities of being a pet CEO.” Reminded of this disparagement, Schmidt declined to take the bait and after a pause said, “I think it’s inappropriate for me to comment on myself… Self-reporting is always suspect.” His low-key demeanor; monotone voice; and round, frameless professorial glasses were interpreted by some as signs of timidity. But over time, detractors came to appreciate his competence and maturity. His modesty also won converts. Instead of wearing his customary suits, Schmidt soon donned the Google uniform: khakis and a white or black golf shirt with the Google logo. He was building trust. Schmidt was assigned a small office containing two desks, but before he arrived an engineer looking for a place to park spotted the empty office and moved in. According to Rajeev Motwani, who continued to advise his Stanford proteges, when Schmidt arrived he assessed the situation and quietly took the second desk. “They became office mates. Can you imagine a company where an engineer can move into the CEO’s office? That tells you a lot about Eric, and about the company. He understood the company’s DNA, which is that what you do defines your importance.”
While Schmidt did not believe he had come to Google to fix a company that was broken, he knew its management systems were dysfunctional. He also knew he needed to go slowly in changing them. He saw that Page and Brin wanted to stay focused on technology and products, and had an aversion to intrusive bureaucrats. Schmidt set out to convince the founders and the engineers that good managers would liberate the engineers, reduce bureaucracy, provide an audited financial system that would better allocate resources and provide more transparency, a word the founders often invoked. “He found a way to bring the discipline of running a company but not lose the magic,” said Omid Kordestani.
Deftly, Schmidt shed old practices. The weekly free-for-all meeting of about a dozen executives, recalled Craig Silverstein, “had outgrown its usefulness. Yet it was hard to disinvite people.” So Schmidt simply said the meeting was too unwieldy and canceled it. Because he did not substitute another meeting, “no one felt excluded,” Silverstein said. Only later did Schmidt establish his own weekly management meeting.
There was an adjustment period, particularly for Schmidt, to get used to his two unusual partners. “Larry is shy, thoughtful, detailed, a linear thinker,” he said. “Sergey is loud, crazy, brilliant, insightful. Their personalities are so different. When I first came here I didn’t think Larry could talk, because Sergey did all the talking.” An unofficial part of Schmidt’s mission was to police the wildest ideas of the founders.
On one occasion, Brin proposed to Schmidt, “We should run a hedge fund.”
“Sergey, among your many ideas, this is the worst,” Schmidt said.
“No, we can do it better because we have so much information.”
Schmidt explained the legal complications, and said he talked him out of it.
And Page, for all his mania about efficiency, could be obsessive. A footnote buried at the back of Battelle’s book on search provides an illustration. He writes of seeking an interview with Page and receiving this weird counterproposaclass="underline"
In exchange for sitting down with me, Page wanted the right to review every mention of Google, Page, or Brin in my book, then respond in footnotes. Such a deal would have been nearly impossible to realize, and would have required untold hours of work on Page’s part. Page and I negotiated for weeks over his proposal… In the end, Page relented.
Like the founders‘, Schmidt’s background was fairly narrow. He was an engineer, with management experience. He had little experience working with advertisers or media companies, which would soon become apparent. But what he did have was maturity and an even temperament. It was said, sometimes by Schmidt himself, that he was brought in to supply “adult supervision.” He was the friendly, wise man with a touch of gray in his neatly parted sandy hair. Eventually, Schmidt became Google’s facilitator, or “catcher,” as he likes to describe his role. “I catch whatever the problem is.” (When I later asked the decidedly non-sports-loving Brin if this description was accurate, he said, “I don’t know what a catcher does.”) The more serious answer, Schmidt added, is that he facilitates decisions that need to be made, establishing management systems, meeting with financial analysts and reporters, serving as Google’s chief link to industry and government. To the founders these were odious tasks, but increasingly important ones. He focused Google on outside technological dangers. “He made us better understand competition in the technology space,” said Marissa Mayer. Google once thought its competition came from search engines like Alta Vista or Overture. “Eric said, ’If we’re successful, Microsoft is going to jump in [to search].‘ Larry and Sergey and I were surprised.”
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?’”