The Luncheon Society/ The New Yorker’s Ken Auletta on Google and the Media/Manhattan-The Century Club/June 3, 2010

In 1998, Ken Auletta sat down with Bill Gates for a extended New Yorker interview while Microsoft was on trial for allegedly violating the Sherman Anti-Trust Act.  At issue was a question as simple as it was complex: had Microsoft abused its de facto monopoly within the PC operating system market?

During the interview, Auletta asked Gates “what scared him, what kept him up late at night?” The answer surprised Auletta because it ripped away the veneer of paranoia that pervaded every corner of high tech. As Gates grabbed a Diet Coke for himself (and neglected to offer one to Auletta) he was worried about innovations he could not see.

Gates believed Microsoft could handle Apple, Netscape, or Yahoo; it could acquire what it could not crush. However, Gates worried that somewhere, some place there were a couple of young kids in a garage inventing something that would render Microsoft obsolete.

He was right. At that very moment two brilliant Stanford grad students, Larry Page and Sergey Brin, were penciling out an idea that become Google. Just as Google was crowned as the next 800 pound gorilla, another wave crashed upon the shore.  Facebook was launched in 2004 by Mark Zuckerberg and his team; today, they are heirs to the throne.

The 50% Rule.It once took decades for a trend to rise to national prominence. Today, thanks to the cascade of online advances, the learning curve for technological dominance has been dramatically reduced.

• It took 71 years after the invention of the light bulb for 50% of the US to receive electricity in their homes
• It took 50 years after the invention of television for 50% of the US households to have a set in their home
• However, it took only 9 years for 50% of American household to have access to the internet.
• Finally, it only took 5 short years for Facebook to reach 400 Million people globally.

Google as metaphor; The Engineer as God. Google is the driving metaphor behind Ken Auletta’s latest book because it typifies the arc of industry game-changers.  At Google, “The Cult of the Engineer” reigns supreme; more than half of their workforce are degreed engineers. The critical question that drives Google is this:  How can I make something more efficient?  How can I track, measure, and assign the appropriate metrics around my endeavor to demonstrate success? Auletta noted that when Google started at their Palo Alto offices, Page and Brin personally interviewed every engineer that came looking for a job. True to the Valley, the workforce skews young. Employees are encouraged to fight back, even though they speak a language nearly indecipherable to non-engineers around the table.

Both Page and Brin took a counterintuitive route to success.  There would be no advertising on their landing page. They would allow engineers to drive content.  Finally, 20% of each employee’s time would be devoted to personal projects of their choice.

Efficiency drives the equation.  Can anybody really measure a 30 second Super Bowl ad? However, with Google ads, measurable metrics are found at every point in the decision chain. Google’s hand in the development of Cloud Computing is another example of efficiency in action.  Why should anybody pay Microsoft for a software bundle worth $400 when Google could launch the same application from a cloud and only charge $100?

Newspapers and the Impact of Efficiency. Newspapers are now within in the gun sights of Google’s drive for greater efficiency. Already battered because of declining relevance, spiraling costs, and an eroding classified revenue model, Google threatens to finish them off through a combination of Google News and Google ads. Our children might think of the paperboy like we think of the milkman—kindly symbols of a bygone era.

Auletta noted that newspapers never saw the express training coming until it was too late. These old dailies lacked the ability understand the evolving nature of the current 24-7 news cycle and think like an engineer.  By the time your local daily has arrived on your doorstep, its content is made obsolete by what’s happening now. While some newspapers had on-line editions as early as the mid 1990’s, they were often supervised by old time print guys and would not let a story break on-line until it appeared in the print edition, thereby negating the online hole-card—speed of publishing.

While the “last newspapers standing” will probably be The New York Times and The Washington Post, the question remains: can they build a predictive revenue stream when many feel the internet should be free.

However, what if Google goes too far?  What if Google kills the golden egg of news reporting?  Google News only aggregates the news but if the industry continues to contract and collapse upon itself, will there be any content left for Google News to aggregate?

The 20% Solution. As part of their job, Google employees spent 20% of their time working on projects that are near and dear to their hearts. In fact, Google News sprung from the “20% time” of Krishna Bharat, Principal Research Scientist of Google.  After 9.11, Bharat felt that Americans did not know very much about Islam and leveraged and tweaked the Google algorithm to build out a new business group.

Google’s Culture of Silence. While Google fosters openness about the data they wish to share, they are remarkably taciturn about the pieces of their own business. When Auletta asked how many data centers Google uses globally, silence reigned.  Likewise, on Fridays when both Brin and Page have a series of town halls, terribly sensitive information is discussed but it stays within the confines of the room. Incredibly, nothing ends up in newspapers or the trade press.

The Cult of the Engineer also wears Blinders. While Google’s motto is “Don’t be Evil,” an atypical cluelessness pervades when engineers confront a number of blind spots. Perhaps it is the callowness of youth or an unclear understanding of the world around them, but simply solving an efficiency chain may not always lead to the greater good.

For example, Google created global digital library by scanning every book it could find but failed with their due diligence.  The intentions were admirable because a digital library meant better access for all but Google failed to realize that authors and publisher meant business when it came to copyright infringement; millions of books had already been scanned before they realized the impact of their actions.  Once again, the “Cult of the Engineer” stumbled badly.  Google felt that content was king and sharing data was good even if it flew in the face of two centuries worth of copyright law.

Also, Google Earth and Google Street illustrate the tone deaf nature of Google’s engineer corps. For example, my house is found on Google Street View but I never offered consent and it can be argued that I have an expectation of privacy when it comes to my backyard. Could Google Earth potentially compromise national security? Might it be possible for terrorists to identify soft targets for their war of terror by turning on their laptop?  Nobody knows where data mining stops and data mining abuse starts?

Publish and Perish. Nothing underscores this better than Sergey Brin’s conversation with Ken Auletta about publishing digitally. Brin argued that Auletta would make more money if he chose to publish his work directly online. He would make more in royalties and bypass the middlemen so often found in publishing.

Auletta quickly countered, “Who would edit my book?  Who would vet my writing with the legal community? Who would pay for my advance so that I could write the book and who would pay for my travel when I wanted to market the book after it was published?  These issues failed to register with Brin and once again, “The Cult of the Engineer” took another hit.

At night when the lights go off, Sergey Brin and Larry Page worry if Facebook will supplant Google. They, like Gates before them, worry about the next generation who toil in a Palo Alto garage.  How will Google react to a revolutionary transformation that eluded them?  Can the power of the Google brand offset the upstart nature of Facebook?  Who comes next?

So where does Google go from here?  The natural direction would have Google flowing toward the nexus of entertainment and content. The Android Operating System found in phones which feature Google technology appears to confirm this approach. However, the world of entertainment is far different than a bunch of engineers in geek couture, something that Yahoo painfully discovered.   Will Google overreach like Yahoo?  Only time and the marketplace knows for sure.  

The Luncheon Society ™ is a series of private luncheons and dinners that take place in San Francisco, Los Angeles, Manhattan, and Boston.  We essentially split the costs of gathering and we meet in groups of 20-25 people. Discussions center on politics, art, science, film, culture, and whatever else is on our mind. Think of us as “Adult Drop in Daycare.” We’ve been around since 1997 and we’re purposely understated. These gatherings takes place around a large table, where you interact with the main guest and conversation becomes end result.  There are no rules, very little structure, and the gatherings happen when they happen. Join us when you can.