>> Kirsten Wiley: So good afternoon, and welcome. My name is Kirsten Wiley and I
am here today to introduce and welcome Steven Levy, who is visiting us as part of the
Microsoft Research Visiting Speaker Series. Stephen is here today to discuss his book, In
the Plex: How Google Thinks, Works, and Shapes Our Lives. Just over a decade ago
Google search engine changed the face of the internet. They're profitable ad business
shook the traditional media industries to the foundations. From the very beginning its
founder said they wanted to change the world. But who are they, and what did they
envision this new world order to be? Stephen Levy is a senior writer at Wired Magazine.
He has been a senior editor and chief technology writer at Newsweek and has written on
technology for a wide variety of publications including Rolling Stone the New Yorker
and the New York Times. He is the author of several books, most notably Hackers and
Insanely Great. Please join me in welcoming him to Microsoft. Thank you.
[applause]
>> Steven Levy: Thank you Kirsten and thank you Microsoft for hosting me. It's always
great to get back to Redmond and see you folks at Microsoft. I'm actually going to talk
about a different company today. In 1998 I think was the first time I saw the Google
search engine and like I think it's safe to say even here all of you when you first saw it
were probably pretty impressed, because it did a lot better than the search engines of its
day in finding what was out there. And actually, in doing this I went back in my own
files and I came across an article I had written in 1996 about Search, and of course all the
companies at the time were talking about how they potentially solved the problem about
as good as it was going to get. And I talked to Excite, and AltaVista and a couple of
others and I remember there was this quote from this guy at AltaVista that basically just
said well it's really not a science. It's really an art. It's sort of mystical and basically hit
and misses and said basically we've, from the problems now it's just basically the artistry
part that really remains to be solved then.
Larry Page and Sergey Brin, the cofounders of Google, didn't accept that wisdom and
came across an idea that actually, sort of surprisingly it was one of those ideas that was
sort of floating out there waiting to be grabbed and that was by somehow getting hold and
cataloguing these structure of links on the World Wide Web. You go backwards and use
those links and crunch them up in some mathematical way to figure out which sites were
important and which sites link to what, and that would enable you to extract the best and
most relevant results from a search query. And not only did Larry Page think about this
but there was a guy who was on a fellowship, a post grad Fellowship at Cornell or from
Cornell at IBM Almaden who thought of it, and there was another guy in New Jersey
who was working for Dow Jones News Service who thought of it, and he took it to his
bosses are they said this wasn't very interesting and we don't really want to bother with it.
Interesting IBM didn't want to patent it when the guy working there came up with it, but
it was Larry Page and Sergey Brin who wanted to actually build it into a product, which
they did.
So I saw it in 1998 and was impressed. I mentioned it in Newsweek where I was
working, in February of ‘99, and in October 1999, by then I was officially interested, not
only in the product, but it became clear to me that this was one of those things which was
going to have significance beyond what it was and actually be transformative. And if you
think about it, it's like the interstate highway system. It's not just for cars moving around
but it changes the landscape because those cars are moving their people would build up
almost little mini city's around the exits and so change the geography. In this case
knowing that there was something out there that could locate a website devoted to
something obscure, people were more likely to create those kinds of websites. So it
changed the whole structure of the web.
So I figured this company itself might be interesting; I wanted to meet these people. So I
asked the communications person at the time, this woman named Cindy McCaffrey who I
knew because she had done work at Apple and I had worked with her, can I come by and
meet these people? She said yes and I remember very clearly it was October and I
remember that because in October is Halloween and when I visited the Googleplex they
had just moved into a bigger building from a small place over a bicycle shop in Palo Alto.
Most everyone was in costume. And Larry Page was dressed like a Viking. He had a big
fur vest and a hat with two giant horns coming out of it and Sergey Brin, the other
cofounder was dressed as a cow. He had a big cow suit with a breastplate with big
disgusting plastic udders coming out of it. And the cow and the Viking took me into a
room and told me about page rank.
So for the next eight years or so when I was at Newsweek, I left in 2008, Google was one
of the prime companies I covered along with Microsoft and Apple. They became my
trilogy of places that I really watched closely and spent a lot of time at. And I thought it
would be interesting to do a book, but around the time when they were IPO in 2004, a
couple other people were working on books so I wrote on something else. And I was still
thinking about it as Google became even more prominent during that decade. And in the
summer of 2007, I got an invitation that I felt gave me a key as to how I could pursue a
book project.
Now Google has this project, you know, this system called associate product managers.
Now you all know about product managers at Microsoft, and Google as it got bigger
realized that it needed to have its own product managers, which actually is not a foregone
conclusion. In 2001 as Larry Page, in particular, saw the company was getting bigger, he
became very alarmed that there would be this layer of middle management. And he
decided to eliminate all management at the company. And the HR person begged him
not to do this. You can't do this; this is crazy. And they had just taken on Bill Campbell
who is an esteemed figure in Silicon Valley; he's the chairman of Intuit and he was a
good friend of John Doerr's who sent him over to Google to give advice, and Bill
Campbell was trying to advise Google against this. And he and Larry had a big fight
where Bill would say people do want to be managed. And Larry said no, people don't
want to be managed. So they actually would, called in just as an experiment, some of the
engineers who were working there at that point of the day. It was about eight o'clock at
night. They were still a lot of people there. And they asked them, do you want to be
managed? Do you want to be managed? And by and large they actually said yes, yes we
do want to be managed. But Larry went ahead anyway and got rid of all the managers
[laughter]. And they had over 100 people, you know, which is all the engineers been the
company at that time reporting to one person Wayne Rosing who was the head of
engineering. And that didn't work too well. So they rolled it back, and eventually had to
have some sort of product managers. But the people they brought in from places like, can
I say it, Microsoft? Were, had their own view, more traditional view of how product
management should be done, and Google wanted to do it differently. A product manager
really can't set the direction for a product and certainly can't tell an engineer what to do
because the engineer as the coder is really the rule at Google there. So they had to figure
out something else and they came up with this scheme where they would pluck people
straight out of college or people who were in the workforce for less than 18 months, and
give them massive responsibility. The very first person in this program was a Stanford
graduate, straight out of school, where they brought into the conference room with the
ping-pong table at that time and said you are in charge of launching this product we are
working on called Gmail.
