Innovation: Mess with the magic

Written by Rick Spence

In June 2003, Viacom president Mel Karmazin visited the Google campus in Mountain View, Calif. seeking a business partner. Viacom’s blue-chip media properties — CBS, Paramount, MTV and more — were floundering in the new digital landscape.

As related by Ken Auletta in his book, Googled, Karmazin was shocked to discover that Google itself was threatening Viacom’s future. Using Google’s new AdWords service, advertisers paid Google only when a prospect clicked on their links to buy the product or learn more.

It was Karmazin’s worst nightmare.

Conventional media outlets didn’t care if the ads they sold their clients produced results. “That’s the worst kind of business model in the world,” Karmazin told Google founders Sergey Brin and Larry Page. “You don’t want to have people know what works. When you know what works or not, you tend to charge less money.” Looking his hosts in the eye, he said, “You’re f—ing with the magic.”

According to Auletta, Google is all about messing with the magic. Since “creative destruction” is a key characteristic of entrepreneurs, I’ve culled 10 tips from Auletta to boost your own Disruptor Quotient.

Question everything
After Karmazin left the building, the Google team puzzled over his resistance. It never occurred to them not to probe every business problem to the core. According to Auletta, Google’s founders always ask, “Why are things the way they are? How can we do better?”

It’s not just products
At age 12, Page was fascinated by a biography of scientist Nikola Tesla, a brilliant intellect who never enjoyed the wealth or fame of his contemporary, Thomas Edison. That lesson stuck with Page, who told Auletta: “You can invent the world’s greatest things, but if you just invent them, it doesn’t accomplish very much€¦. You can imagine if [Tesla] were slightly more skilled in business, or with people, he’d have gotten a lot more done.”

Find your perfect partner
As graduate students at Stanford University, Brin studied data mining, while Page dreamt of downloading the entire Web. Their combined efforts created a search engine that ranks results according to user behaviour. Auletta describes them as “two swords sharpening each other.”

Whatever it takes
Google’s first computers were located in Page’s grad-student apartment. The hardware used so much juice that Page was constantly resetting the circuit breaker in the basement. “Fortunately,” he says, “I had taken up lock-picking so I could get us in there.”

Centre on your customer
From Day 1, Brin and Page focused on creating the best search experience for users. That meant no clutter of ads on the home page, and no pushing users to affiliated sites, as some competitors did. That single focus helped Google quickly become the No. 1 search engine. It now processes a billion searches a day.

Finance with caution
Brin and Page were paranoid about outsiders gaining control of Google. They sourced their first US$1 million from four angel investors (including Jeff Bezos of Amazon), then sought venture capital from two firms to prevent any one investor from getting too powerful.

The right leadership matters
With two founders at the helm, Google faced management chaos by 2000. The VCs had insisted Brin and Page hire an experienced CEO, but the founders dragged their feet, waiting to find an engineer and intellectual equal who could understand their technical motivations. In essence, they were observing a Google mantra: “Don’t settle.” After Google finally signed former Novell CEO Eric Schmidt in 2001, one of the firm’s VC partners told Auletta: “They resisted hiring ordinary people, and that’s a wonderful tribute to them.”

Embrace outside help
Relations between the founders and the new CEO were often rocky. To help such strong-willed executives achieve consensus, Google hired a veteran Silicon Valley coach, Bill Campbell, to establish management systems and occasionally act as go-between. Also a director of Apple, Campbell supported Schmidt while soothing Brin and Page.

Protect your culture
With sales of US$24 billion, Google has experienced massive growing pains. But its grad-school spirit remains intact. Its hierarchy is flat, and top execs are remarkably accessible. Engineers and many other creative employees have 20% of their time to pursue their own projects. Management salaries are capped, and everyone gets stock options.

Fight for good
Google’s social conscience shows in more than its slogan, “Don’t be evil.” The company puts solar collectors on its roofs and subsidizes employees’ purchases of hybrid cars. One percent of profit goes to the Google Foundation, a pioneer in technology-driven philanthropy. Longtime Google advisor Al Gore told Auletta he believes this social mission helps Google get more from the best talent: “People unlock a higher fraction of their creative potential when they feel that what they’re doing is about more than making a buck.”

Looking for a role model? Don’t settle.

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