Guidance from the Googleplex

I just finished reading How Google Works by Eric Schmidt and Jonathan Rosenberg, and as a new entrepreneur with a technical background rather than a business one, I found myself wishing I’d read this book before founding our company. This would have avoided countless hours of self-doubt and consternation. Both my cofounder and I have technical backgrounds, and we had always viewed this as a handicap. We needed to solve business problems, not technical ones, and this needed to be led by a serious businessperson who understands how to identify and solve business problems. However, we were starting a technology company, and we’d always believed that a thorough background in technology was a requirement and figured the business details could be picked up on the way.

Our subsequent experience in our venture and now reading this book has validated this intuition. Google does not identify new product opportunities by doing business analysis and market research. Instead, it uses technical insights to come up with new product ideas. One line I found particularly resonant was “If your customers are asking for it, you aren’t being innovative when you give them what they want; you are just being responsive.” This is important in mature markets, but in new, technology-driven markets, it doesn’t work. This is not to say that customer feedback isn’t important, but don’t expect your customers to give you the technical insight required to create a break-through product. These insights need to come from someone who understands the state of technology, and how it can be used in a unique way to solve a real problem. This person doesn’t necessarily need to be an engineer or scientist, but should be someone with a strong technical background. We built our company, and resulting first product, on a few technical insights. The first one was that modern mobile devices could be used for industrial applications in place of expensive industrial terminals. The second was that in many applications, mobile devices could be used to connect industrial machines to the cloud, rather than needing dedicated Internet access. And finally, for technical reasons I won’t delve into, the method for connecting mobile devices to these machines could not be TCP/IP-based and still result in a good user experience.

The other thing Google does, and we try to do, is focus on the user. In the Internet century, a great product is absolutely crucial as information travels too fast to get away with a so-so product. Companies instead often focus on their competitors, which is “the fastest path to mediocrity” in the words of the authors. While you’re busy replicating what your competitors are doing, they are coming out with the next thing. You need to have your own vision for your products, and not worry whether your competitors agree with you.

Unlike most rational people, we founded our company without knowing what end product we’d develop first. All we had were the technical insights, and we started off building up some general technology we could rapidly apply to any number of industries. But one thing we struggled with was the choice between developing a new product to solve a problem no one else is solving, and developing a better version of a product already on the market. We tended to favour the former, but ended up choosing the latter. And after having done so, we are certain we made the right decision, and it seems Google would agree. The reason is simple; if the market doesn’t currently exist, there is likely no demand for it. It’s far safer to build a better version of a product in an existing market, as you know the market is already there for the taking. Choosing this route doesn’t mean you’re not innovative, as long as you are not simply tweaking the status quo based on customer input. It means using technical insights to redefine the product. If you look at three of the most successful technology companies today, Apple (post 1997), Google and Facebook, none of them became successful by creating new markets. All three companies launched better versions of products and services already on the market at the time.

For anyone founding, starting, or running a technology company, How Google Works is certainly worth reading. It ends with a quip about how it may end up being used as a blueprint by the start-up that ends up dethroning Google. Whether this happens or not remains to be seen, but it will certainly provide inspiration and guidance to the next generation of technology entrepreneurs.

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