So, you know, big responsibility, but they gave him some guidance, these people. And
they took him in classes and it was a two-year program. The first year you do one
project; the second year you work in a different team and midway through the program
the head of this program, the person who thought of the idea, Marissa Mayer, is a Google
executive, would take the young engineers, product managers. They were all computer
science majors, but they also had more of an entrepreneurial bent. They weren't pure
geek coders. She would take them on a trip internationally and they would go to Google
offices at various places in the world, the engineering centers. They would talk to the
people there and then get a sense for the market in those areas, and they'd also bond as a
group which would be interesting because there would be a network as it moved through
the company and presumably became the leaders of the future.
So they invited me to come along. I was the first person to be able to tag along on a trip
like this, which was unusual because Google is a pretty closed company in terms of
letting reporters in to see what's happening. And it was a revelation for me. Even though
I had been covering the company for a number of years, I guess eight years by that time, I
saw a dimension that I hadn't seen before. I've visited a lot of companies during my time
as a tech writer and engineering companies have a lot in common, but Google had some
of those things in common but in other aspects it was different. I really felt like the
company had, whether it was intentionally, it adjust itself to this, or if it was just a natural
consequence of the youth and interest of the employees, but it really throbbed to the
rhythms of the internet itself, and the values seemed uniquely suited for the internet.
And of course it had its own unique culture of springing in part from the proclivities of its
founders who both were Montessori school products and as it turns out a lot of the traits
of that imprint themselves on the company itself. This detesting of authority and this idea
that you have to, you're going to get the most out of anything if you pursue something
that is your passion and you are not forced to do something that is not interesting to you.
So this explains to some degree Google’s, they call it creative but some people just call it
chaos.
So I thought it would be interesting to do a whole book with that kind of access that I had
to these people on a trip, so that I could explain some of the products they do and their
directions and the culture, of course from that point of view and with that degree of
access. I asked him if I could do that after the trip, and to my pleasure and surprise to
some degree, they said yes. Now their head of communications at that time, a fellow
named Elliott Schrade, who now holds a similar job at Facebook, told me that if I agree
that Google could have veto power, approval of everything in the book he would give me
a badge I would have total access there. So I didn't get a Google badge [laughter]. But
they gave me access to anyone in the company; I could talk to anyone; I could sit in on
any number of projects in development and I would keep my mouth shut about it until the
book came out, and if a product for some reason wasn't going to reach the public, wasn't
going to launch before the book came out, then of course I wouldn't write about it. It
seemed fair to me to agree not to prematurely launch Google’s products because they let
me in to see them there.
So I have to say there's one in particular that I'm still waiting to write about. But the
disappointment that I have isn't anywhere near the disappointment they have in not
getting the product out. So I do want to leave a lot of time for questions. Before we do I
just want to touch on five little turning points that I saw in Google's history from
researching the company in this way. And some of them are a little less obvious than
others. It's well appreciated that page rank, which is the system of analyzing those links,
was a big breakthrough that enabled Google to get where it was with the search engine.
But something pretty underappreciated, was something that happened pretty early in
Google's history. I take it from 1999 to 2001 in terms of the people they hired. Now this
is a very small start up, really. This started when they were maybe 9 or 10 or 11 people
where Larry and Sergey went after the kinds of people that no start up really had the
business pursuing. These were PhD's in computers who were attaining a reputation
relatively early in their careers some of them; some of them were a little bit farther along,
a very distinguished computer scientists. Yet Google went after them and convinced
those people to join the company when the company was just starting, had no business
model, and just had a cool product there. And they did this in part by the forceful
personality but also they benefited from the idea that the tech had gone through a trough
and there were all these interesting research labs in addition particularly the DEK
research lab, the western research lab in Palo Alto were going through some hard times
and DEK in particular had been bought by a company which was bought by another
company; there were two levels f not invented here there.
And one guy in particular was sort of a turning point. This guy named Jeff Dean, has
anyone heard of Jeff Dean here, any of you research folks? Well almost no one, but
among certain folks of that time, he was like a legend, the smartest guy at DEK and he
came on there because he was really excited by the challenges that Google was going to
take in dealing in scale, in big data and innovative ways to process it. And when he got
hired in the valley, there was this whispering, like did you hear that this little company
hired Jeff Dean? It was like a little basketball team, a local basketball team hiring Kobe
Bryant. I mean how could this happen? Flip the dial and a lot of people who didn't
consider Google, wouldn't have considered them otherwise, went and got a job there
afterwards. And Google actually had a hit list of some of the people they wanted, people
who are experts in machine learning and dealing in big data who they went down and
they were able to fill in a lot of that list there. And what those people did really was they
built out what was a graduate student project into something that could really handle a
massive scale. They built an infrastructure. They rewrote the search engine and really
changed the direction of the search engine from something that relied very largely on
page rank, to something which was a learning machine, which would learn about the
environment around it by analyzing user behavior there. So that was an important
turning point.
