1 · The mess 1998-2001
Google grew fast on instinct. Nobody owned a budget. No CFO, no monthly numbers.
In July 2001 Larry decided managers slowed engineers down and fired the project managers. About 130 engineers now reported to one VP, Wayne Rosing. It fell apart in months.
2 · The ultimatum 1999-2001
In June 1999 Kleiner Perkins (John Doerr) and Sequoia (Michael Moritz) put in $25M. The deal had one condition: hire an experienced CEO.
The founders stalled for almost two years and turned down dozens of candidates. Moritz threatened to pull Sequoia's money.
3 · The outsider 2001-2011
Eric Schmidt was 46. He had been CTO at Sun Microsystems and CEO of Novell.
He joined as chairman in March 2001 and became CEO in August. Larry and Sergey kept product and technology. Schmidt took the company: people, money, sales and the board.
What the outside CEO changed discipline
- Managers came back. Every team got one clear owner. Google's own 2008 study, Project Oxygen, later proved good managers lift results.
- Finance became real. CFO George Reyes from 2002. Monthly numbers, audited books, clean enough for a 2004 IPO.
- Budgets with a rule. 70% of resources on the core business, 20% on related products, 10% on new bets.
- A sales machine. He backed Omid Kordestani to build the ad sales team that turned search into cash.
- Clear roles at the top. A trio. Founders on vision and product. CEO on operations, people and the board.
- Cost cuts when it counted. In 2008-09 he cut thousands of contractors, about 300 recruiting and sales roles, and shut weak products. Google stayed profitable.
Revenue under Schmidt $ billions
Violet is the 2004 IPO year. Red is the 2008-09 crash, when he cut costs hard and revenue still grew. Profitable every year from 2001.
Who runs what the model
Your company, Monday morning situation → move
| If this is you | Do this |
|---|---|
| Owner signs every cheque and every hire | Hire a CEO or GM to run operations |
| Managers report to you, nobody manages them | Put them under one operator with targets |
| No annual budget, spending runs on feel | Budget by 70/20/10, review monthly |
| Investors or partners keep "suggesting" a CEO | Write it into the deal with a date |
Want the full story?
Page 2 has each act in detail, the ten-year numbers table, the 2008 cost cuts, a 7-step guide to hiring an outside CEO, and an FAQ.
Read the full story →