Google kicks off the Larry Page era: 5 challenges ahead

Google kicks off the Larry Page era: 5 challenges ahead

Summary: Google officially welcomes Larry Page as its CEO on Monday and the years ahead should be very interesting. What's unknown is whether Page, part of a three-headed management structure, will be Steve Jobs or Jerry Yang as CEO.

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Google officially welcomes Larry Page as its CEO on Monday and the years ahead should be very interesting. What's unknown is whether Page, part of a three-headed management structure, will be Steve Jobs or Jerry Yang as CEO.

Previews of Page's first day abound, but the bottom line is this: The new CEO has vast challenges ahead and a lot of pressure. First, he has to fill the shoes of Eric Schmidt, who will be executive chairman with a focus on government relations and dealmaking. And then Page picks up the Google reins just as the company is more complicated than ever.

With that backdrop, here's a look at Page's top five challenges:

Managing a large company and recapturing startup mojo. Page was CEO when Google was founded. That was roughly 24,200 employees ago. Processes, procedures and the usual corporate bloat all become risks at a company as large as Google. Page wants to recapture Google's startup days, but it won't be easy. Another problem: Page has no experience running a company as large as Google.

Finding Google's second trick. Google's business model revolves around advertising. Yes, there are some promising areas such as mobile, but for the most part Google is a one-trick search advertising pony. Page's task: Develop new revenue models. Here Google needs to be more like Microsoft, which has two cash cows Windows and Office. Google needs to find its second trick. "We look to see if Page can better increase the integration of Google’s technology with business models to generate new revenue," said BGC analyst Colin Gillis.

Trust. Folks trust Google with a large amount of data. However, the Federal Trade Commission just slapped Google for its Google Buzz implementation. It's highly likely that Page will face some trust crisis at some point. How he manages privacy issues will determine how Google navigates consumer and partner wariness. Although Schmidt is focused on government relations rest assured Page will have to be involved too.

Balancing Wall Street expectations and investment. Page takes over at Google during its slowest part of the year. Meanwhile, Google expenses are surging due to a 10 percent salary increase for all employees. CEOs buy goodwill by delivering strong quarters. You can't stumble out of the gate. Stifel Nicolaus analyst Jordan Rohan is already worrying about Google's first quarter. He said in a research note:

Ahead of Google's 1Q11 earnings report, we are trimming revenue estimates after channel checks that suggest slightly weaker U.S. paid search activity, in addition to our expectation of a $40 million disruption in Japanese operations. We also note that margins are particularly difficult to predict this quarter, after a confounding increase in sales and marketing spend in 4Q and the expected 10% increase in base salaries.

Being the front man. The San Francisco Chronicle spent a lot of ink fretting about Google's perception and image problems. The story portrayed Page as aloof and recommended a comprehensive PR strategy of sorts. The Chronicle was a bit overwrought, but does pose a good question: Can Page handle the public and regulatory scrutiny? Part of the CEO gig is being a cheerleader. Page will have to adapt to that role.

Topics: Banking, Browser, Enterprise Software, Google

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42 comments
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  • Larry will do just fine. He will help attract the kind of talent to take

    Google to the next level. Hopefully he will let people take bigger risks that are needed, sooner. For instance, they should have started on Android, Chrome and ChromeOS a lot sooner. Look for them to take bigger bets, sooner under Larry. Also look for Larry to be backed up by a lot of other talent.

    The biggest challenge will be getting Larry to do public events. Maybe they will have to look for a core team to do most of the public events for Larry.
    DonnieBoy
    • RE: Google kicks off the Larry Page era: 5 challenges ahead

      @DonnieBoy While I know it really pains you to see negative comments coming from industry and financial institutions, it will be interesting to see Google try to compete with the same views the big boys like MS, Apple, Oracle, IBM and SAP et al have to deal with; the slings and arrows and consumers for years, especially the user comments. Goggles ego's are really big, and they have had a slew of failures. Their products are OK, and now people are expecting more. It was encouraging to see them acknowledge the Web based applications just will not cut it for a majority of people or for more than just the most basic of tasks. This has been true here. That alone is an acknowledgment that the web only paradigm will solve a niche and some basic needs - especially collaboration, but will not get you to the end solution in alot of areas. The targeted advertising they sell is becoming more and more scrutinized as is the likes of Facebook. The other acknowledgment is that the free and open distribution of Android, while a "noble layover of the 60's movement" is getting them some bad, and inaccurate, PR. When a phone or device running Google stinks, Google is blamed while 95+% of the issue is the provider and not Google, yet they are tied at the hip with this, thus the controls on it are promising. Thought I'm sure Apple and MS are smiling, and happily saying - "told you so". How Larry handles this and the growing pains they are obviously just now getting to and will continue to become louder, will be interesting to say the least.
      ItsTheBottomLine
  • Did ZDnet just give Microsoft a backhanded compliment?

