Two venture firms Kleiner Perkins of John Doerr and Sequoia Capital of Michael Moritz that had invested $25 million in Google in 1999 had gotten nothing in return, as they saw it, except frustration and headaches from the Google Guys, who had done everything possible to maintain absolute control. So the firms insisted that Brin and Page would fulfil their verbal promise to hire an experienced first-rate executive, someone who could be Google’s public face when it came time to cash in on Wall Street. But Brin and Page rejected one candidate after another, believing that everything was fine at Google. They had done their best to discourage many candidates Doerr sent to them from wanting to come to work with them. He was already beginning to feel that nobody would please them. In its turn Moritz threatened to demand repayment of his company $12.5 million investment.
At that time Erich Schmidt was the CEO of software maker Novell and wasn’t looking for a new job. He knew he would need one soon after Novell completed a merger, but Google was not a company of interest for him, Ph.D. business executive. He had done the best to avoid a meeting with Google Guys, but John Doerr finally persuaded him to meet them and talk about a role in the management team. Sergey and Larry had as little interest in meeting Schmidt as he had. He was no more than the latest in a series of technology executives, so they planned to send Schmidt on his way back to wherever he had come from, just as they had everyone else.
Almost as soon as Schmidt sat down in the room with Brin and Page, Sergey laid into him about what he termed the “stupidity” of the Schmidt’s strategy in Novell. Erich recalled that they argued for at least 90 minutes and he walked out with two thoughts: there were the best arguments he had had in a very long time, and he sensed he would end up involved with Google in some way.
For their part Brin and Page liked Schmidt better than the other candidates they had met. They liked that he was not only experienced CEO, but was also a computer scientist and had scientist’s love of research as all the best people they hired at Google. He was not afraid to speak his mind and was not intimidated at their first meeting. Schmidt also had something else others might view as a weakness, but Brin and Page saw as strength: he had failed at something during his Sun Microsystems career, challenging Microsoft by leading the development of Java, an independent programming language, and he had defined the company’s Internet strategy. The effort was largely unsuccessful, but it showed Sergey and Larry that Schmidt was not afraid to take on Bill Gates and his computer-based operating system with software that gave businesses and people a choice rather than a having a system forced upon them. This took a certain independence that Brin and Page admired, and it also meant that Schmidt recognized what Sun had done wrong in challenging Microsoft’s dominance.
But they had no intention of lavishing him with cheap stock options without extracting a hefty commitment. They wanted proof that he was emotionally and financially invested in the company they had founded and built. They went round and round over stock options, and finally Erich agreed to pay $1 million of his own money to buy preferred stock in Google. He did it in early 2001 when the company was running short of cash, so the money truly served a business purpose. He served simultaneously as chairman of both companies from March until July of 2001 and in July, when the Novell merger was completed, he was appointed CEO of Google Inc.
Google Guys, so excited about retaining their control over Google, chose Erich Schmidt as company’s CEO and established the unorthodox hierarchy of trio on the top. But in that trio Schmidt, even though he held the ranking title of CEO, would soon find out that he could be outvoted.
David A. Wise, The Google’s Story, 2005
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