Marketing Mistakes and Successes

ELEVENTH mutation merchandising MISTAKES AND SUCCESSES 30TH ANNIVERSARY Robert F. Hartley Cleveland democracy University JOHN WILEY & SONS, INC. VICE PRESIDENT & PUBLISHER EXECUTIVE EDITOR at playant EDITOR PRODUCTION MANAGER PRODUCTION ASSISTANT EXECUTIVE merchandising MANAGER ASSISTANT MARKETING MANAGER MARKETING ASSISTANT DESIGN DIRECTOR SENIOR DESIGNER SENIOR MEDIA EDITOR George H shootman Lise toiletteson Carissa DoshiDorothy Sinclair languor Winslow Amy Scholz Carly DeCandia Alana Filipovich Jeof Vita Arthur Medina Allison Morris This phonograph recording was set in 10/12 bleak Caledonia by Aptara, Inc. and printed and bound by courier/Westford. The c all everyplace was printed by Courier/Westford. This keep back is printed on acid- stark paper. Copyright 2009, 2006, 2004, 2001, 1998, 1995, 1992, 1989, 1986, 1981, 1976 John Wiley & Sons, Inc. 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To order books or for customer service please, call 1-800-CALL WILEY (225-5945). depository library of Congress Cataloging in Publication Data Hartley, Robert F. , 1927 marketing mistakes and successes/Robert F. Hartley. 11th ed. p. cm. Includes index. ISBN 978-0-470-16981-0 (pbk. ) 1. Marketingjoined StatesCase studi es. I. Title. HF5415. 1. H37 2009 658. 800973dc22 2008040282 ISBN-13 978-0-470-16981-0 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 PREFACEWelcome to the 30th anniversary of Marketing Mistakes and Successes with this 11th edition. Who would crap thought that interest in mistakes would be so enduring? Many of you are past maprs, a hardly a(prenominal) in cartridge h aged(a) for decades. I hope you pass on find this fresh edition a worthy successor to earlier editions. I speak up this may even be my shell book. The in the buff Google and Starbucks cases should arouse keen student interest, and may even inspire a nonher generation of enterprisers. A fair number of the older cases have faced earthshaking changes in the survive few age, for better or for worse, and these we have captured to add to reading insights.After so many a nonher(prenominal) years of investigating mistakes, and more(prenominal) juvenilely successes give carewise, it might come uponm a contest to keep these new editions fresh and interesting. The joy of the chase has arrive this an intriguing endeavor through the decades. Still, it is always difficult to waste interesting cases that have steamy student discussions and provoked useful insights, entirely newer case possibilities are ever contesting for inclusion. modelings of good and bad handling of problems and opportunities are forever emerging. further some(prenominal) judgment of convictions we bring back an oldie, and with updating, surpass upon a new perspective.For new users, I hope the book will meet your full expectations and be an effective instructional tool. Although case books abound, you and your students may find this somewhat unparalleled and very read find outted, a book that house help transform dry and rather remote concepts into practical reality, and lead to lively correct discussions, and even debates. In the gentle environment of the classroom, students stomach hone t heir analytical skills and alike their persuasive skills non selling products unless selling their ideasand uphold them against critical scrutiny. This is large practice for the arena of business to come.NEW TO THIS EDITION In contrast to the early on editions, which examined in all when illustrious mistakes, and comprise on your favor fitted comments closely recent editions, I have again include some well-known successes. While mistakes provide invaluable learning insights, we can alike learn from successes and find nuggets by comparing the un thriving with the successful. With the addition of Google and Starbucks, we have locomote entrepreneurial Ad menaces up to the front of the book. We have leadd Marketing Wars, which many of you recommended, and reinstated Comebacks of immobiles iii iv inaugu footstep ising from disappointment. I have also brought back Ethical Mistakes, because I believe that organizations more than ever take aim to be responsive to societ ys best interests. low-pitchedgether, this 11th edition brings sevensome new cases to put back seven that were deleted from the previous edition. Some of the cases are so current we continued updating until the manuscript left-hand(a) for the production process. We have tried to keep all cases as current as possible by using Postscripts, Later Developments, and Updates. A number of you have asked that I identify which cases would be appropriate for the traditional overage of topics as organized in typical marketing textual matters. With approximately cases it is not possible to sincerely compartmentalize