Whom the gods would destroy, they first make mad. I'm not sure if Euripides, the Greek playwright, had Google's management team in mind when he wrote that, but it sure fits. Google, despite the occasional lost deal, billion-dollar lawsuit, and PR black eye, continues to succeed spectacularly as a business. "Somehow they continue shitting more money than you or i could realistically comprehend," writes one Valleywag reader. Indeed. And that money is driving the people who run Google insane. CEO Eric Schmidt's cosseting of girlfriend Marcy Simon with a plum PR job is just the latest, most blatant sign of that madness.
When Google went public, it set up a two-class system of shares, ensuring that Google founders Larry Page and Sergey Brin, not Wall Street, would rule the company. Intended to shield the company from short-term pressures to goose earnings at the expense of long-term growth, this structure has encouraged a tendency to insular thinking that, in turn, has lead to arrogance. Or, to use a fine Greek word, hubris.
Hubris is what leads Schmidt to think he can pad Google's payroll with a girlfriend's consulting fees. Hubris is what leads sales chief Tim Armstrong to think he can run a sideline business, Associated Content, which is designed to profit from Google's advertisers in unseemly ways. Hubris is what leads Brin to loan his wife, Anne Wojcicki, $2.6 million for her biotech startup, 23andMe — and then turn around and have Google repay his loan and more with a $3.9 million investment in her company.
The costs of these behaviors, of course, amount to pocket change compared to Google's immense profits. But the precedents they set, the carelessness they encourage, the hypocrisy they foster, could have implications down the road. When Google shares are going up, investors are unlikely to complain that Google management is running the company like a feudal kingdom. But when things take an inevitable turn for the worse, they'll be under the microscope.
In the meantime, such corruption will leave an indelible mark on the behaviors and attitudes of Google employees. If it's okay for the boss to cheat the company, they'll reason, why can't I? And before you know it, "Don't be evil" will be replaced as a slogan with "Get away with whatever you can."
A recent report by Penn State researchers suggests that narcissism among CEOs makes a company's stock more volatile. May we suggest Eric Schmidt as an excellent subject for a follow-up study?