Will Google stay as hot as its lava lamps?

To remain at top of HR game, company faces hurdles including less-attractive stock options and prospect of reputation declining. Photos: A Google of ways to work

Ed Frauenheim Former Staff Writer, News
Ed Frauenheim covers employment trends, specializing in outsourcing, training and pay issues.
Ed Frauenheim
8 min read
For a few years now, search engine darling Google has worn the tiara as the tech world's "it" company.

But as it matures from cool-kid start-up to publicly traded veteran, can Google maintain its status as "the" place people in the technology world want to work?

It won't be easy. Although Google has signed on big-name talent from major companies such as Microsoft, its hurdles include retaining newly minted millionaires who helped build the company before its initial public stock offering earlier this year. Google also faces the challenges of attracting new workers without the lure of pre-IPO stock, staying on top of new technology markets and maintaining its trustworthy reputation.

Microsoft, Yahoo and Cisco were all once the "hot" tech company at which to work, and their luster faded as they grew and aged. But Google, which now has roughly 2,700 employees, seems determined to continue with what's been its recipe for success so far: Create cutting-edge technology to pursue grand goals.

In addition, the company is being smart about one of its potential rivals, the open-source community, according to Jupiter Research analyst Gary Stein. Whereas Microsoft heaped scorn on the growing open-source movement, Google has shown respect for it, Stein noted. By doing so, the company has kept its techie street cred. "They're still seen as part of the community of hackers--in the best sense of the word," Stein said.

A bold mission
Born in 1998, Google is the brainchild of Stanford University computer science graduate students Larry Page and Sergey Brin. In short order, it became the leading Web site for conducting Internet searches, standing out for both a simple design and a methodology based on the popularity of Web sites.

The company bills itself as a place where tech professionals will simultaneously find challenging work and change the world. "You won't find any bored engineers at Google," the company's Web site states. "You will find friendly colleagues, fascinating projects and the opportunity to make life better for tens of millions of people every day."

So-called "Googlers" are promised an unusual degree of freedom. All employees are encouraged to work on their own individual projects 20 percent of the time. And those projects have the potential to be ambitious in terms of computer horsepower. Sources familiar with Google say the company has built a vast server farm of more than 100,000 machines that can be used to solve tough computing problems.

Google also may be the last of the dot-coms when it comes to workplace culture. Its "Googleplex" headquarters in Mountain View, Calif., boasts free lunches, on-site dental care and dog-friendliness. Luminaries such as Jimmy Carter, Al Gore and Gwyneth Paltrow have visited, adding to the company's coolness factor.

Perks pay off?
Despite perks and eccentricity--or perhaps in part because of them--Google's IPO in August raised $1.66 billion. And even though the company used an auction-based approach expected to prevent the stock from sky-rocketing, the shares lately have been trading at more than twice the initial price of $85.

Over the past year or so, Google has expanded its technology reach well beyond Internet search. It has pushed into e-mail, desktop search, and digital video search--where it appears to have a more ambitious effort under way than Microsoft or Yahoo. Google's work, thus far, is broadly admired. A Microsoft employee recently tipped his hat to Google in a blog. "So now I have Gmail, the Google Toolbar, the Google Deskbar and the Google Desktop," the employee wrote. "I work for Microsoft. I own plenty of Microsoft stock. I want Microsoft to succeed. But right now, Google is kicking our butt."

The company, which is now hiring people ranging

from a receptionist to attorneys to software engineers to sales coordinators, is swamped with job applications. Google gets more than 1,000 resumes per day. "Google is definitely the company that people are interested in," said an official with a technology recruiter in Silicon Valley. The official, whose company works with a Google competitor, asked to remain anonymous.

This year, Google opened an office in Kirkland, Wash., down the road from Microsoft's headquarters in Redmond. Microsoft software developer Adam Barr speculated in his Web log that the sole reason for opening the new office is to poach Microsoft workers.

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Microsoft CIO Ron
Markezich sits down
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"I doubt people working on MSN Search itself would be tempted to switch; they are already working on a search engine, and their product is getting lots of executive love," Barr wrote in October. "But Google as a whole (and its stock) is so red-hot that it could look mighty appealing to someone stuck in a less visible project (at) Microsoft."

Microsoft hit by poaching
Jim Allchin, Microsoft's Windows chief, conceded that Google has stolen some of the software giant's talent, according to a story in The Seattle Times earlier this month. Microsoft has lost a "handful" of employees to Google, the paper reported Allchin as saying. "We lost some people, who went to Google, who we didn't want to lose."

If Google is at the zenith of recruiting hotness, Microsoft has slipped a bit, Allchin's comments suggested. "I do believe our campus recruiting might not be as much of a grand slam as it was the last two years, but we're still doing pretty well," the newspaper quoted Allchin as saying.

One Microsoft developer said he considered applying to work at Google but feared long hours at the younger company. "I'm concerned, actually, that Google would be a sweatshop," said the developer, who spoke on condition of anonymity.

