How Google Works

by Eric Schmidt

TGIF meeting (which is hosted by Larry and Sergey, and where employees are welcome to—and often do—voice their disagreement with company decisions).

As former General Electric CEO Jack Welch said in Winning: “No vision is worth the paper it’s printed on unless it is communicated constantly and reinforced with rewards.”

amenities available to employees: volleyball courts, bowling alleys, climbing walls and slides, gyms with personal trainers and lap pools, colorful bikes to get from building to building, free gourmet cafeterias, and numerous kitchens stocked with all sorts of snacks, drinks, and top-of-the-line espresso machines.

Offices should be designed to maximize energy and interactions, not for isolation and status. Smart creatives thrive on interacting with each other. The mixture you get when you cram them together is combustible, so a top priority must be to keep them crowded.

Employees should always have the option to retire to a quiet place when they’ve had it with all the group stimulation, which is why our offices include plenty of retreats: nooks in the cafés and microkitchens, small conference rooms, outdoor terraces and spaces, and even nap pods.

In our case, Google is a computer science company, so the thing that our smart creatives need most is computing power.

Be very generous with the resources they need to do their work. Be stingy with the stuff that doesn’t matter, like fancy furniture and big offices, but invest in the stuff that does.

We invest in our offices because we expect people to work there, not from home. Working from home during normal working hours, which to many represents the height of enlightened culture, is a problem

Google’s AdSense36 product, which developed into a multibillion-dollar business, was invented one day by a group of engineers from different teams who were playing pool in the office.

We call these places “tenurocracies,” because power derives from tenure, not merit. It reminds us of our favorite quote from Jim Barksdale, erstwhile CEO of Netscape: “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”

“it is the quality of the idea that matters, not who suggests it.”

There was no doubt Sergey was the highest-paid person in the room, but he didn’t make a compelling argument as to why his idea was the best, and Sridhar didn’t agree with it. Sridhar wasn’t a senior executive at the time, so as the hippo, Sergey could have simply ordered Sridhar to comply. Instead, he suggested a compromise. Half of Sridhar’s team could work on what Sergey wanted, and the other half would follow Sridhar’s lead. Sridhar still disagreed, and after much debate about the relative merits of the competing ideas, Sergey’s idea was discarded.

Smart creatives are different: They prefer a flat organization, less because they want to be closer to the top and more because they want to get things done and need direct access to decision-makers.

We call it the rule of seven. We’ve worked at other companies with a rule of seven, but in all of those cases the rule meant that managers were allowed a maximum of seven direct reports.

exceptions) forces flatter charts with less managerial oversight

there simply isn’t time to micromanage.

Determine which people are having the biggest impact and organize around them. Decide who runs the company not based on function or experience, but by performance and passion.

Eric once chatted with Warren Buffett about what he looks for when acquiring companies. His answer was: a leader who doesn’t need him. If the company is run by a person who is performing well because she is committed to its success, and not just by making a bundle by selling to Berkshire Hathaway, then Warren will invest. Internal teams work in much the same way: You want to invest in the people who are going to do what they think is right, whether or not you give them permission. You’ll find that those people will usually be your best smart creatives.

Once you identify the people who have the biggest impact, give them more to do. When you pile more responsibility on your best people, trust that they will keep taking it on or tell you when enough is enough. As the old saying goes: If you want something done, give it to a busy person.

Don’t bite them, but do act swiftly and decisively. Nip crazy in the bud.

Knaves prioritize the individual over the team; divas think they are better than the team, but want success equally for both. Knaves need to be dealt with as quickly as possible. But as long as their contributions match their outlandish egos, divas should be tolerated and even protected.

As long as people can figure out any way to work with the divas, and the divas’ achievements outweigh the collateral damage caused by their diva ways, you should fight for them.

Steve Jobs was one of the greatest business divas the world has ever known!)