The second one, a little more obvious was when Google figured out how to make money.
They came up with this product called AdWords. Now there was another company
which did something similar to what AdWords became. If you advertise on Google, of
course, you buy a keyword which is something that people type into the search engine
when they're searching for something, and of course the keyword goes through and
Google produces the relevant results, and they appear in the middle of the page and those
are the organic search results which Google has discovered to answer your query. But
now of course we see on the right a list of other things which are paid ads. Now these
ads don't get there by the traditional advertising model of saying I want to show you this
and I'm buying space on this page, instead they are conducted by auction. So every time
you type in a keyword, not only does Google go through its indexes and use its
algorithms to extract those search results, but it conducts an auction of people who have
put in bids for those keywords and say how much they're willing to pay when someone
clicks on the ad that appears if they win the auction. But winning the auction doesn't
mean that you necessarily pay the highest amount for the auction. And this is where
Google veered off from a competitor named Overture which had figured out first the idea
of auctioning off keywords. Instead Google had another factor that it mingled in with the
calculation of who will win the auction, is how good the ad was.
So what happened was they had a way to figure out how many people, there are some
people nodding here, maybe Microsoft’s ad system, so how many people were going to
click on the ad; they had to make that prediction and it had a lot to do with sophisticated
math and economics and statistics to make that prediction, but if it did it well then what
would happen is it would give a big incentive to the advertiser to make better ads. And
even though some people who couldn't compete as well, who just wanted to have their ad
to appear on the page by paying the highest, were very frustrated when their ad would not
appear there, they might not have been as happy, but the users were happy. And indeed
Google regularly tests system to see if the users liked it, if the users liked the ads. And
they would show people a certain percentage of the results without ads and they have a
big control group of course of people who see the ads, and people search more with the
model with the ads. So Google constantly is testing to make sure people like the ads.
And this turned out to be so fantastically successful that Google's financial problems
which had been starting to get a little serious. The venture caps were wondering what
was going to happen, evaporated almost instantly when this was implemented. So the
next few years Google engaged in what was called internally as the hiding strategy.
Google was very afraid that one company in particular would notice how well its system
was doing and decide to compete in a very big way. Now this company was one where
its new CEO had had some experience; it had hired Eric Schmidt to be its CEO and he
was a veteran of the browser wars and his side had not done too well in the browser wars
because he was on the Netscape side, and the other company, I won't keep you in
suspense; it was Microsoft that had done pretty well with its browser there. So Eric was
very careful not to moon the giant, and somehow engage Microsoft, and he was very
careful to keep its financial results secret which we had to do until the IPO.
Interestingly the cofounders of Google, Larry and Sergey, have a different idea of
competition. They just want to go where they want to go. And they really don't care
who's occupying the space where they want to move into. So it was an interesting thing
to see when I looked into the origin of Google's browser, Chrome, that very early on
Larry and Sergey wanted to do a browser and Eric kept stalling them saying not time yet,
not time yet until they finally did do a browser that came out in 2008. The third turning
point that I want to mention is when Google got YouTube. Now it's a very valuable
franchise. Google paid a lot for it and I think it worked out pretty well, but the point I
want to make is kind of interesting, because Google had its own product at that time
called GoogleVideo, and it was developing this product, trying to make a popular, and it
was just around the time that these guys in San Bruno were coming up with this thing
called YouTube. They had a little place over a pizza shop. There was like three guys and
they were competing with this big company, Google which, it was the middle of the
2000s and Google was now a very successful public company doing very well.
Now it's possible to go back and do forensics on this competition, because there turned
out to be a very big lawsuit against YouTube and then when Google bought the company,
Google and YouTube by Viacom which charged, made some copyright infringement
there, and as a result of the discovery process all of these wonderful e-mails, a
journalist’s dream I might say, became available. And so you could actually see how
YouTube worked and how GoogleVideo worked, and how each team developed their
product. So the GoogleVideo team, a lot of the e-mails deal about some slide decks
they're making to present to the executives to explain what they are doing, to sell the
product, to get more resources. And there were a lot of e-mails talking about the
copyright strategy, about working with lawyers and other people to make sure that they
were on the right side of the law there. And the person in charge of GoogleVideo
actually was a lawyer and she had worked in the entertainment industry, so she was very
concerned about this. We look at the YouTube videos and it's like, copyright,
smopyright; we just want videos on there. You know, let's just go, have a party. And
clearly, it was those few guys who weren't constrained by being a public company, by
being a big company, by convincing their bosses they had to do something, which
vanquished Google there. So to me it was an early sign that Google’s size was going to
constrain what it did.
And to this day this is a big problem at Google and one which really plagues Larry Page
in particular. So now that Larry is the CEO, he's going on one of his periodic
reorganizations to try to make Google think like it's a smaller company, act like it,
essentially defy gravity; that is very important to him. So I'll give one more point,
turning point in there, and this is something that I spent a lot of time working on in the
book which was China. Now the Google China experience to me was fascinating and
really the centerpiece of the book in a certain way, because I sort of follow the moral
story of Google. Google started with very explicit ideals. Larry Page and his partner
Sergey like to talk about how they are in this to make the world a better place. And when
the company went public, they actually made a statement and Larry wrote this that
sometimes, and they warned shareholders of this, sometimes we are not going to chase
the most profits if we think it's going to get in our way of serving humanity, right?
