Eric Schmidt's lucky search

The 46-year-old earlier this week was selected to become the chief executive officer of Google, the Web indexing and search company that has created a buzz among the digerati. What's more, Google is considered one of the more likely companies to turn in a hot IPO--that is, whenever management decides it's time to take the plunge.

That's not on the immediate agenda, says Schmidt, who intends to make a few tweaks to what he says is otherwise a smoothly running shop.

A seasoned manager is what Google's board wanted and that's what it found. Schmidt served as CEO of Novell; he recently resigned the post, but remains Novell's chairman of the board. He was previously chief technology officer at Sun Microsystems, where he oversaw the development of Java and formed the blueprint for the company's Internet strategy.

In one of his first interviews as the new Google CEO, Schmidt chatted with CNET News.com soon after the news of his selection was made public.

Q: Strategically, how do you envision Google's future?
A: Things are going pretty well right now. One of the board members called me up and said, "Congratulations, don't screw it up." They were joking, of course, but my point here is that Google has done extremely well since it was founded. And I was brought in to help it grow. I'm used to the problems of growth. I don't anticipate any significant strategic changes. There are a few minor things. The finance system needs to be updated, for example; it's limited and it needs to be upgraded. There's lots of internal stuff, but the strategy itself is working very well.

The company is growing pretty rapidly. It has the largest market share of all the search services, and we are amazingly now profitable. Not due to my good work. I'm just the new guy.

As a business story, Google is one of the few dot-coms that are doing well financially, and I'm sure you know we do some advertising that is highly targeted. It's an enormously valuable brand.

Should Google morph into more of a full-blown portal?
We've discussed this question at length, and our conclusion is that we would not become a portal. It's all going to be search...and search.

Why do you think there's such a big market in that?
Let me ask you, what do you do on the Internet every day?

A lot of research.
Sounds like we have half your time right there. Millions of people are looking for information on the Internet.

How much better can search technology become?
There are lots of ways. Let me give you an example: If you write a story and it goes up on the Web and gets onto Google in the next couple of days. Wouldn't you like it to be accessible right now?

We'd like Google to be real time. You make a change (to the Web) and it goes up immediately.

Google's become popular because it's considered a cut above the competition. But it's still a long way from being perfect.
You're never done. In your research, you have to look up information on businesses. If you're a physicist, you look up information on physics. There's a lot of specialized information that Google does not have. It would be great if we could put all that information into Google. We could work with a lot of people to get this specialized information.

Go to image search and see how many pictures come up under your name; it turns out that's the most popular image search. As an example of (improving search technology), we're getting more pictures. I can give you example after example (of ways to improve).

What is your take on online advertising?
Google is trying to remain pure. I think some of these new strategies are really offensive. We'll try some new (advertising). If possible, we'll show an ad related to a visitor's query.

When you came on board at Novell, the company was under pressure--falling market share and red ink. When you left, the company continued to be under pressure with falling market share and red ink. How would you rate the job you did?
My view of my performance at Novell is mixed. I felt the turnaround was successful; the initial strategy was successful. But the PC industry has been under pressure for some time. A 10,000-person company requires an enormous operational-oriented strategy. Jack (Messman, Novell's new CEO) will do a better job of implementing the strategic vision.

For me it was the right personal decision, and it's better for the Novell shareholder. I felt like something smaller, like Google, would be a better fit. And it was where I wanted to spend my time operationally.

Is the situation at Google a better fit for the skills you bring to the job?
I'm used to working with these high-growth, high-tech, strategically focused companies. I can add value at Google that the folks at Google don't have (because) I have run larger companies.

If you could have it back, what would you have done differently at Novell?
I don't have any regrets about what I did at Novell. In hindsight, we did not understand the channel transitions that would happen in the PC industry, and I would have liked to have understood that earlier.

What are your first priorities as you settle into the role at Google?
Mostly, it's rounding out the management team--all the non-strategic stuff, stuff that's missing that would be required if you were a public company like a real forecasting system, for example. My own theory about the dot-coms is that they went public before they had those systems in place. They didn't have those forecasting systems in place, so their businesses went kaput.

How are Google's revenues split?
Two-thirds comes from advertising and one-third comes from powering people like Yahoo.

Considering the current investment climate, would it be fair to assume that a public offering is not on tap for this year?
I'm careful not to talk about a specific date for an IPO. But we don't need to go public. We don't need any money, because we're generating cash. We may decide we need more cash, but the current answer is no, we're not planning on going public in the short term. The market's not conducive to an IPO.