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Comment by grandalf | Hacker News Reader

The more I read about Schmidt the more I think he's soon to be replaced by Larry or Sergey as CEO.

The guy has a knack for putting his foot in his mouth in interviews, and he's been publicly identified as the guy who wanted to stay in China, wanted to abandon Net Neutrality, and who made a few gaffes in reference to the captured wifi network info, etc.

Schmidt is also the face of Google in Washington DC, and has led the Company's efforts to innovate via legislation. He is also very tight with the Obama campaign and campaigned overtly, which is not (in my opinion) an appropriate thing for a CEO to do.

In a lot of ways, his instincts clash with the values that Larry and Sergey seem to be trying very hard to perserve... My prediction is one more gaffe, particularly one accompanied by a stock price dip and he's out.

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If you were a shareholder, would you rather want your company to be controlled by a shark, who pursue profits vigourosly at the cost of the occasional PR failure (that doesn't really seem to affect them in any real term). Or would you want it to be controlled by two geeks that started their company with the motto: "Don't be evil" and would put (I imagine) ethics before profit?

Not all shareholders are eager to sacrifice values and principles to maximize returns.

Sure. But there's enough people who would gladly pay the current price _and_ sacrifice values that I doubt any choice by the "ethical" people would make much of a dent in their share price.

It's a mistake (though a common one, and almost an American truism) to equate "being a shareholder" with "fixated on next quarter's earnings above all other factors". There are other standards of behavior, even if you still profess an interest only in money, especially if you still want your company to be thriving in a decade.

True. It's even true from the standpoint that any investment comes with a notion of time frame. If I invest in Google I'm not looking to cash out next quarter, so I'd rather that Google allocate funds toward projects that come to fruition just before my intended cash-out date.

I agree that a shareholder may be interested in the long term, though not many are (what happens in the long term is not a problem if you manage to sell your shares beforehand).

At the same time I think most shareholders want to make money from their shares. I am sure that there are a significant amount of ethical shareholders, but not enough that their behaviour would change the shares strongly. They would simply pick a company that is more ethical. But as long as Google makes the earnings it makes, I am sure others would happily take their place.

As for the short-term vs. long-term I would agree with you if Google ended up losing business. But I think we (as in the geeky people on this and similar sites) are out of touch if we think they'll lose much. Look at Facebook and the failed boycott. I don't think a few PR gaffes from its CEO would do Google any harm.

Look: I am not defending Google. I hate that people (and shareholders) are not more ethical. I hate that shareholders may hold onto their stock for only a few days or months: originally it was meant as a way to fund companies you believe in, not as a bet on the market. I am just trying to justify why I think there's no way that this or many more gaffes like this would force Schmidt to resign (or be fired).

Expectations of future earnings affect share prices today. And of course if stock markets were perfectly efficient with full information, then stock prices would never change - they would be the net present value of all future earnings.

So the question isn't whether or not Google is profitable today. It's rather, is Google going to be as profitable as it could be in the future? If it keeps up with what it's doing, there's a risk it could attract unwelcome attention from regulators, especially in Europe. It doesn't take much pissing off of the public re privacy for politicians to be motivated to meddle. Google would do well to put that off as much as possible and minimize potential ramifications. And that work pays off in today's prices.

I perfectly agree. It's a risk Google is taking: Schmidt has its pros and cons. The question is not that having a bad reputation may be a risky and one day hurt their revenues. The question is how that would compare to not having done anything, i.e. a Google where Schmidt was not in command. Would we have had Buzz, AdMob, Android and Facebook killers?

So it's the benefit of having Schmidt more or less than the disadvantages brought by his gaffes? My feeling is that apart from a people in tech related websites, most people would soon forget about these gaffes. As evidence I pointed out to Google's current share prices, and other companies that have had similar gaffes or actual problems, such as Apple or Facebook.

Google's business is heavily based on trust, so I think ethics are fairly important.