Imagine telling shareholders that. But that was their stake in the ground; they were
going to be a moral company. So along comes this opportunity to go into China. It's the
most exciting marketplace in the world. More people are going to use the internet in
China then are people who live in the United States. It is very clearly someplace that
every technology company wants to play. And of course Microsoft was already there
with its engineering Center led by Dr. Kaifu Lee. So in order to get into China though, in
order to put its search engine in China, Google had to make this horrible, horrible
compromise. They had to agree to censor their search results according to what the
Chinese government didn't want in there. Now imagine this. This is a company that
spent every fiber of its being in delivering the best possible results when its users type
something into the search box and wanted the answers there. Now it was being asked not
only to withhold results that might be the most relevant results, but to do it in the service
of an oppressive government trying to stifle its citizens, stifle the freedom of its citizens
there. Now that's a tough pill to swallow especially for Sergey Brin, one of Google's
cofounders, who had come over as a child with his family escaping oppression in Russia.
So this was not an abstraction to him. Yeah, they did that. And they say and Google says
and I think I am going to take them on their word on this, that the reason they went into
China was not simply because well the profits are too great, but they actually felt that
they would be doing good. They constructed sort of a moral spreadsheet where in some
cells of the spreadsheet things were way in the red, because obviously they had the
censorship, and that is a very negative thing. But then other cells of the spreadsheet were
positive; they were the black. They thought that just by spreading information more
within China, they would do a service to its people, and somehow encourage people to
seek more information. They would also tell people when they were filtering the search
results, so people might look at the bottom of the page and say, wow, my government’s
preventing me from seeing things. I should push back on my government and ask them
to change the policy there. So essentially Google was asking China or thinking that it
was going to change China. Well, what happened was that China changed Google. The
compromise they made wasn't the end of what China asked them to do. So during the
years that they spent there, they were more and more demands. Government officials
would say, can you take that out about me? There is a news item that is embarrassing.
Please take it out of the indexes. Other times the Chinese government made larger
demands. After the Olympics in 2008, Google thought those demands might subside, but
they didn't, and at one point China even asked them to take out search results not just in
the Google's China operations, but the Chinese language website that people all over the
world can use. So that was tough. When I went to China though, I was surprised at some
other things that I hadn't known, hadn't been out in the press before. For instance, the
number one concern among the engineers in China had nothing to do with censorship,
had nothing to do with some of the unhappiness of their bosses that Google wasn't giving
them more money to market to fight their competitor Baidu, they didn't have access to the
production code that engineers all over the world at every other Google engineering
center could see, could work with in order to improve Google's search and other products
and develop new products.
They felt that Google didn't trust them. Indeed, when I asked the executives at Google
about the policy, that was the case. They did not trust them. It isn't that they didn't trust
them individually. They were worried that their families might come under pressure or
there might be someone who was a secret party member who was out there to take things.
It was a unique thing that Google, put Google at odds with its employees. And it turned
out to be a big cultural gaffe. And this gaffe became complicated even more when
Google discovered that its government relations person, this very important person in the
Beijing operation, because this person has to deal with the government, negotiate
sometimes how much things have to be censored. The government could ask for 10
things and it's up to the GR person to whittle it down to seven or six or maybe even
lower, and also to make sure that Google is on the good side of the government for its
license, which is not a trivial task to get there. This woman as it turns out had given
iPods, not Zunes, as gifts to government officials during Christmas one year. And this
actually is against the law. There is a law against bribing government officials in
different countries, and when Google found this out, they were shocked and actually had
to fire this person there.
They didn't really prepare the people in China to hear this, because in the Chinese culture
it didn't seem like such a horrible transgression, and then it became worse when Google,
following the letter of the law, hired this white-collar investigation firm to come in there
and do an investigation as to what happened there. And these people were former
prosecutors, very tough, and the people in China felt like they were being treated like
thieves.
Meanwhile the people in China were proceeding, that some of the Google executives in
Mountain View had begun to lose faith in the experiment. Maybe they recalculated their
spreadsheet and figured out that this censorship was not worth the effort. So there was
like a rump group in Mountain View of executives who were now quietly urging Google
to reconsider its policy. So in the end of 2009, when an attack occurred on Google’s
servers, not just in China, but in the United States, and property was stolen and the
accounts, the Gmail accounts of users around the world were broken into of dissidents
then Google came to grips finally with the bigger picture there. Many of these hackers,
dark side hackers, and I want to use the word hackers in the pejorative sense, I wrote a
book about that. But these dark side hackers almost certainly were in the service of the
Chinese government if not working for it. And that led to a debate where Google decided
ultimately that it was going to pull this, stop censoring the search results, which
essentially meant they were pulling it out from China. China was never going to be
allowed Google to operate by censoring the search results.
So that was a traumatic thing for the company. But in a sense it ended on a high note
because Google got to reestablish its moral mojo in what it did and it actually came at a
good time in a publicity sense for Google, because at that point Google was suffering a
lot of scrutiny and criticism because it had grown from a small company to a big
company; it had gained a lot of power and people started questioning its power in the
search market, and whether it was afoul of the antitrust laws, and they were questioning
its privacy policies there. And that is something that Google is going to be having to face
I think really throughout the rest of its history and it's interesting to see how they deal
with it, because Google as I said just tries to get itself in the mode or thinks of itself as a
small company so it can be nimble, so it can act quickly, and this is the nature of the
reorganization that Larry Page is doing in the company. And I think intellectually they
understand that they are big company and they are subject to this kind of scrutiny, and
that people are going to be suspicious because they have so much information about
them.