the mistake or success to merely one topic. The patterns of success or failure tend to be more pervasive. Still, I think you will find the dramatizeing classification of cases by example matter to be helpful. I thank those of you who made this and other suggestions. Classification of Cases by Major Marketing Topics Topics Most Relevant Cases Marketing Re attempt and Consume r Analysis Coca-Cola, Disney, McDonalds, Google, Starbucks ProductStarbucks, Nike, snowfall/Pepsi, McDonalds, Maytag, Dell, Hewlett-Packard, Newell Rubbermaid, DaimlerChrysler, Kmart/Sears, Harley-Davidson, Boeing/Airbus, Merck, Boston Beer, Firestone/ get over, Southwest, MetLife, Borden, United Way, new waveguard, Continental, Euro Disney Distribution Nike, Coke/Pepsi, Newell Rubbermaid, Harley-Davidson, Vanguard, Starbucks, Kmart/Sears, Hewlett-Packard, Dell Promotion Nike, Coke/Pepsi, Maytag, Vanguard, Merck, Boston Beer, Kmart/Sears, Harley-Davidson, Borden, MetLife, HewlettPackard, Southwest Air, Google, Starbucks PriceContinental, Southwest, Vanguard, Starbucks, Boston Beer, Dell, Euro Disney, Newell Rubbermaid, Boeing/Airbus, McDonalds Non-product Google, United Way, Disney, Southwest, Continental worldwide Euro Disney, Boeing/Airbus, Harley-Davidson, Maytag, DaimlerChrysler, Firestone/Ford, Dell, Hewlett-Packard, Nike, Coke/Pepsi, Starbucks, McDonalds Customer Relations Newell Rubbermaid, Vanguard, Maytag, Harley, Merck, Firestone/Ford, Starbucks, United Way, Nike, MetLife Social and Ethical Starbucks, Merck, Firestone/Ford, United Way, MetLife Outsourcing Boeing/Airbus, Maytag, Nike, DellPreface v TARGETED COURSES As a supplemental text, this book can be used in a variety of undergraduate and graduate consorts. These range from introduction to marketing/marketing principles to courses in marketing precaution and strategic marketing. It can also be used as a text in inter farmingal marketing courses. Retailing, entrepreneurship, and ethics courses could use a number of these cases and their learning insights. It can certainly be used in breeding programs and even appeal to nonprofessionals who are looking for a good read about well-known firms and personalities. education AIDSAs in previous editions, you will find a plethora of teaching aids and discussion real within and at the end of each chapter. Some of these will be common to some(pren ominal) cases, and embellish that certain successful and unsuccessful practices are not unique. Information Boxes and Issue Boxes are included in each chapter to highlight relevant concepts and issues, or related information, and we are even testing Profile Boxes. acquisition insights help students see how certain practicesboth errors and successescross fraternity lines and are prone to be either traps for the unwary or success modes.Discussion Questions and Hands-On Exercises encourage and stimulate student involvement. A recent pedagogic feature is the Team Debate Exercise, in which formal issues and options can be debated for each case. New in some cases are Devils Advocate exercises in which students can argue against a proposed course of action to test its merits. A new pedagogical feature, based on a reviewers recommendation, appears at the end of the Analysis section students are asked to make their own analysis, draw their own conclusions, and defend them, thereby having an opportunity to stretch themselves.In some cases where there is con facial expressionrable updating, a new feature invites students to quantify the Latest Developments. Invitation to Re look to suggestions allow students to take the case a step further, to investigate what has happened since the case was written, both to the alliance and even to some of the individuals refer. In the final chapter, the various learning insights are summarized and classified into planetary conclusions. An Instructors Manual written by the author accompanies the text to provide suggestions and regardations for the pedagogical stuff and nonsense within and at he ends of chapters. ACKNOWLEDGMENTS It seems fitting to acknowledge everyone who has provided encouragement, information, advice, and constructive criticism through the years since the beginning(a) edition of these Mistakes books. I hope you all are well and successful, and I truly appreciate your contributions. I apologize if I have mis sed anybody, and vi Preface would be grateful to know much(prenominal)(prenominal)(prenominal) so we can rectify this in future editions. I welcome updates to present affiliations. Michael Pearson, Loyola University, New siege of Orleans Beverlee Anderson, University of Cincinnati Y. H. Furuhashi, Notre Dame W.Jack Duncan, University of AlabamaBirmingham Mike Farley, Del Mar College Joseph W. Leonard, Miami University (OH) Abbas Nadim, University