Do GOOG Founders Still Need Adult Supervision?

Posted by Tom Foremski - January 26, 2010

When Eric Schmidt was brought into Google [GOOG] in 2001 his job as CEO was to provide 'adult supervision' to the founders: Larry Page and Sergey Brin.

This was important if the company was to have a successful IPO, which it did, in 2004.

Now, nine years later, Messrs Page and Brin are seasoned executives of the most important Internet company in the world. Do they still need 'adult supervision?' Isn't it a bit embarrassing that they still have to share power with Mr Schmidt in what Google describes as a "triumvirate?"

What other large companies have a similar management structure? I can't think of any.

Are the boys grown up? Both will turn 37 years old in a few months.

Do the founders still need 'adult supervision?'

Clearly, they don't and there seem to be signs lately that demonstrate that they asserting their views, over that of Mr Schmidt.

For example, Google's entry into China was at the strong urging of Mr Schmidt, despite the founders strongly held views that censoring their search results was the wrong thing to do.

Now that the company's entire China investment hangs by a thread and its strategy has been shown to have been a mistake -- it must be a hard blow for Mr Schmidt.

Other problems...

Veteran Forbes reporter Elizabeth Corcoran, knows Mr Schmidt well. She has written that:

"he has defined his job not so much as leading Google but as running interference for it--placating the investment community, soothing nervous regulators and policymakers and doing whatever it takes to create a magical force field protecting Googleteers..."

If that's the case, Mr Schmidt's abilities to run interference on behalf of Google appear to be on an extended leave of absence.

Take a look at some of the jams the company has gotten itself into and that clearly lie in the realm of 'running interference:'

- Google is facing increasing scrutiny from the US government over possible illegal anti-trust business practices. That's despite Mr Schmidt's very public support for President Obama.

- Google has run into big problems internationally with its books scanning project and Mr Schmidt's attempts to calm the waters have failed repeatedly, resulting in lawsuits.

- Its relationship with Microsoft is very bad, because Google actively opposed its acquisition of Yahoo and other deals. Mr Schmidt is behind that opposition, he spent many years fighting with Microsoft when he was head of Novell. That strategy didn't work then and it isn't working now.

- Mr Schmidt has managed to upset newspaper companies in the US and internationally and he has failed to get them to see Google as an ally rather than as an adversary -- that's despite many meetings with top newspaper tycoons such as Rupert Murdoch.

- Google's relationship with Apple has soured badly, Mr Schmidt was forced to resign from Apple's board.

- Mr Schmidt admitted that he persuaded the Google board to pay $1 billion more than YouTube was worth. Critics said that was to reward VCs who were investors in both Google and YouTube. Google is still trying to figure out how make YouTube profitable.

- His position on Google remaining in China hasn't worked and now Google has few choices, a pull out of China would lose its top Chinese research scientists and a very large investment. It lost the head of its China operations last year.

It seems like the 'adult supervision' isn't working out.

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