But on the other hand I don't think viscerally that sinks in there, and the final turning
point there I'll mention is that the book project where Google wanted to scan all the
books in the world and put the contents of the books in its indexes and make that
available to people in a single click, any book ever printed there. Not the entire contents
of the book, but if someone wanted to get to something, it was only in my book Hackers,
then they can type it in and that book would appear or some book that was published in
1922 that no one ever heard of. And Google felt that this was so great for civilization
that no one could possibly launch a serious objection to it to the point where they would,
it would stop that project, when, in fact, Google got sued. There was a settlement and the
settlement came before Judge Jennie Chin in New York City, and an array of people
testified against Google who one would've thought would've been their natural allies.
They were not only people who were big advocates of the spread of information, but
there was even the science fiction writers lined against Google, and that was a low blow
because people at Google love their science fiction. And even, there was even a lawyer
who is representing Arlo Guthrie who testified against it. And I just thought how does it
come to this, that these lovely cuddly Google guys are now the foes of Arlo Guthrie? So
that showed I guess where Google, the concerns were Google is now at this point in the
second decade of the 21st century, and it was, I have to say, a pleasure to work on the
book because Google, like Microsoft, is a great company and one we look to make
possible the bounty of technology.
And one thing I have learned about Larry Page in talking to him is that ambition is really
at the core of his values. And not ambition to get ahead in the semi glick sense, but
ambition, the idea that people should take on big tasks. He really believes, just as you
folks do, that technology makes possible things that we were all brought up to think were
impossible at one point. And we have never been in a position to make the impossible
within grasp as we are now. And he is personally disappointed that more people don't
take advantage of this time in history and what we can do to take on big audacious tasks
there and he's particularly unhappy when people at Google don't take these things on. So
that to me is a sign that may be under Larry we're going to see some unexpected things,
risky moon shots, as they call them at Google that may or may not work out. Anyway
thanks a lot and I am very eager to take your questions.
[applause]
>> Steven Levy: Okay, over there. Are we just got a shout out or do we have a mic or…
>>: I hope this is loud enough. I wanted to ask you about the origin of who thought of
hiring the PhD scientists. So it seems to be the ideal level engineering and algorithm
[inaudible] user service and [inaudible] people are seeking information in different ways,
through their friends, through their social networks and how well-positioned do you think
Google is in handling this challenge [inaudible] that's one thing that I think there was a
lot of catch-up here to do. Everyone talks about going beyond the [inaudible] links. How
well position do you think they are and what you think they should do [inaudible] the
whole [inaudible] movement?
>> Steven Levy: Did everyone hear that? It's the question about the social challenge that
Google faces now. And almost the language that you used I think that the people at
Google are discussing this and working on this problem now. They realize that this has
been a gap in what they've done. Google has had a number, and I will get into it in the
book, a number of projects in the social space over the years and for one reason or
another, I don't think it's one single reason, but for different reasons each one has either
flopped or not fulfilled its expectations. They had a product called Orkut, which actually
came out just around the same time frame as Facebook, and everywhere in the world
except India and Brazil, now they're fading in India, it didn't work. And that was in part
because they didn't give it the resources it needed when it was too slow, and they were
changing the technology platform, but they just didn't put enough into it to fulfill his
potential.
At another point, they bought this company called Dodgeball which is a location-based
system where people can share their location with each other. And they left it to fester
and the guy who started Dodgeball went off and founded Foursquare. I also found out
that during the time Dennis Crowley, the Dodgeball guy, was at Google, at one point he
thought of an idea that actually was exactly like what Twitter is now. And he brought
that up and nobody had much of an interest in it at Google. They didn't see the world
through those lenses now. I have to say is that's different now. They do see that there is
an increasingly growing corpus of information, much of it held by Facebook about what
people like and who people are in contact with, and what people are doing. And this is
information because Facebook is a walled garden that Google can't get at. Their mission
is to access all the world's information, right, and organize it and this is a crucial piece of
information that they can't get hold of and Google is now in sort of a Facebook panic and
how are we going to respond to that.
And I wrote in the book about this big project that they are working on. The codename is
Emerald Sea, which is their giant social initiative. And we are seeing some things come
out of that. We haven't seen everything come out of that yet. And the Emerald Sea name
came, I'm not sure if the picture came first or someone Googled the image search, but
when the first thing you comes up in image search when you type in Emerald Sea, with
the Google is a painting, a 19th century painting by this artist named Alfred Bierstadt and
it shows a giant wave, tsunami sized wave about to crash into the shore, and there is like
a little sailboat caught just in the look of the wave their, it looks like certainly this
sailboat is a goner, right? Who's ever on this sailboat is out of it. But it was explained to
me by the head of this project, that well, this is what social [inaudible] it's either going to
wave, we’re going to ride high, or it's going to engulf us. So they are definitely engaged
and we'll have to see how well they do on that. Okay, way back in there.
>>: So I guess I'm curious, you said [inaudible] moon shot things and it's also the social
study [inaudible] and now they are trying to build a competitor and it's kind of hard for
me to see local coupon advertising has considered a moon shot thing [inaudible]
>> Steven Levy: I would characterize it differently. I think, and when I discussed the
social thing in the Plex, I talk about the perception among some Google people that this
isn't what Google does best. One person who is developing social products for Google a
couple of years ago said what we don't want to be in and what we are not good at is
chasing tail lights, doing what other companies do. He said and he had some contempt
for it. He said drunks chase taillights; that's not for us. So, you know, what Google is
good at is going forward, is building cars that drive themselves. And so now Google is in
an awkward position of basically chasing someone's taillight there and to the degree that
they come up with something that is totally new, and not a Facebook clone I think that
will be in their comfort zone.
