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Google's Mayer: Staying Innovative In aDownturn

The mantra that's been flooding the Googleplex this year?'Scarcity brings clarity,' explains Marissa Mayer, GoogleVice-President

WhenLarry PageandSergey Brinco-founded Google (GOOG) 10 years ago, few people imagined the kind of influence it would wield today—not just on the Internet, butincreasingly in such established industries as media and software.Since then, Google has come to dominate the most lucrative piece of online advertising: thetext ads placed next to its search results. Armed by an expansive mission to "organize theworld's information and make it universally accessible and useful," the company has used itsrapidly growing profits to fund forays into online software applications and even radio andtelevision advertising. No wonder Google shows up as one of the 10 names on

BusinessWeek's

list of the World's Most Influential Companies

At the same time, Google's influence is increasingly under scrutiny, even by its ownadvertisers,who worry that it has become too powerful.In October, Google dropped a deal to run search adson some Yahoo! pages (YHOO) after the Justice Dept. threatened to file an antitrust lawsuit. In a recent interview with Silicon Valley bureau chief Robert Hof, MarissaMayer, vice-president of search products and user experience, talked about the challenges toGoogle's power from the government and from the declining economy, and shared somelittle-known tales of Google's earliest years.

How hasGooglebecome so influential, in your view?

Our mission is one reason. Larry and Sergey thought a lot about it before they got started. Atother companies, there are these Dilbertian crews of HR people who show up and say: "We'veoutgrown our mission and we need to write a new one." That has never happened at Google.The mission is exactly what Larry and Sergey wrote back in the fall of 1998, before any of uswere even here.It wasn't just about Web search. When I showed up, I said, "Guys, shouldn't we be calling thecompany Google.com?" They said: "Oh, we're not just a dot.com. We're not going to be justabout the Web. We're going to be all kinds of things."

Someadvertisersdon't always like the fact that Google tends to favor regular users overadvertisers when it makes changes to its search engine, which can wreak havoc on theirad placement. How do you balance those sometimes competing concerns?

Google is fueled by user choice. We can't rest on our laurels. We know users can pick someone else. When the end-user is happy, they click on more ads, and they really participatewith advertisers. Our commitment is to make sure the ad services we offer improve our products and don't erode the user experience.When I was an engineer, I created an experiment called "no ads at all," where a percentage of users didn't get ads at all. We left that experiment running for five years. Finally, after Imoved on to other jobs, people came to me and said, "Can we shut it off?" I said before weshut it off, we should go and get the data. It turned out that users who got ads were happier than users who didn't. People who got no ads at all searched markedly less than people whogot ads.

Google's sometimes unusual management methods, such as encouraging engineers tospend 20% of their time on projects of their choice, have gotten a lot of attention. But Isense that other corporate departments try to do things differently, too. How well hasthat worked?

The other groups at Google aren't willing to accept that the only people who get to have funand be innovative are the product managers and the engineers. It's innovation envy. So whathappens is, the Human Relations department wants to be innovative. They want to build HR policies like no one's ever had before. Some of these people want to build facilities like noone's ever had before. The finance team wants to bring the company public in a way that noone ever has before.

A lot of other companies wonder if they can adapt Google's methods. Is that tough forthem to do, given Google's unique success?

I don't think so. You don't need to build brightly colored campuses filled with toys and thenoffer free food. It's important to realize each company is different and the benefits they offer their employees need to customized to their culture and their unique situation.But there clearly are things that can be replicated, like having small teams, awarding a lot of ownership to those teams so you stretch and grow those people. Or really focusing on anddemanding that innovation come from everyone and everywhere throughout the organization.One of the worst things you can do in a company is to have an R&D segment or aninnovation group. Once you have some people whose job it is to innovate, everyone elsestops innovating.

Given some push back by advertisers and even by government antitrust regulators, isGoogle now too influential? How are you contending with this?

Our influence comes from the end-users and the trust that we've built with them. If we stop putting their needs first, that will stop.

But given that the Justice Dept. came within hours of filing an antitrust lawsuit inOctober before Google cancelled its proposed search ad deal with Yahoo, isn't Google'sinfluence becoming a problem for the company?

We believe that more competition is better for the Web. It became clear through a series of events that happened this spring that there was going to be a form of consolidation in theindustry. We really felt that we could help Yahoo stay independent. [Chief executive officer]Eric Schmidtsaid several times an independent Yahoo was better for Google…and better for the Web.

Yet that decision set off a number of actions that resulted in a lot of push back againstGoogle. Is there a new reality in the marketplace that Google needs to deal with?

Our footprint on the Web and on the world is significant. When the footprint is this large, youneed to be very thoughtful and responsible about what you're doing. But I do think the actionswe took there had the users at heart.

How has Google changed the way it does business to contend with the economicdownturn?

The mantra we're hearing here around the Googleplex is "Scarcity brings clarity." We arelooking at how we can be frugal and how we can be prudent. Google is doing better thanmost companies, but we don't want to be wasteful. We're looking at different processes wehave running here, what makes sense and what doesn't. But for me, this doesn't feel thatdifferent than when we were a very small company.Our first gym was actually built by myself and one of the engineers—Ray Sidney, duringOctober 1999—because we had worked six 130-hour weeks in a row. We weren't able to go