eric schmidt

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One of my mantras is “provide every company employee with an understanding of the brand strategy.” A brand strategy being the organizing principle that drives value. Bank account value. Which is fed by perceived consumer value. When employees know the brand strategy, the good ones pursue it, use it and think about it — even on weekends.

At Zude, a start-up I was a part of in the web space, the brand strategy was “the fastest, easier way to build and manage a website.”  The CFO of Zude Jeff Finkle used to say that every employee walking to their car at night should ask his or herself “What did I do today to make Zude a faster, easier way to build and manage a website?”

When Larry Page took over from Eric Schmidt as CEO of Google, he declared this as a company mission: “To get Google to be a big company that has the nimbleness and soul and passion and seed of a start-up.”  Not a brand strategy.  It’s an operating or operations strategy. Certainly it’s laudable and good business. Certainly employees can ask themselves as they leave the building if they passed the litmus. But it’s inward focused and brand strat needs to be outward focused.  Beware the difference. Peace.

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Here I sit this morning, in a winter wonderland of snow — on this glacial moraine we call Long Island.  And tres beautiful it is.  The storm has cleared, the sun is low casting long sharp shadows. Is there anything prettier than a holly tree branches heavy with freshies? And in the paper paper today, Google has announced Eric Schmidt will step aside come April to be replaced as leader by co-founder Larry Page.

Talk about freshies?

The spin in the papers is that Google feels it has lost a step, becoming a bit too corporate and in need of a return to its entrepreneurial roots.  Google longs to move at the speed of Facebook. Mr. Page is thought to be adult enough now to manage Google – being steeped in the fast and furious start-up culture.

No matter how you spin this thing, it suggests a management problem.  Earnings, announced yesterday, were terrific but the narrative behind the move, not so much.  Something is amiss. I can smell it and it doesn’t waft well. Stay tuned. Peace!

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Google, the most successful, exciting brand in technology and consumerdom is at a crossroads. Its culture of technological obesity (sitting on a lot of tech calories) has it on the verge of creating a social networking property intended to wrest control of that category from Facebook.  Eric Schmidt is a very smart man.  He made many investors lots of money as CTO at Sun Microsystems, leading he team that developed Java software among other things. He saw what happened to Sun after his departure when innovation lagged and he doesn’t want that to happen to Google, the company for which he is now CEO.

Search

Fall forward fast is sound business advice but its best done when following a focused mission. Google’s mission (We deliver the world’s information in one click) is not what social networking is all about. As the Web gets bigger and more tangled — like kudzu in Georgia – it will be harder, not easier, to find the stuff we want. Owning search is still huge and will become more so.  Worldwide pricing. Finding people. Finding the right content. Finding geolocated mobile phones. Finding video. Audio bits. This (and then some) is what Google and its next gen technologists need to be developing. Why are they focusing on Facebook?  Search me. Peace!

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I’ve written before about Google’s “culture of technological obesity” saying I think the company is taking on too much outside of its core mission.  Phones, productivity apps, the list goes on and on. The reality is — the dirty little secret no employee will readily admit — is Google is an advertising company.  (Google Doubleclick.)  Eric Schmidt and his peeps know this but it doesn’t play well at cocktail parties. The technology badge is what they wear most proudly.

Of the $6.78B in revenue announced this quarter, the lion’s share was ad generated.  Now don’t get me wrong, I love Google.  I’m not a hater. They need to succeed.  Google really is changing the world for the better. But they will Divest or Trivest at some point.  The company is a 3-ring business circus.  And because one of the rings — most profitable ring – is advertising, and because Google hasn’t been putting all of its efforts into providing innovation in advertising, it will lose market share. Ad revenue will still grow, but Google will lose market share. My bet is Facebook and Twitter will take share. Facebook is already doing it and Twitter has just begun.

 Advertising is about search, yes, but also about referral and context and point of sale (POS).  Twitter may have a leg up by combining all four.  To all the developers at Chirp…advertising still is da monies!  Peace!