>>: [inaudible] miss this stuff sort of in part because of that contempt that they
[inaudible] the talents [inaudible] is not really important [inaudible]
>> Steven Levy: Well it didn't seem like a Googly pursuit. Maybe some people, I think
the people who are most regretting not seeing that are the people in Search who realized
how that information can be valuable in search results. So now Google has already ruled
out the social search, and it doesn't quite affect the results yet, the rankings, but I think it's
just one step before they take the information which people can enter voluntarily about a
website that they like it, and it will show up when their friends or contacts or people they
follow on Twitter will search for the same queries and that comes up there and right now
it just flags it like someone you know or someone you follow on Twitter likes this site but
it's inevitable that they are eventually going to use it to affect the rankings and then they
will test the heck out of it to see whether that delivers more relevant results. Okay. Up
front here.
>>: [inaudible] I know they are looking at the businesses I [inaudible] cell Gmail to
enterprise, are they going to, which their culture around that? Do you think it will
support have like a dual focus on search consumer and the business space as well? Are
they going to be able to handle that?
>> Steven Levy: You know Google, they have a big effort obviously into selling its apps
into the government and into their marketplaces, and obviously the people involved in
those divisions take it very seriously. I never felt that it was super core two Google there.
The passion and the urgency let's say that they're approaching social has really yet to be
seen or maybe it's just my perception of them satisfying this. Definitely it's something
that they are engaged competitively in, but I don't know how high it is on their stack to
get that through there, but certainly they react with indignation when people say that they
don't follow the rules or they are misrepresenting their security status in doing that, and
maybe that's a way that some people could be mooning the giant in Mountain View, so
maybe you people should be careful there. [laughter] yeah.
>>: What can you tell us about [inaudible] competitor landscape? Especially in terms of
[inaudible] mobile space [inaudible] Microsoft turns out commercial services [inaudible]
Facebook research
>> Steven Levy: Well aside from the Facebook thing, it's interesting, and I alluded to
this before, that their view of competition is not so traditional. It's not a strategic one
where they are mapping out the world and playing this game of risk like I think you guys,
your leaders might do here there. It's more of we're just going to bomb into a place and if
we see an opportunity to do this, we're not concerned who's in there. I tell the story about
how when they were developing Google Voice and some people said well, your going to
get every phone company against us, and these are people that important for Android
there, and they said who, these people really hate us anyway. Let's just go in there. And
for, the other example of course is the relationship with Apple. For a while it looked like
Google and Apple, they were like Humphrey Bogart and Claude Rains in Casablanca,
arm in arm going off together. Steve Jobs was going on walks with Sergey Brin and they
were entirely complementary companies with no conflicting products. Google decides to
get into the phone space which if you consider, it really has to because I don't think the
day is quite here yet, but it's pretty soon, where more searchers are going to be conducted
on phones and mobile devices than they are on desktop computers and laptops, right? So
it's sort of important to Google to be in that in a big way, but in any case they didn't do it
in a graceful way to make their partner feel included in this. And Steve Jobs wound up
feeling betrayed by Google and that relationship between those two companies is really
in shards. Yeah, over there.
>>: How do you see the iPhone versus Android versus WinPhone coming along? Will it
be a remake of Windows versus Mac [inaudible]?
>> Steven Levy: Well it's not that clear an analogy and in some sense, so far then it has
been in that by building this echo system and not being a one company complete
enchilada solution, Google has managed to outsell the iPhone there. But I think a lot of
people probably wouldn't want to trade Apple's position now with Google's. It's unclear;
certainly Google financially is a beneficiary of the success of Android. Even though it
doesn't charge for it those things are really Trojan horses for GoogleSearch and all their
products there. But they are always a little behind on the quality there and now they are
dealing with problems that come when different suppliers start to fork in the system and
Android might be split in a way where it makes it more of a challenge for developers to
do apps there. And so that's something that they always have to watch there, and it's
going to be difficult. Maybe for that reason, it won't be such a classic matchup like
Windows and Mac was. Yeah.
>>: What is Google afraid of?
>> Steven Levy: Aside from the Facebook thing, Google is afraid that the next paradigm
comes and they're not there. That's where the innovator’s dilemma right? It just ruins
great companies. At companies that are in control of one paradigm and another paradigm
comes along and not only are they slow to adopt what's new, but they find themselves in
a position defending the old because it is very profitable there. And I think that is a
concern. And they are also concerned that they're not going to be able to accomplish
what they could because of the size, because of the bureaucracy. So right now like a lot
of companies, they are really concerned about retaining employees, bringing in new ones
there. But their hiring process on the self selects for the kind of people who have zero
tolerance for bureaucracy. So those are the people who are most unhappy in a big
company that has these Dilbert-esque methods that drive them out and make them crazy
and it's very easy if you were in Silicon Valley and you get fed up at that stuff and if you
are a really talented person, to walk out and start your own company or go to Facebook.
Yeah?
>>: Do you get the impression between the lesson they learned with the YouTube
incident where a small company that might be small enough to ignore the law could
actually beat a dedicated large-company combined with Page coming back to the
leadership that is going to actually be an increase in Google's willingness to kind of skip
over the legal stuff if they become to this whatever they are doing is worth it, I mean…
>> Steven Levy: What you mean skip over the legal? You mean like break the law?