I was very disappointed to see Google trying to innovate by legislation. Why should a company with the best engineering talent resort to such games?

Also, don't underestimate the impact of the shifting demographics of internet/privacy awareness.

Google succeeded because it had a simple product (search) that just worked, and because its ads just worked. Schmidt has had nothing to do with most of Google's revenue and I think he's more likely to screw things up by approving unwise M&A activity or making ill-conceived public statements than he is to somehow usher in a new era of corporate growth.

Also, I question anyone who is too gung-ho about a political candidate; particularly anyone who does it from his/her public corporate podium. It suggests that the person is overly attentive to the sort of base, clannish activities of humans, taking sides, being in the "in crowd". Such behavior often correlates with success in bureaucratic organizations, but that's not the person you want as CEO.

Wow. Apparently I didn't realise such a post would get me downgraded... did i offend someone's sensibility? Was I rude??? Curious...

Anyway, back to your point. I agree on what you said. But the problem as I see it is that Google (the company) is not hurt by its CEO's gaffes. Facebook is a lot worse, and it's still going strong (and the boycott was a total failure). Google itself is going strong: it's becoming harder and harder to stop using it.

So sure, if Google's business started to suffer because of Schmidt then I would agree. However at the moment it seems that the business has been helped by him not hindered. They may have traded ethics for revenue, but clearly not many shareholders were concerned on that, or the prices would have fallen. Those shareholders would be concerned if Google started to lose business, but that doesn't seem likely to happen at the moment.

(I didn't mod your comment down fyi). I think it was a legitimate question.

I guess it depends on how much credit you give to Schmidt for Google's success. I find it hard to believe that he deserves much... but I could be wrong.

My impression is that Schmidt was the one behind the massive expansion of Google into everything. Both in its need to have a finger in every pie and it's sequence of acquisition it reminds a bit of MS and other such companies. I don' think Schmidt was behind much of the current success, just behind the direction Google has been sailing to.

But I agree that if Schmidt deserved a lot less credit for it, then his position as CEO would be more at risk from these gaffes.

You cannot logically justify this statement: "Google (the company) is not hurt by its CEO's gaffes"; with this evidence: "Google itself is going strong: it's becoming harder and harder to stop using it."

It's perfectly possible for Google to be doing worse than it could otherwise have been doing, yet still be doing quite well.

As to your other point, the reason I downvoted it was because it was very short-sighted. Companies that are "controlled by a shark", as you put it, are not well liked, don't attract the best employees, and ultimately get replaced when something with higher values comes along. That kind of thinking is not in the company's enlightened self-interest, and is counter-productive in the medium to long term.

And consequently, no, I wouldn't prefer to invest in such a company, because I would believe it wouldn't have much of a growing future ahead of it. At best, it would maximize profits (as best it can) from mature cash cows in static market; something like Unilever, or P&G. It would be a "safe" investment, and consequently not very rewarding. But in a fast-paced and changing market, it would be a very risky play and subject to dramatic change in less than a decade.

Well, if it was short-sighted you could have replied to it (as you did here) rather than downvoting it... Or maybe I understood the concept of karma wrong. shrug

As for what you say I think on a theoretical level I agree with you. But in reality nowadays a lot of shareholders buy and sell for the short term. Just look at all the companies that have very high stocks as they approach the quarterly report, and once they reported an excellent quarter, their prices fall. And that's without considering all the high-frequency trading.

As for being hurt by the gaffes or not, I agree with you that the evidence (as you put it) is not much. But then what evidence do _you_ have that these gaffes are hurting Google? I think (maybe cynically) that a lot of shareholders are very happy with how Google is doing, and they see a lot of profit in front of it: the finer details of "if the CEO had acted differently" maybe then the business would have been a bit different, seems a bit too abstract.