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barcode

Google built a business, quite well I might add, on perfecting search and search usability. They funded the business with advertising.  The brand play was not to be the world’s greatest advertising platform (something Yahoo and AOL didn’t understand), it was all about search. 

Back in the day (last week, hee hee) Google search was all about the Web.  Finding things digital.  This week, it’s about seeing and searching for digital things in the physical world.  So mobile apps and navigation are the rage. Google hasn’t led the way here, Apple has, but Google wasn’t first in search either.

What’s next?

What’s next is search for physical things in the physical world. Call it worldwide inventory. What is worldwide inventory and how will it work?  Not sure, but this cantaloupe sized brain of mine says it may have to do with barcodes.  Now you can’t put a bar code on an $11,000 hip replacement in Mexico (You can’t?) but you can put one on a $12.00 case of Honest Tea with torn labels. The ability for mankind to find real things, in proximity, with their smart phones is what Google will be doing over the next decade. And that hip replacement or $6,000 valve bypass in China will be something worth searching  for. Stay with search Google — it will soon be atop Maslow’s Hierarchy of needs.

Worldwide Inventory may sound like a Pearl Jam song but it’s an Eric Schmidt song.  Peace!

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The business of marketing is and will continue to be a tripartite business: marketers, marketing agents and media. The lines may blur every now and again and some companies will try to bypass one of the players to save a buck, but the system will endure. 

 

Microsoft purchased aQuantive and Razorfish to see if it could get into the marketing agent business and now has decided it can’t and is selling Razorfish. Smart move. Marketing agent Anomaly is trying to become a marketer and will enjoy some modest success, but they are more likely to make their bones giving independent counsel to makers of products and services than change the system.

 

At Cannes Eric Schmidt and Maurice Levy agreed to play better in the sandbox…but there needs to be a little friction between media (Google) and agent (Publicis) for everyone to make money. Friction and conflict keep everyone on their toes.

 

Media will change. Ad agent tools will change. Products and services will change. The tripartite system will march on. Peace!

 

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YouTube 2.0?

Google is making beau coup bucks because the search algorithm is done and it doesn’t take a lot of overhead to serve up a page with search results on it. These pages are richly monetized with advertising.   YouTube, a Google property, is not profitable (according to Credit Suisse it will lose $470M this year) because servers, bandwidth and other software required to serve the world’s videos are stiflingly expensive. 

 

The New York Times reports today “YouTube would continue to embrace content created users, even if it was not easy to earn revenue from it, because that content was essential to the popularity of the site.” Said Eric Schmidt, Google CEO, “Usage drives revenue opportunities. Usage always comes first at Google.”

 

Google is trying to monetize YouTube but floundering.  I don’t have a good feeling about YouTube adding TV programs and movies to compete with Hulu and earn some jing. If they do go that route, which will be even more expensive than serving user-generated 2 minute videos, they should go the brand extension route or, better yet, come up with a new and unique pay-for brand. Peace!  

 

 

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David McCullough’s book on John Adams is a slow read but has its moments. One such moment is the description of Washington D.C. and how it became the capital before it was much of a town.  Adams thought the president and capital should be in a big city – a place befitting the center of the new world. Jefferson, however, wanted something a little closer to the South and had the vision to recognize you had to start somewhere. So in 1800 our nation’s capital moved to the little backwater town of Washington D.C. and began its long path to greatness.
 
Early Washington D.C. is an apt metaphor for what YouTube is today as an advertising vehicle. YouTube is only expected to generate $200 million in ad revenue this year and Google’s CEO Eric Schmidt (parent of YouTube) has been quoted in the Wall Street Journal as saying “the company hasn’t yet found the best formula for video advertising.”  Oh, it will. Give them another year. And if you buy online media today, YouTube is a great place to start.  Soon they will be printing money.
 
One prediction: the solution won’t include pre- or post-roll. Peace!
 

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