>>: To break the law. If they think that whatever they are doing is more important than
what the law seems to be.
>> Steven Levy: One thing I think I did find interesting about Google and its sort of
unique in my experience, both in the publishing world and covering the companies in the
tech world was that even when they hired their lawyers, they wanted a different kind of
person. In most places the job of your legal team is to see what the law is and then tell
you no, to make sure that you don't violate the law. At Google they have their lawyers,
this is what they are there for, is to figure out a way to say yes. To not get in the way of
doing what you want to do. Now to find a legal way to do it and the idea is not to get
people put in jail or windup being on the wrong side of billion-dollar lawsuits, but their
tilt is towards how do we make this happen, as opposed to how do we stop horrible
lawsuits from happening.
>>: But you read this my Viacom documents and it's pretty clear they concluded that as
long as YouTube is willing to kind of disregard copyright we are never going to win.
>> Steven Levy: Right. Well, I think it was easier to do it, to bring in an outside
company, but they did bring in the technology to identify infringing works and right now
the way that the company operates, there aren't those complaints that were there in the
early parts of the company and they are working hard to be partners now. Yes?
>>: Where do you think Google will be in 10 years?
>> Steven Levy: I don't really know the answer to that. I think it could go either way. If
some of these long shots pay off, Google could be a different kind of company. They
could be a big company in the area where none of us suspect they are even going to go
right now.
>>: Do you think they might buy Verizon?
>> Steven Levy: Verizon?
>>: Yeah.
>> Steven Levy: Wow, that's a new one on me. That would be interesting. I will tell
you what I do think. So I wrote about this spectrum auction that they competed in. And
so it was fascinating because Google was very unhappy that these big carriers had all this
control over the, what can go on the network, how business is done with phones, and
things like that. So they asked the FCC to auction off this next big chunk of spectrum,
this valuable chunk of spectrum in a way where it would be more open. And in order to,
for, and the FCC agreed. But in order for that to take hold, someone would have to bid
the minimum in this auction, otherwise the government would conclude that no one was
going to pay what the spectrum is worth with these restrictions, so now we are going to
have to re-auction it with the same old oppressive ways of the previous one.
So someone had to bid, you know, what was it, like $3 billion, some amount for that
spectrum. So Google decided it was going to participate and the strategy was to just bit
enough to make the auction official and then someone would bid over it and then they
would be off the hook, because Google wasn't ready to be a phone company, right? So
the auction occurs and Google's bidding, and it goes in rounds; it's a little complicated.
So you have to bid in a round, and then the ground ends. And then you bid again. So
Google is a bidder in every round and has to top itself, and top itself to make sure that the
auction is still going. And then the moment comes where Google has to bid over the
reserve, and at that point the auction is official and if no one bids over Google, they are
stuck with it. They are the dog that chases the car, right?
So they have a meeting and they say should we go ahead with this bid? And the policy
guy, the guy who's the expert in the telecoms who has been pushing this all along says,
and they say to him, what are the odds that we are going to get topped there? And he
says 87%. [laughter] And they said that's pretty good; we're going to make the bid.
Afterwards he told me, I said why did you say 87%? He said well, I just picked a number
that sounded official. They love numbers, right? [laughter] So they make the bid and
now they are sweating it out. A day goes by, two days, three days. Finally Verizon tops
the bid; they are off the hook. What happens then is Larry says, why don't we keep
going? And they finally convinced him, no, we are not ready; we can't do that. I think
next time they will keep going.
>>: Do they kill any projects that may be a threat to their core search advertising
business or, you know, do they have this root mentality or do they just kind of let things
go?
>> Steven Levy: That's a great question. Would they cannibalize AdWords? That is a
tough one to cannibalize, wow. But I think if they were convinced, if Larry was
convinced that the next thing down the pike was going to be better, he would do it.
Essentially he did it with AdWords. They had a very successful model of more
traditional advertising that, you know, on one side of the page, on the right side of the
page, they were doing this AdWords model, but on top of the search results, they were
selling traditionally to big companies they just bought by impressions. They were
spending a lot of money, it was $300 million a year there that they were making, at that
time was a lot of money on that they were making on that. And then they decided to end
that. Remember they used to do a thing called the premium ads on top and they had a
premium they called premium sunset where they got rid of a very profitable model in
terms of to implement the up-and-coming model. So I think maybe yes. And that's a
sign of a pretty good company. And Apple is an expert at cannibalism like that. Yeah?
>>: [inaudible] design at Google?
>> Steven Levy: Design? There's actually an ongoing simmering design wars at Apple.
Every couple of years some designer stamps out of there saying this place does not
understand artists, Larry in particular. He doesn't like animations or swishy stuff and
people sometimes criticize Google for its utilitarian look or the idea that it's, the look is
determined by relentless testing of every element of design, so they will be doing A B
testing on, you know, how many pixels are in a line and at one point they tested for 57
different shades of blue on a product there. But it became clear. A lot of designers were
wondering, really what is our design aesthetic all about, until finally somebody explained
it to them. Our products have to be made to look like almost machines designed them,
because implicitly we want to convey that we are not biased, that when you get into our
search results, there is no editorializing of going into what makes them there. So we want
to create the impression that this is a company without bias, and that's why we want to
have these neutral looking interfaces there. Yeah?
>>: Do you think the depths of Google's health is actually exaggerated?
