As a Stanford Engineering School
faculty member, I am delighted with the success of both Yahoo! and Google. After all, both were founded by pairs of
Stanford engineering students. Yahoo!
was started in a trailer on campus by by David Filo and Jerry Yang, and Google was
started by Serge Brin and Larry Page. These two companies are competitors, especially in the search business,
and there is little doubt that at the moment that Google is the victor. 
The
news yesterday that co-founder Jerry Yang had been appointed
the new CEO of Yahoo! made me wonder, however, if a change of fortune is in
the cards. Perhaps it is just because I
love modest nerds, especially when they are underdogs – Jerry Yang certainly
qualifies.
But there is one thing about
Google that makes my skin crawl and that gives me that sick feeling in my stomach
that something could go terribly wrong there, and do so quickly. As much as I admire
Google’s people and products, I wonder if the supreme confidence that has
driven their growth will cause them to stumble. I have seen hints from Google
insiders that, somehow, they believe that Silicon Valley
history and economic principles don’t apply to them because, “after all, we are
Google.” The first time I heard this, I
winced because Google has many, many connections to Stanford, and in my nearly
25 years as a faculty member here, I’ve learned that when faculty justify their
actions by saying “after all we are Stanford,” it means that they haven’t
bothered to think about the logic or they believe that were are so special that
the “usual” rules don’t apply to us. These are vile and dangerous beliefs.
Google
looks nearly insurmountable at the moment. But I keep hearing louder and louder whispers
of concern from Silicon Valley insiders about
Google – especially concern about their arrogance. Just yesterday, one was complaining to me
that the arrogance is so thick that people in Google don’t see it, “it is like
a goldfish doesn’t realize it swims in water.” Stanford students who interview
there for jobs (even those who gets jobs – and they are the largest employer of Stanford
students at the moment) complain about it openly. Even Google CEO Eric Schmidt has admitted that
Google might suffer from a touch of it at times.
Supreme
confidence is not new at Google. About a year before Google went public, my
Stanford college Jeff Pfeffer and I had a long interview and lunch with Google
co-founder Larry Page, during
which he expressed concern that job candidates who interviewed at Google saw
them as arrogant. Jeff and I found Larry to be charming, but well, a bit full
of himself too. Larry’s personality was a lot like the company he has
created – he was among the most likable arrogant people that I’ve ever met. Indeed, I think that their “don’t be evil”
motto (which they take seriously) may help them overcome many of the hazards of
arrogance.
Certainly,
in retrospect, Larry Page’s supreme confidence was warranted – he has since
become one of the richest people in the planet. Moreover, as I’ve argued in Weird
Ideas That Work, extreme faith in your ideas and your people is a hallmark
of successful innovators, because it creates self-fulfilling prophecies that
fuel effort and growth. So all that confidence is probably a key to Google’s current success and may fuel their future
success as well.
BUT
just as in many tragedies, the same thing that leads to a person’s greatness
can also lead to their downfall as well. I worry that, because Google has never
had a major stumble, they are starting to see themselves as impervious to
the fate of every company in Earth that has come before them. A few weeks back,
I heard some Google insiders talking about HP in a condescending tone. Sure, HP
has had troubles, but they are still the only great enduring big company in Silicon Valley,
on top of both the PC and printer businesses over 60 years after Bill and Dave
started the company. I wonder if Google will be one of the largest and most
profitable firms in Silicon Valley 50 years
from now? The odds are against them.
To
return to Jerry Yang and Yahoo! Yes, Yahoo has stumbled, being late to search
and video on the web, and they are not – at the moment –- the employer of choice
for Stanford engineering students and MBAs. Plus Google’s technical dominance– and sheer confidence
to act (not to mention piles of cash to fuel action)– may simply make them an insurmountable
competitor. But that little voice inside of me keeps saying that, if Google just
stumbles modestly, and the illusion of supremacy and invulnerability is
shattered, then things could unravel very quickly. In contrast, Yahoo! has been
through the bumps, and I see a lot of evidence of hard won wisdom among its leaders. I see the courage to act on what they know, combined
with the humility to update when they are wrong. Indeed, these are hallmarks of
Yahoo!’s two new leaders, President Susan Decker and CEO Jerry Yang.
I
also see other little troubling signs. I keep hearing rumors that the red tape
is getting thicker at Google; while Yahoo! is in a phase of cutting it
out. And one message I hear over and
over again is that Google is hiring so fast that they aren’t always bringing in
the very best people. And finally, I
keep getting emails from Stanford students who have been at Google for a year
or two, and have left for another company because “they weren’t having enough fun.”
These
are all weak signals, my information is suspect and uneven, but the one thing
that everyone seems to agree on is the arrogance that pervades Google, and
is barely noticed by insiders, is off-putting at best and a warning sign of future trouble at worst. I have no special influence over Google, but my
gut feeling is that, if they want to hold-off Yahoo! and other competitors,
they should keep the don’t be evil policy and charming courage and confidence,
but learn a bit more humility, learn to ask better questions, and especially,
to listen better.
In
closing, I want to emphasize that these are both great companies, they treat
their employees incredibly well, and I have admired every executive and
engineer that I’ve met from both places. But I worry about the long-term effects of all that arrogance at Google.
An
interesting footnote. Jerry Yang, David Filo, Serge Brin, and Larry Page have
something else in common – they are all Stanford dropouts from engineering PhD
programs. There is a long and glorious tradition
of Stanford dropouts getting rich and famous: others include John Steinback,
John McEnroe, Tiger Woods, and Reese Witherspoon! And, of course, Bill Gates is
one of Harvard’s most famous dropouts.
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