The conventional wisdom is that Google's first shareholders' meeting held yesterday was a great big
bore. As usual, I seem to take the opposite position.
Small audience? Yes. Highly scripted? Yes. Sanitized by $700/hr attorneys? Certainly. Zero information content? Hardly.
Google is frustratingly disciplined about releasing info on their methods and plans. In a market where your
biggest competitor can
preempt innovation with
FUD and
vapor ware, Google's smart to keep their plans secret until products are ready for release. The shareholders' meeting was no exception.
But in spite of their impressive info discipline, Google communicated a ton of strategic information that is critical for the Google investor. Just like the
Federal Reserve, Google's public statements are carefully crafted, but with careful interpretation, yield important insights into the future.
You can watch the
webcast yourself while reading the
slide deck from the meeting. Judging from many of the inane questions investors asked at the meeting, we would do well to study Google's mission and public statements since there's a lot of information already there.
In short, Google stresses its culture, values, and building the company for the long-term -- creating a "great institution." Google repeatedly returned to the theme of "life-changing innovation" and "solving big problems." Google's competitors don't usually talk in terms like that.
Here are some excerpts that I found interesting:
Building for the long term. Years ago,
John Doerr (board member) advised Schmidt to "Take your time, work on building a great institution."
Well positioned for the revolution in media and information. Schmidt: "I'm a student of technology history. I believe that every once in a while there are waves, and successful companies ride these waves. And it's clear to me, when we look at Google and its success, that we've been able to take advantage of a wave that's much bigger than what Google is all about. If you go back to the history of the mainframe, or the history of the personal computer, each of these waves created an entire ecosystem, an entire industry, each of which was larger than the one before. I'm pleased to say that Google is very well positioned to take advantage of that..."
Financially strong. "Our market share by most estimates is number one in most markets, we have more advertisers than others..."
Globally focused. "We've invented this new model that has helped us build a significant international business. Most of our user base and search traffic now comes from outside the United States... This is a force that is part of a much broader phenomenon... most people when they talk about Google talk about us in the context of the United States ... but internet penetration is 5% in China, Indonesia, 2%, Brazil, 9% ....we talk about the internet as if it's a done deal because we've talked about it here in the United States for so long. In fact, if you look at it from a world perspective, we're still very much at the beginning."
The internet is different. "The internet is different from other media because it's software defined. We keep changing it. You'll see this in the products that Google brings out in the next year or two. Our focus on quality, search and personalization will come through all of our products that we bring out."
World-changing plans. "Larry and Sergey founded the company with a simple but brilliant mission: organize the world's information and make it universally accessible and useful...the world's information, not just the U.S.; information, not just the Web; 'universally' means for everyone, everywhere; accessible means on every device; and useful means you can actually use it... just from this you can see how we expect the company to go forward. We define ourselves as not just the Web, not just Web search, but information, and solving unique and very very large problems."
Bigger than the Web. "In this quest to put this together, we end up focusing on the online consumer, and the company focuses on its end users over its many other constituencies... We want to tackle important problems that people really care about. We're trying to address big markets with large opportunities... We are gonna absolutely make sure that everyone and every device, every object has access to Google. So it's much broader than Web search on your personal computer."
The (hackneyed) Long Tail. "We took a look at our market [of advertisers] last year, and asked, 'How are we doing with the largest companies (Wal-Mart, largest company in the world), all the way down to the smallest business, the single individual?' We've done really well up until now in the middle part of [the curve], well-run, midsized businesses, smart people solving interesting problems.... But how well do we do against the problems of the very largest customers? Last year we brought out a whole suite of tools for very large advertisers who can use our services in all their divisions....What about the individual, the small business... the one-person company? We built a whole bunch of small self-service tools which allow those people to automatically use our service.... So by going in both directions last year, ... we've been able to capture very large and historically underserved businesses as well as a whole new area that's never had access to these kinds of online [advertising] services."
Level playing field. "The auctions that we run ... serve this industry well because they allow all the players an even playing field, and they determine the pricing for our product, they determine the real value of a click or an ad or a keyword."
Predictablility. "If you go back to quarterly growth rates, you see very nice, linear growth. Our model has the wonderful property that it's very predictable. And you can see how smooth these growth rates are."
Innovation. "We run our company in an unusual way....Sergey, who is quite the mathemetician, proved that you should organize your engineering around 70-20-10." Google invests 70% in its core business (search and ads), 20% in related businesses (extensions of search - Local, Gmail, Desktop, News, and "other communication projects"). "But most importantly, we also invest in completely new ideas at the 10% level."
Competitive advantage. Brin: in comparison to Yahoo, "our true strength competitively lies in our technical execution ... you see that in the kinds of products we have, in the comprehensiveness and relevance of our search, the kinds of new things we're doing with maps and so forth ... we really try to innovate technologically.
Diversity of products. Brin: "We're a substantially younger company, so we don't have a Yahoo this, Yahoo that, horoscopes, all of that. But we're perfectly happy to link to them in our search. So if you type in a stock quote now in Google, you'll get a link to Yahoo, Etrade, and other stock quote sites... The Web is a big place, we don't think we have to create every possible kind of service."
Microsoft. Brin: "Microsoft launched their own search engine ... we feel comfortable that ours is substantially better across a variety of metrics.... They have made an announcement with respect to entering the advertising network market though I haven't seen any products and I'm not aware when that might launch."
What defines success? Schmidt: "We focus on end-user reach ... are we being consistent with the values that Larry and Sergey founded the company with ... financial metrics such as revenue growth, profitability and free-cash flow ... but the most important thing is not so much whether the advertising model is working because we know it will with enough end-user adoption ... what I would focus on is whether the company is bringing out the life-changing, global, material products that really change the lives of end users ... if that happens, the rest of the model should perform well over the long term."
Google foundation. Brin: Google is setting up an organization to pursue global poverty and environmental issues. "We want to be bold, we want to make a big difference... we intend to put a lot of resources behind it, and we intend to be ambitious."
