Speaking to a room full of students in a prestigious Stanford University classroom, Eric Schmidt, executive chairman at Google's new parent company, Alphabet Inc., shed some light on some of the company's inner workings. He discussed everything from scaling to hiring to product successes and failures.

Led by LinkedIn founder Reid Hoffman, along with other big names in tech, Schmidt provided a lot of detailed information and anecdotes, some of which can be found in his book, "How Google Works," co-written in collaboration with Jonathan Rosenburg.


Perhaps most curious were his thoughts on Alphabet, which was revealed back in August as an umbrella company for Google and its many subsidiaries.

On this topic, he begins by saying that Google became so big that it started falling in on itself. Even Steve Jobs criticized Google for "doing too many things." Fortunately, Schmidt claims, Google's size was negligent for quite some time due to having "strong founders and leaders," but even so the organization, or lack thereof, became too much for one company.

"Alphabet is an attempt to build a holding company like Berkshire Hathaway out of an existing operating company," he explained. "It's never been done before."

On scalability

Mentioned frequently was Uber, being used as an example of company scalability. "You've got to have products that can scale," said the former Novell CEO. "What's new is that once you have that product, you can scale very quickly. Look at Uber."

He discussed the work Larry Page and Sergey Brin would conduct behind his back, leading to the developments of both Chrome and Android, both of which Schmidt initially advised against.

"We're not going to do a browser or OS," Eric told them. Six months later, after toying with Firefox and attempting to improve its performance, Larry and Sergey brought to Schmidt a working version of Google Chrome. "Those assholes," he uttered jokingly. "I knew they were going around me."

Then, with AdWords, Schdmit said, a young man named Sal at Google suggested switching from an "as-sold" business model entirely to auctions. "I was so worried that I implemented a cash restriction program," admitted Schmidt. "The day we turned on the auctions, revenue tripled."

On hiring

Of course, since Google doesn't fire anyone, Schmidt suggests that there's a lot to bank on when hiring new employees.

"You don't hire generic people," he advised. "You hire people who have had stress and achievement. The best people to hire are CFOs who've gone bankrupt, because they've been through wars."

He even went as far as to describe a horror story where someone was interviewed 16 times before being denied a position at Google. "You can't just do this to people," Schdmit told the hiring managers. "You're not allowed to interview them more than 8 times."

Fortunately, there's a widely enforced company rule now that engineers can't receive more than 5 interviews while non-engineers max out at 4.

Drawing comparisons to Steve Jobs and Sun Microsystems cofounder Bill Joy, Schmidt supports the notion that companies should hire "divas." He elaborates, "They are a pain in the ass. But the divas that believe will drive the culture."

On the APM program

Marissa Mayer, Schmidt says, contended that engineers should be hired immediately out of college, opting for graduates with technical degrees who didn't want to be programmers.

"She would train them – take them on trips for weeks – and it forged these incredibly tight bonds between people who were highly technical and could specify products."

The APM program, it was called, along with other programs like it, led to the hiring of the present Google CEO Sundar Pichai, now-Dropbox CEO Dennis Woodside, and former Google operations executive Shona Brown.

On winning

Schmidt says, and this comes up a lot during the interview, that the reason Google has been so indefinitely successful in its comparatively short life is because it has a strong set of founders. Larry Page and Sergey Brin, he boasts, are both "impressive, smart, passionate, [and] committed."

"The ideal business," Schmidt argues, "is Microsoft – a monopoly business with hardware competitors who need you, in a growing industry."

You can read the full interview on Medium, courtesy of Chris Yeh.