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Google Reveals Its Product Formula
By Matt Hicks
February 9, 2005

Google executives attempted to demystify the search company's product decisions during presentations with Wall Street analysts on Wednesday.

As Google Inc. has moved beyond Web search and into product areas as diverse as e-mail, photo-organizing software and mapping tools, one of the common questions for the company is how it decides where to devote resources.

In classic Google fashion, its executives answered with a formula, one that CEO Eric Schmidt said was derived from the mathematical calculations of cofounder Sergey Brin.

Google is striving to split its product investments three ways, following a formula of "70-20-10," Schmidt told analysts gathered at the company's Mountain View, Calif. headquarters.

Seventy percent would target its core search and advertising products, while 20 percent would focus on adjacent products, such as its newer desktop and product search services.

The final 10 percent would center on the most experimental products, those "things that are truly interesting to us," Schmidt said. These projects would include ones where the company remains unsure if users will adopt the service or if it would make money, but such experiments are critical for the long term.

"Every company that has forgotten to remain innovative has ultimately lost in the next technology change," Schmidt told analysts. "So the 70-20-10 turns out to be roughly the right answer for us."

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