Also, and this is a point I think it's worth making. When I said controlled by a shark many people seemed to have read that as simply meaning someone with no ethics. But that's not the case. I meant someone who gave up ethics to pursue new areas of expansion. So if you will it's a bet. The shareholder has to wonder how much the predatory behaviour of a company are helping it expand (and if it doesn't expand the shares don't go up), and how much its reputation is hurting it.

During the 90s MS was a really big shark, but it's business was flourishing. Same with Facebook: you and I maybe dislike FB's privacy policy, and surely FB is getting a bit of a bad rep. but at the same time at the start FB didn't have a clear business proposition either.

So yeah, maybe Brin and Page would have kept Google as a wonderful place to be, with great ethics, and a lot of geek appeal (and hence amazing employees). But then maybe that same Google would still be concentrating in improving their search algorithm, and maybe having a good mail system. They would not have pursued a FB killer, a Foursquare killer a Twitter killer, an iPhone killer, or any other killer. Then would that company's revenue really been higher than the real Google's? It's not so clear to me.

So yeah, we can all agree that bad reputation can be bad. But putting ethics above profit may be bad too (even for the long-term profit). It's not clear to me what evidence you've shown that the latter would have made Google richer than the former.

> if you were a shareholder

$461.00 will make you one. So what would YOU want?

For a start I wouldn't want to spend 461$ to have a vote. You know, democracy and all that.

Edit (after being downvoted): why all the bad votes? What did I say that was so bad? Schmidt compared Google to a government. My point is that only shareholders can vote to oust him, and to be a shareholder I've just been informed that it would cost me 461$.

How is democracy (eveyone has a vote), not relevant? If we live in a democracy then surely I should have a say without having to pay 461$.

> If we live in a democracy then surely I should have a say without having to pay 461$.

If you live in the US, then you already have a vote without spending $461 that can affect how Google operates.

If you wish to change how Google operates from within, it will cost you $461.

> How is democracy (eveyone has a vote), not relevant?

Democracy is not about everyone having a vote. Their is a large portion of the US population that cannot vote for various reasons.

As for the down votes: probably because your comment doesn't really contribute anything worthwhile to the discussion.

I agree with you on the first point. Google (and similar data hoarders) should be regulated. A set of laws should explain what they can and can't do, for how long they can keep the data or have to publish it, etc...

The problem I had was more the idea that the choice it between giving our data to the companies (without regulation) and to the government. And incidentally several government have told Google to stop certain actions, but they keep going... so clearly here there's something to solve. (I hope we agree that corporations are not above the law, no matter how big).

As for your second point, that it's exactly what democracy is about. You could say that in practice no country has a perfect democracy. In terms of political philosophy, the state is a construct where each citizen gives up a little bit of its power, to get an organism that will regulate how people should live. However those same citizens can also affect the state by using their vote. Hence why everyone who makes up a country should have a vote.

In reality, we negate the vote to people who we consider were not part of the original deal (i.e. they arrived into the country afterwards), or that we don't consider they know enough and understand enough to take their own choices.

Actually, that vote is going to cost you a significant percentage of your income.

You can't vote in any democracy if you aren't a member. In publicly traded companies, membership is based on ownership. Ownership will cost you $461. If you are not going to contribute to the company, why should you have a vote in its policies?

The original point was that transparent government ownership of information is better than corporate ownership of information, because votes in government are relatively free/equally split, while voting in a corporation isn't.

Except government has much more power to misuse the information and cause you harm.

Google won't put you in jail, government might.

Governments have too many twisted incentives to be entrusted with too much information. US happens to be one of the better governments, but how successful our voting power was to end or prevent war in Iraq? Or how about recent witchhunt against craigslist? It's not easy to find examples of government doing serious damage.

Google can't start a war.

I would reconsider recommendation that we give government one bit more of power over people.

But is there any real reason to believe that Schmidt's view of how things will be in NOT shared by google as a company (or even Sergey and Larry)? Perhaps that is precisely what google wants to achieve?

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