Google declined to comment on this concern. The company's Web site promises a "family-friendly work environment" but admits that "the pace is intense."

In a lawsuit earlier this year, Google was accused of routinely discriminating against employees over the age of 40 in its recruiting, hiring and employment practices. Google said the case was without merit.

Whatever warts it might have, Google has succeeded in luring some high-profile tech pros. They include Adam Bosworth, a former employee of BEA and Microsoft who helped create Internet Explorer, and Joe Beda, a Microsoft veteran who's worked on the software giant's next-generation graphics engine, Avalon.

The company also brought on Joshua Bloch, a Sun Microsystems developer who has designed major enhancements to the Java programming language and application programming interfaces, or APIs, well after recruiting former Novell CEO Eric Schmidt.

A victim of its own triumph?
Google's very success, though, is creating challenges. As the company expands, it risks losing the dynamic feel of an intimate team--a dilemma for any growing firm. Google isn't anywhere near the scale of Microsoft, which employs more than 57,000. But the company is proliferating--it has added more than 750 workers since the end of March.

Now that Google has had its IPO and become a household name, it might be harder to attract people looking to put in "sweat equity" in exchange for a possible stock option fortune. Although Google shares have soared to about $185, they're not likely to rise as rapidly over the next year, said Jason Avilio, an equity analyst at investment firm First Albany. Avilio's price target for the stock over the next 12 months is $195. "They can't offer the same level of equity compensation as they have historically," Avilio said.

Like other companies that go through an IPO, Google also may suffer from new employees envying the older ones, some of whom have stock options worth millions.

Another potential HR headache for the search giant: Talented Google veterans could cash out their stock options and retire early.

"We are thinking about that," said Stacy Sullivan, Google's human resources director. "We're working to make sure it doesn't become an issue."

Sullivan said the company might let such employees have flexible schedules. In addition, she pointed to a new perk coming to the Googleplex early next year: a day care center. Also vital in retaining

employees, Sullivan said, is giving them interesting work.

So far, the company seems to be faring well in the post-IPO era. Google says it hasn't seen a drop in the number of resumes it receives. And Jupiter's Stein hasn't noticed employees leaving Google in droves. But he warns that the company's magnetic pull could weaken if it departs from its visionary mission. A good example of that philosophy in action, he said, was Google's recently announced plan to help create digital copies of books at major libraries.

"If that changes to, 'You've got to crank out what we think people will buy,' and employees start working on bland projects, you're going to lose some people," Stein said.

Page and Brin have made it clear that they intend to pursue high-minded, long-term goals and treat workers well. The company is set up to preserve the power of current leaders, partly through a dual-class stock system.

But there's no guarantee that its current brain trust will remain at Google's helm. Other tech companies have lost farsighted leaders. "Jobs and Wozniak were pushed out" of Apple Computer, Stein said.

"I own plenty of Microsoft stock. I want Microsoft to succeed. But right now, Google is kicking our butt."
--Microsoft developer

Meanwhile, as king of the search mountain, Google faces competition from a range of players--including giants Microsoft and Yahoo, as well as newcomer Blinkx. Compounding this threat, Google's core business, Web search, is an area where preferences could change quickly, and there's little user "lock-in" of the sort that keeps money flowing to Microsoft.

To be sure, with applications such as desktop search and Gmail, the company has been spreading its wings far beyond Web search in recent months. In addition, there are indications that Google is working on Web browser technology.

Open arms for open source
Such an initiative could place Google in competition with the open-source software community, which has seen success with the Firefox browser.

But by hosting an event earlier this year focused on the Mozilla group's work on Firefox, Google indicated that it is more interested in embracing than attacking open-source projects. And Mozilla, by featuring Google as the default search engine in the Firefox browser, is reciprocating.

In addition, Google has remained vigilant about seeking out top technical talent. The company's recruiting methods have included coding contests, mysterious billboards and an aptitude test with this question: Write a haiku describing possible methods for predicting search traffic seasonality.

With its quirkiness, technology prowess and commitment to do no "evil," Google appears largely to have won the trust of both the general public and the developer community. But the company's reputation could suffer as it becomes more powerful and remains relatively tight-lipped, suggests Stephen O'Grady, an analyst at research firm RedMonk.

"The problem for Google, I think, will come as they amass more and more information--personal and otherwise--because along with that information stewardship comes grave responsibility," O'Grady wrote earlier this month. "Thus far, Google has shown little to indicate that they recognize the serious nature of their information management role."

In addition, the Internet--which enabled Google to emerge and whose importance Google has in turn increased--makes it possible for another star to rise just as quickly, said Richard Spitz, who heads the technology practice of executive recruitment firm Korn/Ferry International.

Spitz, whose firm has done work for Yahoo, gives credit to Google's founders for trying to be "true to their vision." But, he said, "there are a lot of companies we thought would be hot forever. It's a challenge great companies face."

CNET News.com's Stefanie Olsen contributed to this report.