“Hubris: The false pride that comes before the fall” - Wikipedia

I probably get more questions from product people about Google than any other company. With their astounding success, it seems everyone wants to emulate them.

Regular readers of my blog and newsletter know that I’m one of Google’s biggest fans. Beyond their excellent search, I think their AdWords and AdSense products are truly exceptional, and they have more than their fair share of outstanding engineers.

That said, I am very worried about the long-term prospects for the company.

I am worried about them for two reasons. First, I think there is a serious problem with their product skills, and second, I am increasingly seeing symptoms of problems with their corporate culture.
With respect to their products, I know it’s odd to talk about product problems with a business that has performed overall so well. Nevertheless, I believe strongly that Google could and should have performed so much better than they have.

For example, consider Froogle, a fantastic opportunity for Google, given how so many people clearly start their e-commerce shopping process with a Google search. I can only believe that Google is intentionally holding back on this product for strategic or contractual reasons because I can’t otherwise explain the lack of progress. Similarly with Gmail, another great opportunity to leverage the community’s affinity for Google, that now is two years old and hasn’t progressed much since its debut. Another terrific opportunity is the Google Desktop, but even very basic capabilities (like moving a file to a different folder) remain unsupported. And Orkut, the social networking site that launched at the right time and should have leaped when Friendster stumbled, also seems deserted by its product team. And Google Base. Why did they bother? And the list goes on.

More generally, Google seems to get all excited and launch something and then just leave it there and lose interest. They call a service "Beta" for years, not because they're listening to the market and rapidly responding and interating, but seemingly just because they appear unwilling to follow through. Their products are rarely integrated with each other, or completed to the level that users deserve.

It seems clear to me that Google is having a very difficult time converting terrific product opportunities and terrific assets (including their huge and loyal community, talented engineering and site operations staff, and deep pockets) into terrific products. Part of this may be due to the role of product management at Google, part may be due to its corporate culture (discussed next), and part may be due to the consequences of very rapid growth. For whatever reason, if Google is to become the long-term success that I hope and believe it can, it must become better at converting these product opportunities into successful products.

Now let’s discuss the corporate culture issue. I have to admit up front that I’m particularly sensitive to this problem. While I loved my time at Netscape and later AOL, and I worked with some of the best people I’ve ever met there, I think both of those companies suffered from some fairly serious cases of corporate arrogance. At Netscape, it was more of technology-based arrogance and at AOL is was more market position-based arrogance. In both cases it turned out to be a significant liability and customers suffered.

At Netscape, I think I got caught up in the emotion there as well, and wish I could have spent more of my time assisting partners and startups that asked for help, rather than just focusing on the biggest opportunities. At AOL, the attitude by the sales and business development people especially was often so bad, and partners and customers were treated so poorly, that many of us were frankly embarrassed and ashamed of our corporate behavior.

Unfortunately, I’m seeing some similar problems at Google. I have heard now from multiple sources that there have been important business deals for Google that they have lost due to the unwillingness of companies to join their culture.

I also know of too many people now that have been so turned off by the Google interviewing experience that they have declined their offers, or dropped out of the process. In each of these cases, it was Google’s loss. The interview process itself is flawed, but the bigger issue is the arrogance that comes across. Especially worrisome to me is the emphasis on things like college, degree and GPA. While a degree from MIT, IIT, or Stanford is an asset on any resume, surely the people at Google are bright enough to realize that many of the smartest and most successful people in our industry either never went to college, dropped out of college, did poorly in college, or went to a “lesser” college.

At HP we used to go through an exercise every year where we rank-ordered every employee from top to bottom, across every job; so every senior engineer in a division, for example, would be ranked 1 to n. This was a controversial practice, but it made very clear the employees the organization felt were truly the top performers. I remember the HP Lab’s management team’s surprise when they discovered the lack of correlation between performance ranking and years of computer science university level education (and HP Labs was one of the top industrial research labs in the world at the time). It certainly taught me to look beyond superficial indications like GPA when evaluating potential employees.

I understand Google’s desire to maintain staff quality in the face of very rapid growth, but I think their process suffers on both fronts – it is too slow to support the needs of the business, and too narrow-minded in terms of finding the best people.

I do believe that Google can correct these problems and realize their potential, both as an industry leader and as the provider of many great products. But it may take some soul searching for them to decide what kind of company they want to be, and the different skills needed to get there.

