Google's Mayer: Staying Innovative In a Downturn

The mantra that's been flooding the Googleplex this year? 'Scarcity brings clarity,' explains Marissa Mayer, Google Vice-President

When Larry Page and Sergey Brin co-founded Google (GOOG) 10 years ago, few people imagined the kind of influence it would wield today—not just on the Internet, but increasingly in such established industries as media and software.

Since then, Google has come to dominate the most lucrative piece of online advertising: the text ads placed next to its search results. Armed by an expansive mission to "organize the world's information and make it universally accessible and useful," the company has used its rapidly growing profits to fund forays into online software applications and even radio and television advertising. No wonder Google shows up as one of the 10 names on BusinessWeek's list of the World's Most Influential Companies

At the same time, Google's influence is increasingly under scrutiny, even by its own advertisers, who worry that it has become too powerful. In October, Google dropped a deal to run search ads on some Yahoo! pages (YHOO) after the Justice Dept. threatened to file an antitrust lawsuit. In a recent interview with Silicon Valley bureau chief Robert Hof, Marissa Mayer, vice-president of search products and user experience, talked about the challenges to Google's power from the government and from the declining economy, and shared some little-known tales of Google's earliest years.

How has Google become so influential, in your view?

Our mission is one reason. Larry and Sergey thought a lot about it before they got started. At other companies, there are these Dilbertian crews of HR people who show up and say: "We've outgrown our mission and we need to write a new one." That has never happened at Google. The mission is exactly what Larry and Sergey wrote back in the fall of 1998, before any of us were even here.

It wasn't just about Web search. When I showed up, I said, "Guys, shouldn't we be calling the company" They said: "Oh, we're not just a We're not going to be just about the Web. We're going to be all kinds of things."

Some advertisers don't always like the fact that Google tends to favor regular users over advertisers when it makes changes to its search engine, which can wreak havoc on their ad placement. How do you balance those sometimes competing concerns?

Google is fueled by user choice. We can't rest on our laurels. We know users can pick someone else. When the end-user is happy, they click on more ads, and they really participate with advertisers. Our commitment is to make sure the ad services we offer improve our products and don't erode the user experience.

When I was an engineer, I created an experiment called "no ads at all," where a percentage of users didn't get ads at all. We left that experiment running for five years. Finally, after I moved on to other jobs, people came to me and said, "Can we shut it off?" I said before we shut it off, we should go and get the data. It turned out that users who got ads were happier than users who didn't. People who got no ads at all searched markedly less than people who got ads.

Google's sometimes unusual management methods, such as encouraging engineers to spend 20% of their time on projects of their choice, have gotten a lot of attention. But I sense that other corporate departments try to do things differently, too. How well has that worked?

The other groups at Google aren't willing to accept that the only people who get to have fun and be innovative are the product managers and the engineers. It's innovation envy. So what happens is, the Human Relations department wants to be innovative. They want to build HR policies like no one's ever had before. Some of these people want to build facilities like no one's ever had before. The finance team wants to bring the company public in a way that no one ever has before.

A lot of other companies wonder if they can adapt Google's methods. Is that tough for them to do, given Google's unique success?

I don't think so. You don't need to build brightly colored campuses filled with toys and then offer free food. It's important to realize each company is different and the benefits they offer their employees need to customized to their culture and their unique situation.

But there clearly are things that can be replicated, like having small teams, awarding a lot of ownership to those teams so you stretch and grow those people. Or really focusing on and demanding that innovation come from everyone and everywhere throughout the organization. One of the worst things you can do in a company is to have an R&D segment or an innovation group. Once you have some people whose job it is to innovate, everyone else stops innovating.

Given some push back by advertisers and even by government antitrust regulators, is Google now too influential? How are you contending with this?

Our influence comes from the end-users and the trust that we've built with them. If we stop putting their needs first, that will stop.

But given that the Justice Dept. came within hours of filing an antitrust lawsuit in October before Google cancelled its proposed search ad deal with Yahoo, isn't Google's influence becoming a problem for the company?

We believe that more competition is better for the Web. It became clear through a series of events that happened this spring that there was going to be a form of consolidation in the industry. We really felt that we could help Yahoo stay independent. [Chief executive officer] Eric Schmidt said several times an independent Yahoo was better for Google…and better for the Web.

Yet that decision set off a number of actions that resulted in a lot of push back against Google. Is there a new reality in the marketplace that Google needs to deal with?

Our footprint on the Web and on the world is significant. When the footprint is this large, you need to be very thoughtful and responsible about what you're doing. But I do think the actions we took there had the users at heart.

How has Google changed the way it does business to contend with the economic downturn?

The mantra we're hearing here around the Googleplex is "Scarcity brings clarity." We are looking at how we can be frugal and how we can be prudent. Google is doing better than most companies, but we don't want to be wasteful. We're looking at different processes we have running here, what makes sense and what doesn't. But for me, this doesn't feel that different than when we were a very small company.

Our first gym was actually built by myself and one of the engineers—Ray Sidney, during October 1999—because we had worked six 130-hour weeks in a row. We weren't able to go home, shower, or sleep, and we were getting in really bad shape. And we went to Sergey and said: "Can we have $5,000 to buy weights and a used treadmill?" And Sergey said, "Sure, but try to get them for less than $5,000." We found this Web site called that had very cheap fitness equipment.

People think, "Gosh, Google has a gym, isn't that a luxury?" But that first one really came from the scarcity of money. We did it in a really cheap way using all used equipment.

So you're saying this new focus on containing costs at Google isn't all that new?

Those values have always been there at Google. But the economy if anything is a return to those core values.

Why do we serve food on campus? One, it is a way to encourage more communication here on campus. People sit down and eat together and exchange ideas. Two, it makes it so people can be productive because they don't have to take time and go somewhere else. So even these things that are considered a luxury, if you look at why and how we're doing them, we do them in really cost-effective ways and we do them because they make sense in the unique culture of Google.

Business Exchange related topics:GoogleBusiness InnovationDigital AdvertisingAdvertising in a Recession

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