    Did ZDNet just say that Google should be more like Microsoft and have more products? That shocks me. What does not shock me is that you minimized Microsoft's dominance in multiple verticals. Microsoft has *Several* Billion dollar business: Windows, Office, SQL, SharePoint, and Kinect just to name a few.
    Your Non Advocate
    • Well, they were trying to be kind, but, any way you look at it, Microsoft's

      future does not look good. That is why the stock is in the toilet.
      DonnieBoy
      • RE: Google kicks off the Larry Page era: 5 challenges ahead

        @DonnieBoy LOL... Yeah. That Windows 7 thing isn't selling well at all. Terrible numbers there.. and that Office 2010.. my God what a flop. Oh Wait... that was what I saw in my trips to an alternate Universe... Here in this one... these were numbers 1 and 2 in overall software sales for 2010....and not by a small margin. Windows 7 outsold all previous versions of Linux combined in its first 30 minutes of being released. :)
        condelirios
      • condelirios: Yes, and what is the outlook for MS? How is the stock price

        doing compared to Google and Apple?
        DonnieBoy
      • Please do not tell me that you are a stock broker

        @DonnieBoy
        Have you actually compared the number of shares outstanding between Apple, Microsoft and Google. Google and Apple, and for that matter any company that restrains the total # of shares outstanding will generally have a stock price per share greater than those of companies that have more shares outstanding.
        Your Non Advocate
      • You are babling about something you do not understand. Look at the stock

        prices over the last 10 years for Apple, Google, and Microsoft. See how the investors have fared with each stock.
        DonnieBoy
      • I can understand why Google does not wish to sell more stock

        @DonnieBoy
        If Google were to have 8.4 billion shares of stock on the market as opposed to 321 million they do now, their stock would cost approximately 22.75 per share.

        With the worries of Larry Page heading the helm of Google, their future does not look to good.

        The only reason that this change was made was because Google's future was "in the toilet", as companies do not change their CEO's when they have the confindence of investors.
        Tim Cook
      • facebook@..., DonnieBoy does not understand

        @facebook@...
        the functions of the stock market. On a side note, I do hope he did not purchase any Google stock at 746.00 a share a few years ago.
        Tim Cook
      • RE: Google kicks off the Larry Page era: 5 challenges ahead

        @DonnieBoy Same prediction - and same result - wrong. But keep trying your silly wishes are funny to read.
        ItsTheBottomLine
    • RE: Google kicks off the Larry Page era: 5 challenges ahead

      @facebook@... com'on... DonnieBoy doesn't understand volume and market stock analysis... anything Microsoft equals doom and gloom even if earning reports say otherwise.
      jessiethe3rd
  • He's got his work cut out for him

    Bureaucratic rot is already taking place at Google and so I agree with the need to recapture the startup mentality. The problem is, it is next to impossible to do.

    Fixing Android is doable and needed now. Chrome OS? Probably just a waste of time.
    otaddy
    • Well, dealing with the size of Google is a challenge, but, they are doing

      just fine. The big problem of bureaucratic rot is at MS where they have a very hard time getting out operating system updates and figuring out direction.

      Also, Android is doing extremely well, and they want to do even better. So, not a matter of "fixing", but improving. On the other hand, things are terribly wrong with WP7, and "fixing" would be appropriate in this case.
      DonnieBoy
      • RE: Google kicks off the Larry Page era: 5 challenges ahead

        @DonnieBoy Stop talking about Microsoft, DonnieBully.
        Grayson Peddie
      • Grayson Peddie: Are you trying to say that Microsoft is irrelavent and that

        we do not need to talk about them anymore????? I do not think that they have reached that point . . . yet.
        DonnieBoy
      • No, he's saying this is a topic about Google

        Yet all you seem to do, in every topic, is insult Microsoft.
        Michael Alan Goff
      • RE: Google kicks off the Larry Page era: 5 challenges ahead

        @DonnieBoy You bone head he's saying this is about Google, not your date night preparation topic of Microsoft.
        ItsTheBottomLine
  • RE: Google kicks off the Larry Page era: 5 challenges ahead

    I like to call this the end of Google era. They are headed downwards, have been for a while since they lost focus of their business and just want to play with office toys all day.
    Loverock Davidson
    • Wow, YES, I could not agree more. Steve Balmer has been brilliant lately,

      and WP7 market share is soaring, along with their stock price. Windows 8 will be out in a very short time, also running on Arm, and competition will be crushed. At the same time, the importance of locally installed office suites is exploding.
      DonnieBoy