something a site dominated by user-generated content could not ensure. Like many Valley start-up founders, Chad Hurley and Steve Chen believed, as Google’s did when they launched, that if they first built traffic, money would follow. By February 2008, Schmidt said he had summoned teams from YouTube and Google to “start working on monetizing it.”
“You didn’t tell us to work on it,” a surprised Hurley said, recalled Schmidt.
“Well, times have changed,” said Schmidt.
Schmidt was not unhappy with YouTube or its founders. He believed YouTube was becoming nearly as ubiquitous a Web activity as e-mail. But Schmidt wanted a business plan; he announced that his “highest priority” in 2008 was to figure out a way for YouTube “to make money.” He knew that online video ads had to be different from television ads. Ads that appeared before a video started would be annoying. Internet users wanted to see the video as soon as they clicked on it. Thirty-second ads anywhere in an online setting were too long. The ads couldn’t feel like an interruption, certainly not a long interruption. Schmidt’s joint teams came up with several novel advertising schemes. Schmidt said he didn’t know if they’d work, but “if any of them hit, it is a billion-dollar business. Of course, it’s now zero.” To minimize insecurity at YouTube’s headquarters in San Bruno, he dispatched Coach Campbell to visit regularly and to calm the troops and help coax a monetization plan.
There was another potential cash cow to pursue. In 2007, Google began to aggressively move to claim a slice of the mobile phone business, which then counted three billion users worldwide—three times the PC market—a number Schmidt expected to grow by another billion in four years. The success of Apple’s revolutionary iPhone, with its easy access to the Internet, was an eye-opener: the iPhone delivered fifty times more search queries, Google found, than the typical so-called smartphone. A mobile device was no longer just a telephone or a PDA, and portable access to the Internet advanced Google’s interests; the more people went online, the more Google benefited.
But Google was frustrated that many of its programs functioned poorly on mobile phones. They were frustrated that telephone companies, not consumers, decided which applications would appear on their mobile phones. “As compared to the Internet model, where we’ve been able to make software that basically is able to run everything and works for people pretty well, it’s been very difficult to do that on phones,” Page said. Google’s mobile quarterback was Andy Rubin. A former Microsoft employee, Rubin had left to cofound a mobile software company called Android, which Google had acquired in 2005. As the senior director of mobile platforms for Google, Rubin set out to make Android an open-source operating system—open to improvements from any software designer because the source code was visible, not proprietary, and peers could collaborate to offer and improve different software applications. This was a direct assault on the telephone companies, which policed what software applications could be displayed for consumers.
Rubin likened the current mobile market to what happened in the early eighties to PCs. Original hardware makers, such as Wang or DEC, were supplanted by IBM, which in turn was supplanted by the manufacturers of clones. As the hardware became commoditized, the price of the PC dropped. At the same time, the cost of the software rose, because a single company, Microsoft, controlled it. “Unless there is a vendor-independent software solution,” said Rubin, expressing the ethos not just of Google but of the Valley culture at large, “the consumer isn’t going to be well served. What I mean by ‘vendor-independent’ is you can’t have a single source. Microsoft was a single source. What Android is doing is trying to avoid what happened in the PC business, which was to create a monopoly.” That is why, he said, Android is an open-source system that “no single entity can own.” He is openly disdainful of phone companies like Verizon and AT&T, though he doesn’t name them, and obviously feels the same way about Apple’s closed iPhone system. “The thing I carry around in my pocket every day,” he said, gripping his yet to be released Android phone manufactured by T-Mobile, “is as powerful as the PC was five years ago. So how can I take advantage of that and make it do what I want it to? I’m the one who paid for it! Just because I have a service plan with some whacky wireless carrier doesn’t mean they get