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intelliot
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 Posted: Sat Aug 21, 2004 8:07 pm Post subject: Google's success affects how others do business in valley |
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| Quote: | As the dust begins to settle from Google's dramatic stock-market debut, many Silicon Valley entrepreneurs say its success is having a profound impact on the way they do business.
The bursting of the Internet bubble seemingly threw out the idea that youthful idealism, freely accessed Web sites, and well, having fun, could sustain a business. But many say Google's coming-of-age could change all that.
It is inviting many back to experiment with rambunctious, unorthodox ways. Just as with Apple, Sun Microsystems and Netscape before it, Google has reminded chief executives and venture capitalists that great companies break many of the rules.
``The garage is back in business,'' says Ross Mayfield, chief executive of Socialtext, a 10-person Palo Alto start-up, referring to the valley's tradition of starting innovative companies in a garage. ``Google has been a shining example for us.''
Inspiration from Google's new stock-market riches, and the business prowess that spawned it, is taking many forms: Firing up the troops, bolstering new hiring techniques, revolutionizing the power relationship between engineers and managers, and learning how to have fun while working hard, too.
For some executives, Google's lessons are simply reaffirming beliefs and practices that may have been forgotten. For others, including many Internet companies, it's validating their business models. For still others, the lessons are driving them to devise new, even radical, management techniques.
``I guarantee you, every engineer I have is thinking about it,'' said Ben Smith, CEO of Palo Alto's Spoke Software. Specifically, they're thinking of the 1,000 millionaire employees Google's stock sale created, he says.
Google has succeeded partly by endowing its employees with the power to innovate on their own -- rather than from top-down directives. Smith and his 14 engineers are taking that to heart.
Smith's company held an off-site meeting late last week where he got feedback from his engineers. As he recalls it, they told him: ``Wait a minute. Google just designs things that they think are interesting, and sees what sticks.''
Immediate results
This confirmed Smith's view that his company's management style needed fixing. Already, following Google's example, he's made personnel changes, giving more power to engineers. He also decided the rank-and-file should be given clear directives about the company's goals, but also the freedom to work out details themselves. Ideas should bubble up, not down.
The result was almost immediate. An enlightened employee worked non-stop over the weekend to find the solution to a vexing software-integration problem that had dragged on for weeks, bogged down by management indecision. It worked. ``If we'd have told him to do it,'' Smith says, ``he never would have done it over a weekend.''
Some say Google's success has helped erase the bad taste lingering from some corporate excesses that accompanied the Internet bubble. Google's generous job benefits, including free doctor visits and gourmet meals served by an award-winning chef, have helped usher back some of the perks that had gone out of style, they add.
``Google is setting an amazing example and precedent that others can aspire to,'' says Mark Pincus, CEO of San Francisco's Tribe Networks.
True, there are those who say Google is an exception, more a relic of the dot-com era than the vanguard of a new post-bubble age. Pavan Nigam, CEO of Mountain View start-up Cendura, says of Google's IPO: ``This could be the closing parenthesis of the Internet revolution started by Netscape.''
Thinking deeply
But many CEOs say Google means more than that. For the 10 employees at San Mateo's Mobissimo, a search engine for travel, Google's IPO has validated more than the company's business model. CEO Beatrice Tarka says it has inspired her and her team to think deeply about adhering to good ethics, making advertising more relevant to the site's content and simplifying the product for users.
And by showing how young people -- many of them immigrants -- can still hit the million-dollar stock-option jackpot even after the bubble, Google's IPO is going to help her attract better employees, she says. Tarka is a French immigrant herself.
At Foster City start-up Encentuate, CEO Peng Ong says he's learning from Google, even after launching two other companies, Interwoven and Match.com.
His company sells software to help companies integrate their computer systems, and Ong says he focuses on making money the traditional way -- off every piece of software he makes. But Google has taught him the value of developing useful products for customers, even if there's no immediate way to make money from it.
His executive team is brainstorming how to implement the policy: ``Google realized they had this great technology, but how to make money from it wasn't clear to them . . . They figured it out later,'' he said.
Ong is even contemplating giving some of his engineers a full day a week to innovate on their own -- just like Google. Within bounds. ``Not across the board,'' he says.
Doing good
Socialtext's Mayfield also took a page from Google's book by trying to ``do well by doing good.'' He gave his software -- which helps users collaborate -- to academic and non-profit groups. These users, in turn, are helping spread the word for him, and he's making inroads with the for-profit sector.
Another Google lesson, Socialtext's Mayfield says, is to let users decide what they want. Google demonstrated the keep-it-simple rule, he said. So Mayfield lets users provide feedback, and he has a testing site, giving users previews of products under development.
Finally, there's the make-sure-you-have-fun lesson, he says. ``We goof off, too.'' |
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