Google seeking to rekindle that start-up feeling

SAN FRANCISCO - Google is richer than ever, but it's not as cool as it once was.

Facebook boasts 500 million members who share 30 billion links, notes, and photos each month - data that Google's search engine can't completely index. Facebook is so influential that 26-year-old founder Mark Zuckerberg was just named Time's person of the year, and a movie about the company's early days is a contender for best picture at the Oscars.

Twitter, Groupon, and Foursquare are additional thorns in Google's side, raising worries that the online search leader may be losing the competitive edge that turned it into the Internet's most powerful company.

Making Google hip and nimble again will be the priority as Larry Page, one of the two Stanford University students who founded the company in a garage in 1998, prepares to reclaim the CEO job in a shake-up that surprised Silicon Valley.

He last held it a decade ago, when Google Inc. had less than $100 million in annual revenue and fewer than 300 employees. Google's size today - 24,400 employees and annual revenue of $29 billion - has slowed its decision-making and innovation in the last few years.

About 200 of Facebook's 2,000 employees defected from Google, and the migration appears to be about more than just the allure of getting stock options in a hot company before it goes public. Some engineers seem to be drawn by the work at a smaller company, which offers an opportunity to reshape culture with less corporate bureaucracy and more creative freedom.

"Facebook has become the cool kid on the block, and now Google wants to prove it can still be cool, too," says Danny Sullivan, who follows both companies as editor-in-chief of Search Engine Land.

It's not an impossible feat, says Michael Cusumano, an MIT professor of management. As an example, he cites IBM, which seemed on its way to becoming a tech dinosaur in the early 1990s before Louis Gerstner arrived as CEO and streamlined the company.

To get back to its roots, Google concluded it needed to rearrange the hierarchy in place since technology veteran Eric Schmidt was brought in as CEO in 2001. It was an egalitarian arrangement, with Schmidt never having the final say on important matters. Page and Google's other founder, Sergey Brin, always weighed in, too.

In April, Schmidt will become executive chairman and relinquish the CEO duties to Page, now 37. While Schmidt travels the world meeting with business partners, government officials, and potential takeover targets, Page says he will make most of the big decisions as he tries to rekindle "the soul and passion of a start-up." Brin will concentrate on developing products.

Page, worth $15 billion, remains something of a rebel who has always had a disdain for corporate protocol.

"Larry and Sergey both hate being organized. They don't want to be locked into meetings," says Ken Auletta, who got to know them while writing his book Googled: The End of the World as We Know It.

While a freewheeling attitude typically works well at small companies, it could cause problems in a company as large as Google, says Steve Booth, a business professor at the University of Chicago.

Schmidt, 55, has no doubt Page is ready for the challenges ahead.

"Larry has been with me in every major decision in the past decade," Schmidt said in an interview Thursday. "It's not like he has been sitting around doing nothing."

Although management by committee worked well enough to turn Google into an enormous success, it eventually slowed Google's reaction to popular new ideas such as Facebook and Twitter.

"Facebook is the most ominous threat to Google," Wedbush Morgan analyst Lou Kerner said, "but Facebook is just emblematic of the rising pace at which all of these [start-ups] are moving."