10 min read.Updated: 19 Apr 2019, 06:44 AM ISTEric Schmidt,Jonathan Rosenberg & Alan Eagle
In the nervous days ahead of Google’s IPO in 2004, disagreements almost resulted in chairman Eric Schmidt quitting the firm
As the coach of Google’s executive team, Bill Campbell couldn’t let the greatest team in technology break up. He understood Eric was hurt but knew Google neede him
When Google went public, in August 2004, it created two classes of stock. Class A shares were the ones sold to the public, each share coming with traditional voting rights: one share equals one vote. But class B shares were different: each share came with ten votes. Class B shares were not sold publicly, and were held by Google insiders, such as co-founders Larry Page and Sergey Brin, and chief executive officer (CEO) Eric Schmidt. This “dual class" structure ensured that Google’s founders and executive team retained control of the company. This structure was unusual at the time and highly controversial, stirring public debate in the months leading up to the initial public offering (IPO).
To Larry and Sergey, the structure was a critical element of their vision for the company. They admired Warren Buffett and had become knowledgeable about the dual class stock structure that his company Berkshire Hathaway Inc. employed.
They had always considered Google as much an institution as a business. They fervently believed in thinking long term, making big bets and big investments in those bets, without having to consider the quarterly ups and downs of public markets. They were concerned that Google would lose this “think big" propensity once it was a public company, and they saw the dual class stock structure as a way to guard against that happening. Their interests would always be aligned with that of shareholders, they reasoned, because long-term thinking and investing was the best way to maximize value for everyone.
Eric found himself at the centre of this debate. After talking with the founders, he became convinced that theirs was the best approach. He believed it would keep Google on track not just in its current businesses but in its broader mission of organizing the world’s information, and it would actually lead to the creation of greater shareholder value than the traditional structure. He made this case to the board, but there was still a lot of open discussion.
At the same time, some board members had been mulling over the idea of bringing in a new chairman of the board, someone who was more independent of the company, and the discussion on the dual stock classes pushed them even further in that direction. They asked Eric if he would step aside as chairman. He would remain as CEO. Eric was hurt by this stance. He felt he had done a good job in his three years as chairman and CEO, and, as far as he knew, the board agreed. He had earned the trust of the founders and employees, the company had performed very well, and they were about to go public. And for that they wanted to remove him as chairman? He got on a call with Bill and gave his perspective on the situation.
“What are you going to do?" Bill asked.
In a moment full of pride and hurt, Eric said, “I’m going to quit Google."
At that moment, as the coach of Google’s executive team, Bill became a critical player in the future of the firm. The greatest team in technology was about to break up. Bill couldn’t let it happen. The meeting with the board where all this would be decided—where Eric was going to step down not just as chairman, but maybe as CEO, too—was on Thursday, a couple of days hence. Bill got to work.
Team is paramount
Bill Campbell was a coach of teams. He built them, shaped them, put the right players in the right positions (and removed the wrong players from the wrong positions), cheered them on, and kicked them in their collective butt when they were underperforming. He knew, as he often said, that “you can’t get anything done without a team". “You can only really succeed and accomplish things through the collective, the common purpose," Lee C. Bollinger says. “There are so many ways in which people don’t understand this, and even when they do understand it, they don’t know how to do it. That’s where Bill’s genius was."
Bill’s guiding principle was that the team is paramount, and the most important thing he looked for and expected in people was a “team-first" attitude. Teams are not successful unless every member is loyal and will, when necessary, subjugate their personal agenda to that of the team. That the team wins has to be the most important thing.
Back in 2004, Bill correctly assessed that feelings were rubbed raw over the pending IPO, the discussions on how to structure the firm, and the idea that Eric step down as chairman. He understood that Eric was hurt, but he also knew that the team needed him to stay. He also felt that Eric was the best person to be the company’s chairman, at that point and for the foreseeable future. So he thought about the situation and called Eric back the next day. You can’t leave, the team needs you, he stated. How about if you step down as chairman for now, and remain as CEO? And then at some point, not too far from now, Bill would see to it that Eric got reinstated as chairman.
He’d offered a reasonable compromise and appealed to Eric’s loyalty to Google. This was not a fight to have today, he told Eric. Your pride is getting in the way of what’s best for the company, and for you.
Eric saw that Bill was right, and he had no doubt that Bill could implement what he was proposing, so Eric agreed. Together they talked through how the board meeting the next day would go, and by Thursday, Eric was well prepared. He stepped down as chairman and stayed on as CEO. Later, in 2007, he was reinstated as chairman, a role he held until April 2011. He was executive chairman from that date until January 2018.
Many people might look at Eric’s short-lived decision to leave Google as completely crazy. Look how much stock he would be leaving behind! But in teams, and particularly high-performing teams, other things matter, too. It’s not just about money! Purpose, pride, ambition, ego: these are vital motivators as well and must be considered by any manager or coach.