We encourage people to take real vacations, although not to promote “work-life balance.” If someone is so critical to the company’s success that he believes he can’t unplug for a week or two without things crashing down, then there is a larger problem that must be addressed. No one should or can be indispensable. Occasionally you will encounter employees who create this situation intentionally, perhaps to feed their ego or in the mistaken belief that “indispensability” equals job security.

Memegen created a new way for Googlers to have fun while commenting acerbically on the state of the company.

“we’ll figure it out” approach—they have, as Jonathan wrote in one person’s review, the “pliancy to roll with the punches in this vertiginous environment.”

Bet on technical insights that help solve a big problem in a novel way, optimize for scale, not for revenue, and let great products grow the market for everyone.

millennials here, Generation X there,

(Henry Ford: “If I had listened to customers, I would have gone out looking for faster horses.”)65

If you are trying to do something big, it’s not enough to just grow, you need to scale.

it means to grow something very quickly and globally.

Google patiently focused on growth. There were plenty of opportunities to cash in; as traffic to Google.com grew rapidly, the company could have followed the lead of every other commercial website and put ads on the home page. But it didn’t. Instead it invested in improving the search engine. We took a similar approach with our AdWords ads platform. We cut deals with publishing partners such as America Online (AOL) and Ask Jeeves,

But how much to share? Our approach was usually to try to share as much as possible—remember, the priority was to grow, not to make more money. This kept the partners very happy.

This is why, in the technology industry, companies always think “platforms, not products.”

Twitter is not a technology company, it is a publishing company. Airbnb is a platform for the lodging industry, while Uber is one for personal transportation services. 23andMe is a platform play as well as a consumer service company. For a fee, it will map a customer’s personal genetic code; if it aggregates all of that data it could create a powerful data platform. Pharmaceutical companies, for example, could potentially use 23andMe’s data to identify participants in new studies, and when they do, contribute any additional data they create back into the platform.

in the late ’90s, Google focused on one thing: being great at search, which we measured along five axes—speed (fast is always better than slow), accuracy (how relevant are the results to the user’s query?), ease of use (can everyone’s grandparents use Google?), comprehensiveness (are we searching the entire Internet?), and freshness (how fresh are the results?).

If you are attacking an entrenched incumbent, you can use its very entrenchedness to your advantage.

organizations like Khan Academy, Coursera, and Udacity are trying to gain a foothold in the education market.81 They combine Internet Century technologies (online video, interactive and social tools) with an open business model (anyone can take any classes for free) that is radically different from how the entrenched incumbents operate (high tuitions to cover a high cost basis).

Netflix is a case in point: In 2006, the movie-rental company wanted to improve its recommendation algorithm, but internal efforts had plateaued. So they took a previously proprietary data set of a hundred million anonymized user movie ratings and published it, while announcing that the first person or team who could use that data to beat the current algorithm’s accuracy by at least 10 percent would win a $1-million prize. Even the contest was open: Netflix reported top teams’ progress on a public leaderboard, and within three years a winning solution emerged.

If you can achieve that sort of extreme impact with a closed system, then give it a shot. Otherwise, default to open.

If you focus on your competition, you will never deliver anything truly innovative.

Many large, successful companies started with the following: They solved a problem in a novel way. They used that solution to grow and spread quickly. That success was based largely on their products.

once he arrived at Google he realized that the company’s leaders pursued interviewing with the same level of intensity for every candidate. It didn’t matter if the person would be an entry-level software engineer or a senior executive,

The higher up you go in most organizations, the more detached the executives get from the hiring process. The inverse should be true.

hierarchical hiring doesn’t work.

we believe that hiring should be peer-based, not hierarchical, with decisions made by committees, and it should be focused on bringing the best possible people into the company, even if their experience might not match one of the open roles. Eric hired Sheryl Sandberg even though he didn’t have a job for her.

The adage is to always hire people who are smarter than you.

hire them not for the knowledge they possess, but for the things they don’t yet know.

Henry Ford said that “anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young.

These “learning animals” have the smarts to handle massive change and the character to love it. Psychologist Carol Dweck has another term for it. She calls it a “growth mindset.”