Tim ChenierJoe Elko

Brandon EudyJason Harris

IntroductionGoogle was started by two Stanford graduate

students Sergey Brin and Larry Page in 1998 with initial funding from two venture capital firms, Sequoia and Kleiner Perkins

Eric Schmidt joined Google in 2001 as CEO

Question 1

Introduction - ProtagonistThe protagonist of this case study is Eric Schmidt

CEO of Google March 2001 (former CTO of Sun Microsystems and CEO of Novell)

Sold the IPO at $85 – August 2004Stock peaked December 2007 at $714 and still

currently above $300Implements the IPO with dual-class equity structureAllowed unconventional approaches for managing

innovationCreated the “Google Ten Golden Rules” with Hal

Varian

Question 1

Introduction - ObjectivesSell the IPO with plans for a dual-class equity

structureTo keep the trio in charge

Grow the company and profitsStay focused on the core business (search

engines)Allow and encourage growth into new

domains / marketsCreate an atmosphere that pushes the limits

of technology and innovation

Question 1

Introduction – Key DecisionsAssemble and execute the IPO to finance the

potential growth of GoogleAgree with Brin and Page on the radical dual class

stock equity structureKeep the trio in harmony and in power to make

decisionsAllow the creative side of the company to create and

allow high risk high reward projects to be funded (invest in long shots)

Focus product development and accelerate the pace of these efforts

Implement and live by Google’s Statement of Philosophy

Question 1

Key Issues – Problems/RisksGenerating revenue

How to generate revenue

Attracting advertisersHow to lure advertisers to Google

Attracting users (searchers)How to entice people to use Google

Question 2

Key Issues – OpportunitiesExpand services to current users (searchers)

Current users are more willing to try new services

Differentiate services from competitorsYahoo, MSN, Lycos, etc.

Offer prime ad space to advertisersAbility to reach more consumers

Question 2

Key Issues – Alternative Actions1. Stay focused on core competencies – web

searches & advertisingContinue to fine-tune search capability

2. Expand services into existing realmsContinue to develop products in existing

arenas (i.e. Google Earth, Maps, Picasa, Desktop)

3. Branch out into new areasOS, OpenOffice, Mobile technology

Question 2

Key Issues – EvidenceSearch engine market share between Google &

Yahoo is 36% & 30% respectively Google must force perceived differentiation in order

to increase market share

US paid-listings spendings estimated to be approaching $12 billion by 2010Focus on increasing advertising capability

Over 50% of web users prefer Google as search engineBetter positioned to expand services and increase

switching costs

Question 2

Key Issues – CriteriaWhich provides the greatest good

for users

Which provides the largest return on investment

Which better matches market trend forecast

Question 2

If I Were The CEO… - Actions

Continue to emphasize Google’s web search capabilities through strategies and applications aimed at cell phone web use

Question 3

If I Were The CEO… - WhyAs the costs for internet data usage over cell phones

decreases, more individuals will be attracted to cell phone web tools that are useful and user friendly.

Google currently leads the market in: “Most Relevant Results”“Speed of Website”“Best Features”,“Presentation of Search”.

Google needs to capitalize on this momentum to avoid falling behind as technology evolves past personal PCs and towards various mobile portable devices.

Question 3

If I Were The CEO… How The primary strategy for Google should be in developing cell phone software

that totally integrates all current technology. Develop software that provides a mobile internet experience to be

virtually the same as a PC internet experience. Some software is a viable substitute, however, few if any would be considered a 1:1 comparison.

Technology that links Google Maps to GPS features, Google Directory, and Google Latitude. Will be very helpful for travelers who are in unfamiliar surroundings. Help find gas stations, hotels, restaurants, etc with reduced anxiety.

The previous data will enable suggestions to be made as to where to meet friends based on Google Surveys (determines preferences) and Google Latitude (relative locations of party members). This creates a useful application as well as a profit center for ad revenue.