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For as far back as I can remember, it wasn’t enough to have a good product, you also needed a strong sales person to get the customer to actually commit and sign the check. In fact, the lack of skilled sales people was and remains the limiting factor for many companies. As a product person, this has always frustrated me. I never liked having someone between me and my customers, but I understood the need for the sales person to maintain “account ownership.” But it doesn’t mean I liked it. In fact, for me personally, one of the big attractions of consumer internet services over enterprise companies is the free access to my customers. I don’t have to worry about some key influencer deciding he prefers the wining and dining from our competitor’s sales person over our own.

Unfortunately for those in sales, in virtually every market I see their role undergoing significant change. While I don’t really see sales people going away completely any time soon (the relationship component of large purchases is too entrenched in our culture, and there are too many situations where customers want someone to hold their hands through the process), I do see the role of human sales people continuing to decline and change dramatically. Customers now begin by educating themselves on the company’s products and services through the company’s web site, third-party product reviews, and discussion forums. Then they expect some form of online trial or self-guided demo. They expect online purchasing options, and online account tracking and customer service tools.

We already know there are several major customer benefits to shopping online, including convenience, product availability/selection, ease of purchase, and price. But we also know that there are some very real reasons why many people still prefer to buy offline. Let’s discuss these main barriers and consider what some leading companies are doing about these issues:

Fear – it wasn’t long ago that the press was filled with stories of users too scared to provide their payment/credit/debit card info online. Today, while there is still a segment of the population that feels this way, it is no longer a barrier in most developed countries. In fact, people now not only trust that established companies like Gap or Amazon will protect their payment info and deliver the goods they promise, but they also routinely trust individuals and small businesses, as personified by eBay and especially the contribution of their reputation system.

Immediate Gratification – often when we decide we want a product, we want it right now. For some types of products – likes music and movies – the online version can in fact provide even more immediate gratification than the offline options. It doesn’t get much faster than picking the songs you want on iTunes and immediately downloading them to your iPod. Certainly faster than it was to go to the neighborhood Tower Records. In other areas, with physical goods, sites have improved this with services like Amazon’s Prime, and in-store pickup (see www.circuitcity.com among others).

Need to Touch – one of the more difficult challenges is that for some types of products, customers really want to touch and feel the product before they take the plunge. Customer reviews help somewhat here, but part of the solution for some companies has been to make the product so easy to return that it really isn’t a bother to “try it on at home.” If you haven’t heard of Zappos yet you probably will soon (see www.zappos.com). They’ve lowered the barrier so much that it’s not unusual for a customer to order two or three pairs of the same shoes in different sizes and just send the ones that don’t fit back - or all of them if they decide they don’t like the style. Other sites have invested in user interfaces that provide improved ability to view the products and see what they might look like on you, or what the product would look like with the options you’ve selected (see www.bmw.com).

Returns – this relates directly to the fear that customers have that returns will be difficult. With certain offline retailers, customers know that they can just take the product back to the store for a refund or an exchange. But many customers still worry if they’ll get the same service online. Some retailers, like Zappos and REI (see www.rei.com), have made the ease of return one of their competitive differentiators, and central to their customer experience.

Customer Service – most of us that have bought online in any quantity have experienced just how bad customer service can be online. Especially when you encounter the perfect storm of poor site, poor product and poor customer service. But others are recognizing the customer loyalty that competent customer service can create, and are working hard on the overall customer experience.

All of these elements contribute to the overall customer experience. Some retailers in the offline world like Costco and Wal-Mart clearly focus on price and selection and believe that many customers will forgo most elements of the customer experience if they believe they are saving significant money. But when you go into a retailer like Starbucks, REI or Nordstrom, there’s an overall customer experience that they work hard to convey, as it’s a big part of the product or service that they offer.

Even products that are very difficult to sell online like cars and homes now have significant components of the buying process very well supported online, like research and pricing (check out www.consumerreports.org and www.zillow.com). So at the very least customers can arm themselves like never before in preparation for facing down the dreaded car salesman or timeshare sales rep.

I fully expect the barriers to continue to fall. I love watching smart people at leading companies take on each and every one of these obstacles. Hopefully, in the not too distant future, buying an ERP system or a car won’t be so influenced by the talents and persistence of the sales person and instead will be driven by the capabilities and fit of the product.

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