New Google CEO means business

One thing about Eric Schmidt's new position at the helm of the popular search-engine service Google Inc. strikes him as funny: He got the job because of his business acumen - not his technical expertise.

"Normally I think of myself as a technologist first," Schmidt said in a telephone interview late Monday. But "the technology strategy is just fine" at Google.

Schmidt, who was named CEO of the Mountain View, Calif.-based company on Monday after nearly five months as its chairman, says he'll be drawing heavily on his experience in marketing, sales and recruiting. His experience is deep. He has worked as the CTO of Sun Microsystems Inc. and, most recently, CEO and chairman of Novell Inc. He will remain chairman of Novell.

In Schmidt, three-year-old Google gets a seasoned executive ready to build on the company's success. His appointment caps a 1 1/2-year search for a new CEO.

The 46-year-old Schmidt takes over the company's top post from 28-year-old Larry Page, Google's founding CEO, who will become president of the company's products division. Sergey Brin, 27, the company's founding president, will serve as the president of the technology division.

"I like these guys. But more importantly their insights and strategies are much better than mine," Schmidt says. "The plan is they're going to run things day to day."

That doesn't mean Schmidt won't be plenty busy. "The company is pretty unstructured," says Schmidt, who already has added some meetings to help fix that. Also on his to-do list: Develop formal revenue forecasting, fill out the management team and create a more thorough MIS (Management Information Systems) strategy.

Page and Brin officially created Google the company in 1998, after spending two years creating its precursor, BackRub. During the next three years, Google's following grew and with it the number of queries to the search engine, from 10,000 per day in 1998 to 100 million per day now. The brains behind Google have grown into what Schmidt calls a "pretty large computer environment" - between 10,000 and 12,000 computers.

Unlike competitors such as Yahoo, Excite and Alta Vista, Google has resisted becoming a portal that offers everything from Internet radio to stock quotes. Rather, the company has stayed true to its beginnings as a search engine, and with that has also resisted selling banner ads. Amid a tougher ad market, portals also have jumped on the pay-for-placement bandwagon, offering special positions in search results to the highest bidder. GoTo.com has become the dominant provider of those so-called pay-for-placement results in searches offered on America Online and Alta Vista. Schmidt says that's an entirely different model than Google, which prides itself on creating an index of 1.3 billion Web pages.

Last year, however, Google did follow competitors in offering sponsored links - a form of advertising based on search terms - on the top and left of search results. Today such advertising accounts for two-thirds of Google's revenues, with the remainder coming from powering searches on other Web sites, including that of Yahoo. Observers have wondered whether Google's business model can survive, especially given the downturn in Internet advertising. Schmidt insists that the company has been profitable for the last two quarters, although he declines to disclose numbers.

Eventually Schmidt says he foresees taking the privately held company public, but given the poor performance of the market it won't be anytime soon. Nor is the company strapped for cash. Google has received more than US$35 million in funding from such well-respected venture capital firms as Sequoia Capital and Kleiner Perkins Caufield & Byers.

"I think the opportunity to build Google into a company of bigger impact is a great one," he says. Plus, he says, "This is a really fun group."

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