Entrepreneurs

What happened when Google made its CEO share an office with one of his engineers

Chairman of Alphabet Eric Schmidt
Photo by Axel Schmidt
Chairman of Alphabet Eric Schmidt

In 2001, Google founders Larry Page and Sergey Brin brought in CEO Eric Schmidt to help them scale the booming business they had on their hands. Google was then doing more than $100 million in revenue and was three years from going public.

Though Schmidt was impressed by Page and Brin's intellectually rigorous interview process, he was not terribly impressed with his first day on the job.

Schmidt's title made him part of the C-suite — in name only. "My first office at Google was an 8-by-12 office, just enough room for me and my desk and my little chair," says Schmidt, speaking with Linkedin co-founder Reid Hoffman on the podcast, "Masters of Scale."

To further confuse things, the then-CEO walked in to find he had a roommate.

"I said 'Hello.' He says, 'Hello.' I said, 'Hi, I'm Eric.' And he goes, 'Hi, I'm Amit.'"

Schmidt, who is today the Chairman of Google's parent company Alphabet and worth almost $12 billion according to Forbes, didn't expect to have to share.

"Now, as a new person coming into the company, it's very important to not create a cultural faux pas," says Schmidt.

"Like it would be incorrect to say, 'I'm the CEO. Get the heck out of my office.'"

"A dash of insubordination is the secret ingredient to Google's success." -Reid Hoffman, co-founder of LinkedIn

Schmidt's secretary didn't know anything about the seating arrangements, so Schmidt asked Amit who said it was OK for him to move in with the CEO.

According to Amit, it was the VP of engineering. Schmidt thought his new team must be playing a joke on him.

He asked Amit why he moved in. "Well, because I was in a six person office, it was very crowded, and your office was empty," Schmidt recalls Amit saying.

Fair enough.

"So we became colleagues," he says.

It turned out to be fortuitous.

When Schmidt got down to working, he called the vice president of sales to talk numbers.

"At the time the revenue was estimated about 120 [million dollars]," says Schmidt. "And I said, 'Don't you think you could do better?' And he said, 'Well, I think we can get to 123, 124.' 'Come on push harder, push harder," Schmidt says.

When he hung up, "Amit takes his headphones off and says, 'I can tell you what the revenue is going to be,'" Schmidt tells Hoffman.

"And so I said, 'What's the revenue going to be?' And he said, 'It's going to be 138.'

"I said, 'How do you know that?' 'Because I build the analytics that predict this,'" Schmidt recalls Amit saying.

Schmidt continues, "And so I didn't tell the sales people, and I watched, and they kept moving their forecast up and hit 138.

"It was a really easy lesson to understand the power of data analytics — plus having a great roommate."

Schmidt and Amit shared an office for years as Google grew. And, according to Schmidt, the two became good friends.

Today Google has a market cap of $675 billion.

There's also a bigger lesson. The unique culture described by Schmidt is part of what makes Google tick, according to Hoffman, the podcast host.

"I would argue that a dash of insubordination is the secret ingredient to Google's success. Ideas emerge organically through conversations like the one Eric and Amit had in their cramped executive suite," says Hoffman.

"There's only one way to keep those unruly conversations going. You let them unfold chaotically, anywhere and everywhere across the organization. And you listen for what bubbles up. If you want your company to innovate, your job is to manage the chaos."

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