On Google’s purpose

Horace Dediu at Asymco has been pondering recently the purpose behind Google – its motivating force. This is something I’ve been thinking about too in my research, and I thought I’d put a few thoughts down by way of a response, or a contribution to his thought process.

I think Google’s purpose is very closely aligned to the founders’ personal objectives to a degree that is relatively rare in public companies. More often than not, founders get pushed aside as the need for “adult supervision” outweighs the desire to indulge them, especially in the run-up to an IPO. But even when they stay, it’s often because they’ve mastered traditional business management techniques (often with lots of help) and therefore somewhat lost sight of their own purposes or at least subjugated them to the needs of a public company to satisfy shareholders. Steve Jobs arguably tried this for a long time and eventually found himself forced out, only returning to Apple when he had learned how to reconcile the two.

But at Google today, it’s really Larry and Sergey calling the shots, with Larry once again at the helm after that period of adult supervision under Schmidt. But even under Schmidt, Larry and Sergey called the shots to a great extent. I’ll draw on several excerpts from Steven Levy’s In the Plex book here, starting with one about the dynamic between Schmidt and the founders:

His anecdotes about disagreements with Sergey and Larry followed a consistent storyline: Schmidt expresses a tradition-bound preconception. The young men who, technically at least, report to him, reject the idea and demand that Google pursue an audacious, seemingly absurd alternative. The punch line? “And of course they were right,” Schmidt would say. (p.81, Kindle Edition)

Though Schmidt helped to curb some of Page and Brin’s worst excesses and provided needed discipline on the financial side, he did so with an approach focused on letting them get away with as much as possible without derailing the Google train. And now that Larry Page is back in charge, it really is his objectives that are the driving force behind Google’s strategy, so it helps to understand what makes him tick as a human being. I found the following quotes from early in Levy’s book illuminating on this topic:

“Doing good was Larry Page’s plan from the very beginning. Even as a child, he wanted to be an inventor, not simply because his mind aligned perfectly with the nexus of logic and technology (which it did) but because, he says, “I really wanted to change the world.” (p.10-11)

when you got to know him, what stood out was his ambition. It expressed itself not as a personal drive (though there was that, too) but as a general principle that everyone should think big and then make big things happen. He believed that the only true failure was not attempting the audacious. “Even if you fail at your ambitious thing, it’s very hard to fail completely,” he says. (p.11-12)

[on Tesla] “I felt he could’ve accomplished much more had he had more resources. And he had trouble commercializing the stuff he did. Probably more trouble than he should’ve had. I think that was a good lesson. I didn’t want to just invent things, I also wanted to make the world better, and in order to do that, you need to do more than just invent things.” (p.13)

I think that last sentence is the key here. Larry Page was enormously ambitious, but not in the sense of personal advancement: rather, in the sense of changing the world. But he had learned from Tesla’s sad history that the guy with the great idea doesn’t always end up being the one who changes the world. The lesson was that you had to not just come up with great ideas, but find a way to fund them. Even then (and there may be some revisionist history in those quotes above) they don’t seem to have taken this all that seriously early on in the history of Google (then BackRub) 1.

However, once it became clear that Google was going to make money, and keep making money, hand over fist, it enabled the second part of Larry Page’s vision to take root: namely, changing the world, and beyond just providing an excellent search engine.  As such, he initiated a number of expansions into areas that were first reasonably close fits with Google’s core business of search, and then a variety of others with much more tenuous connections to it. And of course he fostered many others that bubbled up from employees or acquisitions.

Most founders – and Bill Gates is the archetypal example here – take their personal millions (or billions) and spend those on their pet projects. Larry Page’s amazing good fortune is to have been able to spend Google’s money on many of his pet projects. How is he able to do this? Two reasons: firstly, because Google’s reach is so expansive in its core business, it’s easy to make the argument that there’s a tenuous connection between a new activity and Google’s own core business. As Levy says in his book in the context of the acquisition of Android, “Larry Page interpreted Google’s mission in the broadest sense. What was good for the web was good for Google. What was good for the cloud was good for Google” (p.214). Secondly, Page is able to do this at Google precisely because the company throws off such enormous and growing profits, and does so in a particularly opaque way. As Dediu has discussed on his blog and on the Critical Path podcast, Google’s financials are amazingly non-specific in their description of how Google makes and spends money.

But as long as Page’s interests (making money to fund his projects) and shareholders’ interests (making money to provide a return on investment) align through maximizing profits, this situation can continue almost indefinitely, as long as the pet projects stay within a certain range of overall profits 2, and especially if the projects can be spun as R&D in search of new business opportunities for Google. To date, almost none of Google’s new initiatives has done anything but pad the existing business lines, boosting the audience for advertising but little else. Even Android, success though it may be considered, drives no direct revenue for Google, and only drives indirect revenue by providing another platform for Google’s core services. As Andy Rubin is quoted by Levy as saying, “We don’t monetize the thing we create,” Andy Rubin says. “We monetize the people that use it. The more people that use our products, the more opportunity we have to advertise to them” (p.229).

Another part of the genius of Google is that it has been able to attract two types of people who allow this model to succeed: A-types who can be given responsibility for a particular product or line of business and who will run it in a way that will maximize profits and revenue, and creative thinkers like the founders who will come up with a range of new ideas. Marissa Mayer is perhaps the best example of the first type, while Andy Rubin may be more of the latter (a number of top executives combine both, though I suspect this may be why Andy Rubin left the Android team to work on robots – breaking new ground suits him better than merely feeding the Google advertising machine, the above quote notwithstanding). By employing these two types, Google is able to satisfy the shared objective of profit maximization while seeking out and succeeding in new areas.

Ultimately, it’s clearly a huge over-simplification to suggest that Google is simply Larry Page’s plaything. But if you’re looking for clues as to Google’s motivation as a company, you could do a lot worse than understanding Larry Page’s motivations as a human being. The big question is whether the objectives of shareholders and of Larry Page will continue to be so aligned going forwards, or whether there will be a breaking point somewhere along the line. If and when Google’s core revenue source – advertising – ever stops producing at the same rate, that will certainly make it a lot more challenging. But the point could also be reached much sooner if Page over-reaches and investors stop believing that Google X and other moonshot projects have become disconnected from Google’s core value proposition.


  1. A couple more quotes are relevant here:

    “Brin and Page were reluctant at that point [when it became clear they might need to start a company] to strike out on their own. They had both headed to Stanford intending to become PhDs like their dads.” (p.28)

    “We weren’t… in an entrepreneurial frame of mind back then,” Sergey later said. (p.30) 

  2. It’s interesting in this context to think of Google’s legendary 20% time. I’m not suggesting anywhere near 20% of Google’s profits are being plowed into these projects, but it’s a model for taking some of the company’s resources and putting them towards things that are not yet (or may never be) part of the company’s official lines of business.