Mavericks in the corporate jungle

Google. The reigning Internet-search king. Love ’em, or hate ’em, but you sure can’t fault ’em for lacking chutzpah. For, which other company would keep everyone guessing by making a major product announcement (Gmail) on April Fool’s Day? Or demand to retain full control of the company despite collecting a cool $2.7 billion from the public? Or hold out against Wall Street suits by boldly changing the rules of the investment game with an unconventional “Dutch auction” initial public offering (IPO)? Or chant ‘Don’t be evil’ as part of its corporate mission statement and desire to ‘make the world a better place’?

That’s Google for you. Innovative, daring, brash, nerdy, and way cooler than thou (rollerblading founders, teams of massage therapists for the stressed-out propeller heads, lunches cooked by the former chef of the Grateful Dead, remote-controlled digital toilets to visit thereafter, roller hockey in the evening—all in all, a colourful, freewheeling culture wherein formals lose out limply to gym shorts and T-shirts). Why is such tomfoolery quietly tolerated by the suits of the big bad world? One word: Profits!

Lots and lots of profits. Last year, Google netted $105.6 million on revenues of $961.9 million. The operating profit was much higher—all of 62 percent ($571.8 million). And revenues have been growing at over 200 percent year-on-year. All this could result in a valuation of around $25 billion following the company’s forthcoming IPO, guaranteed to make overnight billionaires of its youthful co-founders, Larry Page and Sergey Brin. Not at all bad for a six-year-old fledgling.

What’s the recipe that made Google the star of the Internet start-ups? To begin with, throw in one great idea—that of converting mundane ol’ search into something of a popularity contest (enter your search query in Google and you’re presented with a list of qualifying Web pages, sorted in order of those that are most linked-to from other websites). Next, add in a huge dollop of an exploding revenue stream—that of contextual advertising (ads displayed beside search results are relevant to the entered keywords). Then strain out all possible clutter from the home page, making even the keyword-based ads tiny, textual and innocuous, but separate from the search results (thus making for a great user experience, without compromising credibility). Now sprinkle a dash of spicy chutzpah and freewheeling culture, for a strong flavour of creativity and innovation. Meanwhile, most importantly, make very sure that Gates and gang don’t get a whiff of what’s cooking!

Of course, that last bit’s infeasible to sustain, for the sweet smell of money is just impossible to contain. So, with Microsoft and Yahoo now breathing down its neck, Google is unlikely to remain king of the search ring indefinitely. Smart move, then, to cash in with an IPO whilst revenues are soaring. Although, the unconventional “owner’s manual for shareholders” penned in plainspeak by Page and Brin, would have you believe that they were dragged, screaming and kicking, from their private playground and into the harsh public glare, ostensibly by their VCs. Indeed, they all but plead with you not to waste your hard-earned money on the potentially worthless shares of a company that’s unlikely to provide substantial returns in the short-term. The owner’s manual makes it clear that Google plans to intentionally flout every accepted norm of good corporate governance and accepted principles of running a public company. All with the objective of creating a different kind of company that sacrifices short-term quarterly glory for greater success in the longer term.

Easy to digest when the going is good. But there’s little doubt that the true test of such bravado would come during leaner periods, when profits are under pressure, the competition is striding ahead, and investors are screaming blue murder. Whether the cool dudes at Google will be able to withstand the heat then is anybody’s guess; they sure don’t have any successful precedents to cite—even Yahoo was forced to toe the line and succumb to staidness and sobriety when it was faced with plummeting revenues during the dotcom meltdown.

Nevertheless, as the able flag-bearer of rebellious, anti-establishment geekdom for the last few years, it’s not surprising that Google has developed a bit of a cult following, and possibly has the best shot ever at rewriting the rules of the corporate game. Adoring techies have spent much development time devising wacky, ingenious and inane pastimes centred around the Google search engine. You’ve heard of Googlewhacks and Googlebombs, now how about a friendly l’il Google Smackdown. Go to www.onfocus.com/googlesmack/down.asp, and pitch two competing search words or phrases in a “terabyte tug-of-war” and find out which one comes up trumps. Great for a bit of egosurfing, no doubt. But also try pitting ‘Microsoft’ and ‘Yahoo’ against ‘Google’ for a smackdown. The undisputed winner is Yahoo, at 68.2 million; the runner-up is Microsoft at 44.5 million; and Google a distant third at 20.8 million. Means absolutely nothing of course, but construe it as an ominous sign of the times to come, if you will.

So far, Google has been able to hold its own quite admirably. But as the big boys muscle in on its territory, this one-trick pony will have to conjure up many more innovations and revenue streams to stay on the fast track. The Google brand has managed to attain “verb” status amongst its vast, adoring user base—we’d sure hate to see it relegated to the “past tense” anytime soon.

Val Souza, Editor

valsouza@expresscomputeronline.com