Nikesh Arora

Topics: Google Nikesh Arora

Nikesh Arora, President, Google's global sales India's road to economic reform India a safe bet Budget: What it means for economy In its confrontation with the Chinese government, the world’s most powerful internet company, Google, intends to ‘stay in touch’ with its moral values and that of its consumers, Nikesh Arora, the 42-year-old president of global sales and business development, told ET in an exclusive interview. Mr Arora, who joined Google in 2004, is an engineer from the Institute of Technology in Varanasi, an MBA from Northeastern University, and a CFA. He’s been in IT, finance, telecom and probably needs all those skills and more as Google battles traditional internet rivals and newer ones in domains as diverse as devices and enterprise software. Its recipe for success, said Mr Arora, is focus on providing ‘wow consumer moments’ before thinking revenue and monetisation. The regulatory environment across the globe seems to be posing challenges for Google. Around 20-25 countries have blocked You Tube and Google search, and now we are hearing about China. How is Google coping? Google is a search company, which has many other products that are exciting like Gmail, Android and Maps. We are a technology company, but we are not the Internet. Sometimes, what happens is we are made synonymous with the internet. That’s one challenge we run into. Actually what you are saying is that you can block the entire internet, and we are not the internet. If you look at past 10 years, I think the internet and the digital world have gone from the fringes to mainstream. Even in India, most people are on Facebook, every newspaper has a digital edition, and all of Bollywood is on Twitter. Everybody is out there and suddenly it’s become relevant, and it challenges the old structures. The first structural challenge is national borders. Now you have to decide if you want to control, and if you do, you have to block the internet. It’s a digital world and in a digital world you leave digital footprints. Now I’ve used my card for 20 years, and I am pretty sure my credit card company has way more information than any other company. But, I cannot remember a controversy around using credit cards — it’s become a part of our social norm because we have traded convenience for giving up some information about ourselves. Same thing about the internet — you are going to be trading some information about you for convenience. As long as you trust the people who own that information, it’s okay. As long as those people do not use that information specifically to do something bad or something targeted at you, that’s okay too. To go back to your original question, I think we are being held synonymous with the Internet. When fundamental structures get challenged, you have to come up with new structures. The choice is either to replicate the old, or to think of new ways in a new world and choose what you want to regulate. Does it mean you have to give up at times while trying to deal with these issues? If you look at a market like China, with 400 million users, that does pose some difficult choices. It’s important to understand (and this is not an arrogant comment I am making) that our DNA is very different — our DNA is the DNA of our founders and the values with which the company was built. The values are about solving technological challenges of scale. We want to solve big technology problems and we have some very simple principles — we want to stay in touch with our moral values and that of our consumers. It’s not about the economics. If you look at the Google portfolio, we have only few services that make money. Everything else is trying to solve the technology problem of scale. And, we keep saying to ourselves, how do we make money out of this? Maybe we will, maybe we won’t, may be it will help our brand. And, in that context, it seems to be fine, it seems to be working. Our shareholders are happy, our revenues are fine, our profits are fine. We don’t see any decision as an economic event, we see if it aligns with the values we have, we see if it aligns with what our customers and stakeholders expect us to do. I cannot talk much about China because we are in conversation with the government. What is the revenue model for You Tube? We are happy with the trajectory of You Tube. We are selling advertising on You Tube homepage, and last quarter we were close to 90%-plus sold out in the US. We are beginning to see in-video advertising for You Tube, and a market for short clips, which we didn’t think existed in the past. There’s no way you can watch a short clip on TV. If I hear Serena Williams threw a tantrum on court, I’m not interested in the match, but in that 1-2 minute argument. Now suddenly that clip exists. People are beginning to take the relevant parts they want to see, put it up there and share it with friends. There is huge space developed called the short clip market, and you can put advertising there. How do you plan ahead? The good news is that we don’t have five-year plan. We don’t even have a three-year plan because we don’t know how the world is going to look like in three years. We plan for about a year and we have reasonably good visibility for the year from a revenue perspective. This is about creating ‘wow consumer moments’, we want to create cool products — that’s Google, I really like it! And then, we plan about whatever can be sold. We have a good team of product people on the monetisation side. It’s hard to plan, but that’s why it’s fun. Because of your reach, whatever innovation you create lasts for long. What goes behind monetising these efforts? The model we follow is 70:20:10. The main task is 70% of efforts, 20% is on related tasks and many of our innovations, such as Gmail, have come from it. The remaining 10% can be about anything. During first four years, we did not have any revenues. Today we have around $20 billion in revenues and 22,000 employees. There’s been a stress on the system because if you look at it, no other company in the history of business has grown so fast. If you think about Google, we have consumer properties and we sell advertising. Here’s our search property and we sell advertising against it. We have operations in over 40 countries across the world and we serve over a million advertisers who advertise on our search products. Then we go to other people who offer search and tell them why don’t you let us advertise for you because we can figure out a way to bring a million people who want to spend money. If you look at our numbers, roughly 50% is made from our own properties and the rest from others properties, which we help advertise. These guys are not going to get a million advertisers on their own, and they have a lot of content. Even if they can sell 30% of their content themselves, they can’t reach out to million advertisers. We are serving over a billion searches everyday. We have been building our Maps product for five years and now believe it has become successful. Now, we are thinking of advertising. Trials are running in two US cities. If you’re on the map, we will enhance the listing for $25 a month. We are trailing that and we’ll see where it goes. We will wait for a robust consumer success before we trail monetisation. Why is search inferior in You Tube compared to Google? We are working on it. It is not as good. There are challenges, there are very different signals in the video space. A few days ago, we turned on subtitles for video, which is computer-generated. That should make it interesting because once you do that, it allows you much more corpus of content. The challenge with videos is that unless it’s tagged well, it’s hard to search. Can you talk a little about the cannibalisation of print and content? Internet is going to change the shape of every business — not just media, but telecom, music, entertainment, they’re all going to get impacted by — not Google — but the internet. Fundamentally, the internet is the world’s largest communication distribution network. It’s going to change consumption, distribution and production. My perspective is in the next 5-8 years, roughly 30-50% of the content in the world will be consumed digitally. In addition, there is ‘disaggregation of bundle’. Newspapers have been the only source of information for many years. Today, I can probably get better information at weather.com than the weather page of a newspaper. Our children are not going to consume the aggregated bundle that we create, but create their own. That is an editorial challenge. There’s $700 billion worth of advertising globally and roughly $70 billion is digital now. Is the convergence, that everybody is talking about, for real? The lines between devices and business models seem to be blurring every day. I have not been a believer of convergence because if you look at history, it’s actually gone more towards divergence than convergence. Things have become more specific. If you look at sunglasses, there are different ones available for biking and other activities. Suddenly there are 18 variants of mobile phones — one is better for web browsing, the other is better for something else and so on and so forth. We actually live in a world of divergence. Probably the most convergent device is the laptop — it does everything, but it’s not perfect in any one thing.