Dogfight: How Apple and Google Went to War and Started a Revolution (7 page)

A lot was wrong with the first iPhone too. Rubin and the Android team—along with many others—did not think users would take to typing on a screen without the tactile feedback of a physical keyboard. That is why the first Android phone—the T-Mobile G1 from HTC, nearly two years later—had a slide-out keyboard. But what was also undeniable to the Android team was that they had underestimated Jobs. At the very least, Jobs had come up with a new way of interacting with a device—with a finger instead of a stylus or dedicated buttons—and likely a lot more. “We knew that Apple was going to announce a phone. Everyone knew that. We just didn’t think it would be that good,” said Ethan Beard, one of Android’s early business development executives.

Within weeks the Android team had completely reconfigured its objectives. A phone with a touchscreen, code-named Dream, that had been in the early stages of development, became the focus. Its launch was pushed out a year until fall 2008. Engineers started drilling into it all the things the iPhone
didn’t
do to differentiate their phone when launch day
did
occur. Erick Tseng, then Android’s project manager, remembers suddenly feeling the nervous excitement of a pending public performance. Tseng had joined Google the year before out of Stanford business school after Eric Schmidt, himself, sold him on the promise of Android. “I never got the feeling that we should scrap what we were doing—that the iPhone meant game over. But a bar had been set, and whatever we decided to launch, we wanted to make sure that it cleared the bar.”

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In many ways the Android project is the perfect reflection of Google’s zany and chaotic culture. At most companies, outlandish ideas are discouraged in favor of ideas that are doable. At Google, especially back then, the reverse was true. The easiest way to get on cofounder and now CEO Larry Page’s bad side was not to think big enough and to clutter a pitch with how much money an idea could make. Back in 2006 Page famously gave Sheryl Sandberg praise for making a mistake that cost Google several million dollars. That was when Sandberg was a Google vice president in charge of its automated ad system, not the chief operating officer of Facebook. “God, I feel really bad about this,” Sandberg told Page, according to
Fortune
magazine. But instead of hammering her for the error, Page said, “I’m so glad you made this mistake because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk.”

The cell phone industry in 2005 was a perfect example of a hairy Google-size problem. The software industry for mobile phones was one of the most dysfunctional in all technology. There wasn’t enough wireless bandwidth for users to surf the Internet on a phone without frustration. Phones weren’t powerful enough to run anything but rudimentary software. But the biggest problem, as Jobs had learned, was that the industry was ruled by an oligopoly: Few companies besides the carriers and the phone makers were writing software for phones, and what existed was terrible. Wireless bandwidth would improve and phone chips would get more powerful; but back then it looked as if the carriers and phone makers would control it all. “We had done a deal with Vodafone [the big European carrier] to try to get Google search on their phones,” said one top Google executive who would not give his name. “But the search they offered us was that we could put some results on, but that they would control most of them, and that our results would be at the bottom of every query. They didn’t have a good mobile browser. Ringtones [that they were selling] sometimes got prioritized in search results. All the carriers were doing this. They thought they could provide all the services inside a walled garden [as AOL had in the 1990s], and that this control was the best way to make money.”

The reason few developers built software for mobile phones was because anytime they tried, they lost money. There was no standardization in the industry. Virtually every phone ran its own software and set of applications, meaning software written for a Samsung phone often wouldn’t run on a Motorola phone, which wouldn’t run on a Nokia. Software platforms were incompatible even within companies. For example, there were a handful of different versions of Symbian. Put simply, the mobile industry screamed “money pit” to any enterprising developer. Most stayed away. The most lucrative business was not writing apps for phones. It was owning a testing company that would make sure your apps worked on all the phones in the market. Larry Page has never been shy talking about how frustrating those days were for him and Google. “We had a closet full of over 100 phones [that we were developing software for], and we were building our software pretty much one device at a time,” he said in his 2012 report to shareholders. In various remarks over the years he has described the experience as both “awful” and “incredibly painful.”