>> Steven Levy: It doesn't seem underground to me. I've haven't heard a lot about that.
I think it could be back. It's one of those areas where it's so in their wheelhouse, it's
tough to imagine that they don't want to play, but it's a tough nut to crack and their
priorities went elsewhere when it didn't work too well. Google is not that great at
reviving something when the first response isn't that good. That's a weakness of the
company there. Yeah?
>>: What have you observed about how Google deals with privacy?
>> Steven Levy: Deals with privacy?
>>: Yes.
>> Steven Levy: Well, they have a big privacy infrastructure there. And the privacy
people are concerned not only about the degree of privacy they give to the users, but the
perception that Google has on privacy. So I wrote about this product they did called
Google Goggles where you take a picture of something and it acts like a search query
where, you know, it searches by the image for something. They had the capability to
build face recognition into that, but it was turned down because they felt that it was too
creepy, that people would react negatively to it and it would give Google more trouble
than it was worth. Now in some other aspects though I feel that some of the leaders of
Google are, while they are concerned about privacy, don't really understand the degree to
which people in general are worried about Google in this. And it's the typical thing
where because they feel their motives are pure as far as they can see in self-examination
that they don't understand why anyone would have a problem with them. Yeah?
>>: So it seems that in many ways Google today is kind of like Microsoft in 1997.
>> Steven Levy: You said it. [laughter]
>>: Maybe not paying as much attention to the government as they should or that they
are not very friendly to their partners. I would love to hear your thoughts on how the two
companies compare since you've been following them for so long.
>> Steven Levy: There are definite parallels as you mentioned there and both are, you
know, in terms of the -- as I said before, I do distinguish that both have partner problems
but it comes from a different point of view. My impression at Microsoft is that people
there and figure, you know, here is our competitors, how do we win over our
competitors? Which is the way businesses have traditionally have done it. In Google it's
more here is an opportunity to do something new in the market. We're going to use our
infrastructure and our talent to come up and move into a market and they really aren't
concerned with who is or who isn't in there. In terms of the government, very similar,
though, I have to say, I am a little surprised at the degree to which you folks here at
Microsoft under appreciate the irony of pushing the government and the EU to file
antitrust against Google. So I covered Microsoft a lot during the ‘90s there and talked to
your chairman at the time a lot about that. And I would've thought that Bill Gates would
not have wished on his worst enemy what he was experiencing then. And clearly he
does. [laughter] yeah?
>>: I'd be interested in any of your thoughts around Google Buzz and Google Gears, I
worked at enterprise [inaudible] and if we were to decide to withdraw a service we would
do it [inaudible] and I think it would be more responsive to customers’ needs or wishes.
Do you think, do you have any insight as to how and why they make those decisions and
whether with hindsight they would choose to do things differently?
>> Steven Levy: I still don't quite understand what happened with Google Gears. Now
especially since they have come up with there, the Chrome operating system, which
seemed Gears, or something Gears-like, would be pretty useful, to have a computer
which really doesn't work when it's not connected to the internet, it seems odd to me. So
maybe I haven't done the reporting as to why Gears went away but…
>>: What I find interesting about that is [inaudible] I think someone asked in a
conference and then it just [inaudible] if we were ending off-line access to two things
there would be a huge brawl. And it was interesting how they did it and the fact that they
didn't anticipate that that was going to be an issue especially now that [inaudible]
>> Steven Levy: Actually surprised it's not a bigger issue, because that did surprise me.
The other thing you mentioned was Buzz. Well, Buzz, there is a case where they, this
case of myopia when they tested the product. You know they had this project. You use
the word dog food here at Microsoft? Yeah, okay, so it, during the dog food process, do
you also have fish food? Is that in the part of the game? So fish food is when you test
the product like within the group that creates it, and then dog food is when you give it
more widely in the company. That is the dog food process, so that's the new animal, you
know, reference that you guys can integrate into your works here, but during the dog food
process when it was tested within the company, eating your own dog food, they had this
feature that they thought was a wonderful feature to save people all of the hassle in timeconsuming effort to build a social network when you had a new product there, it would
do it automatically from your contacts, right?
And when you were testing it internally, that was no problem, because you were only
using it with other people within Google. And there weren't people that you wanted to
hide on your e-mail list when they did that, so they were totally unprepared for the outcry
that would come when these instant social networks came up and some of your contacts
learned who else you are in contact with, which if you think about it, isn't necessarily a
great thing. And they actually fixed that fairly quickly but the damage to the product was
such that it sustained as someone told me that Google it's going to remain for ever, and
essentially that product has a greatly diminished chance of ever being picked up there. I
actually went to the rehearsal of the Buzz launch and they had a bunch of Google's PR
people playing the press, they were doing sort of a mock Q&A session, a mook Q&A
session. And they asked all these questions about, you know, Facebook and things like
that. And not one person asked the privacy question, which was interesting. But to be
fair in the real launch, not one reporter asked the privacy question.
>> Kirsten Wiley: Let's just do one more question.
>> Steven Levy: Okay one more, back there.
>>: How much of their focus on operational excellence comes from the top? Is that…
>> Steven Levy: I think a lot of it comes from the top there. And I think one thing they
have been successful at is even though they are big company and most people at Google
haven't spent personal time with Larry and Sergey, they do a good job of channeling their
values there. And operational excellence is one of them, another is speed and scale. You
know speed is mom at Google and scale is apple pie. So those are things that everyone in
the company all knows about there. Anyway great questions as I expected. Thanks so
much for coming. And I'm signing…
[applause]