Bill knew that he had to appeal to Eric both emotionally and rationally. His suggested compromise worked. At the time he proposed the compromise, Bill did not have everyone’s agreement that Eric would be reinstated as chairman down the road. He simply knew that it was the right thing to do for the company, and that, as the coach, he had the influence to make things like that happen. Bill’s integrity and his long record of sound judgment were paramount. When the time was right, when the IPO was done and emotions had simmered down, Bill would make the case to reinstate Eric as chairman. Which is exactly what happened.
This was an example of high-stakes team building, with a multibillion-dollar IPO at stake and investors, founders, and executives debating difficult issues. But it is in precisely these situations that a team coach is needed the most, someone who can see past individual egos and understand the value that all of the members, combined, create. Team building is vital, and the principles Bill espoused apply at every level of an organization. But it gets a lot harder to hold a team together at senior levels in companies, where egos and ambitions are considerable.
Senior executives may have access to individual executive coaching, but team coaches at that level are more rare. After all, all-star teams may have coaches, but they aren’t really coaching—they usually just sit back and enjoy the show! So why should executive teams, which consist of presumably the most talented people in the company, need a coach? “It was bizarre to me when I first joined the company," Google’s former CEO Patrick Pichette says. “You have all these amazing people at Google. Why would they need a coach?"
In fact, it’s nearly impossible to overstate Bill’s influence in nurturing the Google management team during the company’s formative years, an influence that continued until he passed away. As Omid Kordestani, former Google head of sales, puts it: “What was very special about Google was the community aspect of the senior team. Bill was the glue in that process."
So as a coach of teams, what would Bill do? His first instinct was always to work the team, not the problem. In other words, he focused on the team’s dynamics, not on trying to solve the team’s particular challenges. His job was team building, assessing people’s talents, and finding the doers. He ran toward the biggest problems, the stinkers that fester and cause tension. He focused on winning but winning right, and he doubled down on his core values when things turned south. And he brought resolution by filling the gaps between people, listening, observing, and then seeking people out in behind-the-scenes conversations that brought teams together.
Work the team first
At a Google meeting a few years ago, the group was discussing an issue related to costs in some of the developing businesses. Google board member Ram Shriram raised concerns: the numbers were getting big! Shouldn’t we get more details on how we are working on this? There was some back-and-forth, then Bill spoke up. Don’t worry, he said, we have the right team in place. They are working the problem. “I learned something from that," Ram says. “Bill didn’t work the problem first, he worked the team. We didn’t talk about the problem analytically. We talked about the people on the team and if they could get it done."
As managers, we tend to focus on the problem at hand. What is the situation? What are the issues? What are the options? And so on. These are valid questions, but the coach’s instinct is to lead with a more fundamental one. Who was working on the problem? Was the right team in place? Did they have what they needed to succeed? “When I became CEO of Google," Sundar Pichai says, “Bill advised me that at that level, more than ever before, you need to bet on people. Choose your team. Think much harder about that."
Bill helped us employ this approach in a problem that arose in 2010. Apple (and in particular, Steve Jobs) believed that Google’s Android operating system violated patents that Apple had developed for the iPhone. They sued Google’s business partners, the makers of Android phones. This wasn’t just a business or a legal problem to Bill—it was personal. He was close friends with Jobs and a member of Apple’s board—as well as an informal but influential coach to Google’s leadership team. It was like his two children were fighting.
Bill’s approach was to focus on the team, not the problem. He never even offered an opinion on the relative merits of each side’s case, even though he was quite knowledgeable about the issues and the phone features in question. He did, however, counsel Eric to put the right guy in charge of talking to Apple: Alan Eustace. Alan became the chief diplomat interfacing with Apple. It became his job to ensure that the relationship between the companies didn’t implode.
Much later in Bill’s career, Google was planning an important change to its corporate structure. The company was forming a new holding company, to be called Alphabet, and moving some of its most speculative efforts (called “other bets") out into separate companies. This new organization was a major shift in the operating structure and management culture; Sundar Pichai was being promoted to run Google, with Larry Page moving over to become CEO of Alphabet. Meanwhile, the firm’s head of sales, Nikesh Arora, had left, creating a big hole in one of the key leadership positions. The firm contacted Omid Kordestani, its first head of sales. Would he be interested in coming back?
“It was clear at that point that we would be moving to Alphabet, and that Sundar would be CEO of Google," Omid says, “but it wasn’t clear how we would get there. There were so many complex steps involved." When he talked to Bill, they didn’t talk about the operational changes or any of the tactics or strategy involved. They talked about the team. Bill wanted someone who cared about the company and its people to help with the transition, which described Omid perfectly. “Care for the team like that is unusual at that level," Omid says. “It tends to be pretty cutthroat. But not for Bill. The management team was his primary love."
Excerpted from Trillion Dollar Coach: The Leadership Handbook of Silicon Valley’s Bill Campbell by Eric Schmidt, Jonathan Rosenberg and Alan Eagle with permission from Hachette India; Hardback ₹599.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!