But Page and the rest of Google’s executives knew that someone would figure out the mobile business eventually, and they were particularly concerned that that company would be Microsoft. Back then, Microsoft was still the richest and most powerful technology company in the world, and it was finally getting traction with its Windows CE mobile phones and software. Windows CE smartphones were still a niche market, but if consumers took to the platform en masse as they did later with the iPhone, Google’s entire business could be in jeopardy.

This wasn’t an exaggeration. Back then, Microsoft and Google were in the midst of a nasty battle of their own for dominance in search, and for top dog in the tech world. After two decades of being the first-choice workplace of top engineering talent, Microsoft was now losing many of those battles to Google. Chairman Bill Gates and CEO Steve Ballmer had made it clear they took Google’s challenge personally. Gates seemed particularly affected by it. Once or twice he made fun of the way Page and his Google cofounder Sergey Brin dressed. He said their search engine’s popularity was “a fad.” Then, in the same breath, he would issue the ultimate compliment, saying that of all his competitors over the years, Google was the most like Microsoft.

Google executives were convinced that if Windows on mobile devices caught on, Microsoft would interfere with users’ access to Google search on those devices in favor of its own search engine. The government’s successful antitrust trial against Microsoft in the 1990s made it difficult for the company to use its monopoly on desktops and laptops to bully competitors. It could not, for example, make Microsoft’s the default search engine in Windows without giving users a choice between its search engine and those from Google, Yahoo, and others. However, on smartphones, few rules governed how fiercely Microsoft could compete. It didn’t have a monopoly there. Google worried that if Microsoft made it hard enough to use Google search on its mobile devices and easy enough to use Microsoft search, many users would just switch search engines. This was the way Microsoft killed Netscape with Internet Explorer in the 1990s. If users stopped using Google’s search engine and began using a competitor’s such as Microsoft’s, Google’s business would quickly run aground. Google made all its money back then from the search ads that appeared next to its search results. “It’s hard to relate to that [fear of Microsoft] now, but at the time we were very concerned that Microsoft’s mobile strategy would be successful,” Schmidt said in 2012 during testimony in the
Oracle v. Google
copyright trial.

All these fears and frustrations were top of the mind for Page when he agreed to meet with Rubin in early 2005 in the first-floor conference room of Google’s Building 43. Back then, Page’s office was on the second floor overlooking Google’s main courtyard. He and Brin shared it and continued that setup until Page became CEO in 2011. The space looked more like the dorm room of two engineering students than anything you would expect to see in a major corporation. You had to work to see their two desks and computers because the room was so jammed with their latest electronic-gadget passions—cameras typically for Page, along with Brin’s radio-controlled planes and cars and his roller-hockey gear. When Brin and Page were not there, the office was often filled with other programmers, who felt free to take it over. Rubin had reached out to Page because Rubin had started Android the year before and had enough software written to show potential customers such as carriers. He thought some kind of sign from Google—such as an email from Page saying that Android was doing interesting work—would help Rubin raise more money to keep going and give his sales pitch more zing.

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Few people can just email Larry Page directly and successfully ask for a meeting, but back then Rubin was one of them. Three years earlier, when Google was still scrabbling for users, attention, and revenue, Rubin had made Google the default search engine on the T-Mobile Sidekick, the device Rubin designed and built when he ran Danger. Page remembered the gesture not just because Google had desperately needed search traffic at the time, but also because he thought the Sidekick was one of best-engineered mobile devices he’d ever seen.

