The traditional Silicon Valley narrative revolves around certain archetypes: fabulously visionary leaders, a seemingly unbeatable streak of incredible products, and, very often, humble beginnings in a family garage. This benign description conveniently foregoes the later stages of such companies, where hubris, arrogance, and mismanagement bring those same behemoths to the brink of extinction. This story has happened dozens of times before and will happen again. It is a story narrated and driven by human nature.
Let us review some notable examples in history.
John Walker, the founder of Autodesk and one of the original programmers of AutoCAD, wrote in April 1991 an inflammatory internal memo called “Information Letter 14,” today available on Walker’s website. It is a long text, but it should constitute mandatory reading for all software CEOs. One particular phrase stands out, though:
One of the largest unappreciated factors in Autodesk’s success has been the poor strategy and half-hearted, incompetent execution that characterised most of our competitors in the past.
Let us keep this phrase in mind as we move forward.
Hewlett-Packard is another sorry example of such a process. This company grabbed Compaq’s feet as it drowned in a naval war that old employees still remember as “the blues against the reds.” The HP name brings today memories of overpriced toner or ink cartridges… and pretty much nothing else.
Let us not forget about IBM. After becoming synonymous with the computer industry, the company started in the 1990s a steady decline that led to eroding its logo out of the memory of a whole generation of computer programmers. Only those with a particular affinity with computer history (or mainframes or quantum computing) can say anything about it, which is, no matter how you look at it, to say the least, unfortunate.
Some companies, like Dell, Apple, and Microsoft, are famously known for having turned the tides in their favor, prompting dramatic changes in their companies, and directing them to lead new markets, sometimes at the antipodes of their founding ideas.
(IBM’s inflection point might have been the acquisition of Red Hat in 2018, but it is still too early to tell. Or it could be quantum computing, whatever and however that turns out to be.)
Today it is Google’s turn. This company, which has undoubtedly changed the World Wide Web forever, is starting to face the same challenges as Autodesk, Hewlett-Packard, Apple, Dell, and Microsoft faced before; in particular, and paraphrasing John Walker, it is facing “the end of the incompetent execution that characterised” most of their competitors in the past.
In short, Google (the corporation) has been feeling lucky for the past 25 years, first by building a genuine ground-breaking product; then by shoveling cash via online advertising; and finally, by facing quite mediocre competition for years.
Many current Google engineers will have angrily stopped reading this article when reaching the “lucky” word above and will have canceled their monthly contributions to this magazine if any. So be it. By stating the corporation as “lucky,” I do not mean to say individual engineers are not brilliant. Quite the opposite. Google has attracted the crème de la crème of software engineering over the past 25 years. The very best A-players at the top of their games. Google’s problem is not an engineering problem.
And this was true from the beginning. It is hard to realize how radically better Google (the search engine) was in 1998. The best search engine available at that time, AltaVista, was okay-ish at best. Google would regularly return the best result for your query on top of the list, and within milliseconds: the “I’m Feeling Lucky” button worked wonderfully well back in those days. It is no longer the case.
And this is without counting a long list of discontinued products and services. Google Reader, in particular, where are thou? Picasa? Google Code? Fastlane? Oh, well, at least in this last case, Google still owns the intellectual property, even though the “community” does the work. Phew. Nothing to see here; move along.
How did the competition, specifically Microsoft, react to Google? It did not. This is something Joel Spolsky famously observed, and Steve Ballmer regretted in front of Charlie Rose:
The very fact that Google invented MapReduce, and Microsoft didn’t, says something about why Microsoft is still playing catch up trying to get basic search features to work, while Google has moved on to the next problem: building Skynet^H^H^H^H^H^H the world’s largest massively parallel supercomputer. I don’t think Microsoft completely understands just how far behind they are on that wave.
In an ironic naming twist, IBM named a 2015 reorganization initiative “Project Chrome,” whereby 26% of IBM employees were at risk of being laid off: a whooping 100’000 of them. Last January, Google followed its corporate peers in the new trend of massive layoffs with 12’000 job cuts, which shook the otherwise calm Google offices next to Zürich Hauptbahnhof.
But the problem with Google today has one name: hubris. Its management and most devoted engineers cannot understand the threatening nature of what is coming upon them and, even worse, enjoy a twisted sense of exceptionalism that no longer applies. And no, this is not (only) about GDPR or ChatGPT but their crumbling from within, their self-destructing internal processes, and their incapacity to change.
IBM’s and HP’s downfall began at the end of the 1980s when sales became more important than engineering excellence, and layoffs became a fashionable way to increase shareholder value. The same happened to Microsoft in the early 2010s, to Apple in the mid-nineties, and so many other companies during their lifetime.
Google’s downfall began the day advertising revenue became more important than anything else, including its employees.
And now, layoffs. What is next?
As Robert X. Cringely once explained, the 5th stage of companies can either be rebirth… or death. Google is running out of luck.
Cover photo by Caleb Williams on Unsplash.