Allow for seamless syncing between a Google phone and a home computer. This will include everything from emails, contacts, music, movies, photos, misc. documents, etc. This will allow a photo snapshot on a cell phone to be instantly transferred onto a PC. Music and/or video on an internet PC will be able to stream content directly to your phone. These features will eliminate the sense of loss associated with losing or damaging a cell phone. Ad revenue may be positively impacted through more customized advertising.

Question 3

If I Were The CEO… - ImpactThe impact from this suite of applications will provide

Google users with the next logical step in mobile technology.

Business partners will hopefully be impacted by the increased revenues they received based on Google users choosing their goods or services instantly on a cell phone.

Shareholders will be impacted through increase dividends through increased profits.

Employees will be impacted through the motivation this renewed focus on integration. They will need to not only think about their individual projects, but also how their projects link to the other entities of the overall “spider web”

Competitors will be impacted by having to compete the next generation of cell phone software and the increased customer expectations.

Question 3

If I Were The CEO… - RespondCustomers – Will initially be excited about the new

technology, but will eventually accept it as a part of everyday life. They will find it hard to remember a time before a fully integrated cell phone.

Business Partners – More business will provide Google with their business info and locations. This will allow a more comprehensive directory for Google users.

Stockholders – Will react positively and stock prices will rise.

Employees – Will create more multifunctional and meaningful applications. Total output will be more than the sum of the applications. Cross calibrations will create software that was initially non-existent.

Competition – Will attempt to piggy-back off our software or create imitations. Google must maintain a forward-looking attitude to avoid the imitations from becoming a viable threat.

Question 3

Follow Up ResearchWhere Google is today:

Question 4

2005 Today

$414 stock price $335.34 stock price

5,680 employees 20,123 employees

8.0 billion in cash 8.6 billion in cash

123 billion in market equity

105.11 billion in market equity

35% share of US searches

63% share of US searches

68% share outside US 75.5% share worldwidehttp://www.comscore.com/press/release.asp?press=2729 http://www.comscore.com/press/data/top_worldwide_properties.asp http://investor.google.com/faq.html#employees http://finance.yahoo.com/q/bs?s=GOOG&annualhttp://finance.yahoo.com/q/ks?s=GOOG

Follow Up Research Web search initiatives

Acquisitions of Orion to help pull in pages with content that is strongly related to keywords SearchWiki – customize searches

New search domains Image search Video search News Search Product Search Life Magazine photography search

Enhancements to advertising services dMarc - Radio advertising DoubleClick technology - Behavioral technology – March 09 – using user profiles – previous searches Google Analytics Google AdSense for domains AdSense for Mobile Search & Advertising for Myspace

Software tools & services Browser – Chrome Phone OS – Android – T-Mobile G1 iGoogle – portal YouTube Google Documents Google Spreadsheets Google Voice – voip Google Reader – RSS feed reader SketchUp – 3d Modeling program Google Translate – site translation Custom Search Business Edition / Google Site Search – ad-free window into Google Google Apps – SaaS – messaging, collaboration & security Google Security Services Google Health – medical records online Google Checkout – shopping cart system Google Latitude Google Toolbar

Question 4

Follow Up Research Google has shown dedication to its core values and initiatives by continuing to

improve search capability. Acquiring the Orion search engine algorithm, Google has a better ability to return results that are related to keywords. Google has also added the ability for users to customize their results by creating SearchWiki. In dealing with new search domains, Google has added a multitude of areas that are now searchable, including: Images, Videos, News, Products and Life Magazine photographs.

Google continues to update its advertising ability by acquiring companies and creating new opportunities. dMarc enters into radio advertising and DoubleClick implements behavioral advertising. Google has also expanded its Adsense capability to include mobile marketing.

Google has dramatically increased it’s software tools and services by offering a vast array of products for consumers and businesses. One prime example of Google’s commitment to information organization is Google Health which was created to organize medical records. Further examples of Google’s expansion into new arenas includes: Google’s OS for mobile phones Android, the “wallet” system Checkout, the browser Chrome, and the user portal iGoogle.

Google continues to strive to be a driving force for technology, introducing new capabilities and web services that allow consumers and marketers to come together within the marketplace to both obtain desired results.

Question 4