The Sidekick was odd looking—shaped like a bar of soap with a screen in the middle. To operate it, one flipped up the screen, rotating it 180 degrees, and typed on the keyboard underneath. Its nonstandard looks and a nonexistent marketing budget kept it from being a hit product. But it had a cult following among two groups: savvy high school and college students and Silicon Valley engineers. Students liked that it was the first mobile device to have instant-messaging software built in. Engineers such as Page loved that it was the first mobile device to allow users to surf the Internet the same way as on their office computers. BlackBerry had mobile email down to a science, and everyone at Google had a BlackBerry. But the Internet browsers on it and other mobile devices were terrible. To deal with smaller bandwidth back then, browsers were designed to show only the bare bones of a web page’s content—typically just text. But that also made the browsing experience all but useless for businesses. One of the things that wouldn’t work in these crippled browsers were Google search ads. You couldn’t click on them. Soon Page and Brin were walking around with Sidekicks themselves, enthralling their friends and colleagues with a mobile device that nearly replaced their laptops.

According to
Wired
, when Page arrived for the meeting, late as usual, Rubin jumped to the whiteboard to begin his pitch: phones with computer capabilities, not laptops or desktops, were the future of technology. It was a huge market, Rubin said. More than 700 million cell phones were sold worldwide every year, compared to 200 million computers, and that gap was widening. But the phone business was stuck in the dark ages. Android would fix that problem by convincing carriers and phone makers that they didn’t need to spend money on their own proprietary software. Frustrated consumers would flock to phones that worked better. Software developers would rush to write software for a platform in such demand. A self-reinforcing software ecosystem would be born.

Page listened gamely. He looked at the prototype Rubin had brought with him. But Page had pretty much decided what he was going to do before the meeting even started: What if Google just bought Android? he asked. He later told Steven Levy, the author of
In the Plex
, “We had that vision [about what the future of mobile should look like], and Andy came along and we were like ‘Yeah we should do it. He’s the guy.’” Google bought Android for about $50 million plus incentives, and by July 2005 Rubin and his seven other Android cofounders were sharing their vision of the world with the rest of Google’s management team.

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Rubin was surprised and thrilled about Google’s decision to buy his company. “At Danger we had a great niche product [the Sidekick] that everyone loved. But I wanted to get beyond niche and make a mass-market product,” he said. And no company was more mass-market than Google. When reflecting on those days, he likes to tell a before-and-after story about a presentation he gave to phone maker Samsung in Seoul:

I walk into the boardroom with my entire team—me and six people. Then twenty executives walk in and stand on the other side of the table in the boardroom. We’re sitting down because I wasn’t accustomed to Asian culture and whatnot at the time. Their CEO walks in. Everyone sits only after he sits, like a military tribunal. Then I go into pitch mode. I pitch the whole Android vision to them like they are a venture capitalist. And at the end and I am out of breath, with the whole thing laid out … there is silence. Literally silence, like there are crickets in the room. Then I hear whispering in a nonnative language, and one of the lieutenants, having whispered with the CEO, says, “Are you dreaming?” The whole vision that I presented, their response was “You and what army are going to go and create this? You have six people. Are you high?” is basically what they said. They laughed me out of the boardroom. This happened two weeks before Google acquired us. The next day [after the acquisition was announced] a very nervous lieutenant of the CEO calls me up and says, “I demand we meet immediately to discuss your very, very interesting proposal that you gave us [when you were in Seoul].”

Because of Google, Rubin no longer had to worry about running out of money and having potential vendors and customers not return his calls. But after the euphoria of the acquisition wore off, it became clear that even at Google getting Android off the ground was going to be one of the hardest things Rubin had undertaken in his life. Just navigating Google itself was initially a challenge for Rubin and his team. There was no hard-and-fast org chart, as in other companies. Every employee seemed right out of college. And the Google culture, with its famous “Don’t be evil” and “That’s not Googley” sanctimony, seemed weird for someone such as Rubin, who had already been in the workplace twenty years. He couldn’t even drive his car to work because it was too fancy for the Google parking lot. Google was by then filled with millionaires who had gotten rich on the 2004 IPO. But in an effort to preserve Google’s brand as a revolutionary company with a revolutionary product—the anti-Microsoft—all cars fancier than a 3 Series BMW were banned. During this period Brin and Page—now worth more than $5 billion apiece—famously drove Priuses to work. That meant Rubin’s Ferrari was not allowed.