of New Haven William ODonnell, University of Phoenix Howard Smith, University of New Mexico James Wolter, University of Michigan, heartless Vernon R. Stauble, California State Polytechnic University Donna Giertz, Parkland College Don Hantula, St. Josephs University Milton Alexander, Auburn University James F. Cashman, University of Alabama Douglas Wozniak, Ferris State University Greg Bach, Bismark State College Glenna Dod, Wesleyan College Anthony McGann, University of Wyoming Robert D.Nale, Coastal Carolina University Robert H. Votaw, Amber University Don Fagan, Daniel Webster University Andrew J. Deile, Mercer University Samuel Hazen, Tarleton State University Michael B. McCormick, Jacksonville State University Neil K. Friedman, Queens College Lawrence Aronhime, John Hopkins University Joseph Marrocco, Boston University Morgan Milner, Eastern Michigan University Souha Ezzedeen, Pennsylvania State University, Harrisburg Regina Hughes, University of Texas Karen Stewart, Stockton College Francy Milner, University of Colorado Greg M.Allenby, Ohio State University Annette Fortia, Old Westbury Bruce Ryan, Loyola Jennifer Barr, Stockton College Dale Van Cantfort, Piedmont University Larry Goldstein, Iona University Duane Prokop, Gannon University Jeff Stoltman, Wayne State University Nevena Koukova, Lehigh University Matthew R. Hartley, University of California, Berkeley Cindy Claycomb, Wichita State University Pola Gupta, Wright State University Joan Lindsey-Mullikin, Babson College. Also Barnett Helzberg, Jr. f the S hirley and Barnett Helzberg Foundation, and my colleagues from Cleveland State University Ram Rao, Sanford Jacobs, Andrew Gross and Benoy Joseph. From Wiley Judith Joseph, Kimberly Mortimer, Carissa Marker. Robert F. Hartley, prof Emeritus College of Business Administration Cleveland State University Cleveland, Ohio R. emailprotected EDU ABOUT THE AUTHOR Bob Hartley is Professor Emeritus at Cleveland State Universitys College of Business Administration. in that respect he taught a variety of undergraduate and graduate courses in management, marketing, and ethics.Prior to that he taught at the University of Minnesota and George capital of the United States University. His MBA and Ph. D. are from the University of Minnesota, with a BBA from Drake University. Before coming into academia, he spent thirteen years in retailing with the predecessor of Kmart (S. S. Kresge), JCPenney, and Dayton-Hudson and its Target subsidiary. He held positions in store management, interchange buying, a nd merchandise management. His initial textbook, Marketing Management and Social Change, was published in 1972. It was a intellect of its time in introducing social and environmental issues to the study of marketing.Other books, Marketing depotamentals, Retailing, Sales Management, and Marketing Research, followed. In 1976 the first Marketing Mistakes book was published and brought a new approach to case studies, making them student-friendly and more relevant to travel sweetener than existing books. In 1983, Management Mistakes was published. These books are now in the eleventh and ninth editions, respectively, and have been wide translated. In 1992 Professor Hartley wrote Business Ethics Violations of the Public Trust. Business Ethics Mistakes and Successes was published in 2005. He is listed in Whos Who in America, and Whos Who in the World. ii This page intentionally left blanched CONTENTS Preface About the Author Chapter 1 base fall in I ENTREPRENEURIAL ADVENTURES Chapter 2 Chapter 3 Chapter 4 Google An entrepreneurial road roller Starbucks A Paragon of growing and Employee Benefits Finds Storms Boston Beer Is Greater Growth Possible? 29 46 PART II MARKETING WARS 61 Chapter 5 Chapter 6 Chapter 7 Cola Wars Coca-Cola vs. Pepsi PC Wars Hewlett-Packard vs. Dell Airliner Wars Boeing vs. Airbus and Recent Outsourcing Woes 63 86 PART III COMEBACKS Chapter 8 Chapter 9 Chapter 10 McDonalds Rebirth Through ModerationHarley-Davidson Creating An Enduring Mystique Continental Airlines Salvaging From the Ashes PART IV MARKETING perplexity MISTAKES Chapter 11 Chapter 12 Borden Letting Brands Wither United Way A Nonprofit Tries to Cope with number Destruction DaimlerChrysler A Merger Made in Hades Newells Acquisition of Rubbermaid Becomes an Albatross Euro Disney fumbling a Successful Format Maytag An Incredible Sales Promotion in England and Outsourcing Kmart and Sears A Hedge Fund Managers Challenge Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 iii septet 1 9 11 103 127 129 147 161 175 177 190 203 220 233 251 67 ix x Contents PART V NOTABLE MARKETING SUCCESSES 281 Chapter 18 Chapter 19 Chapter 20 Southwest Airlines Success Is Finally repugn Nike A Powerhouse Brand Vanguard Is Advertising Really Needed? 283 302 319 PART VI respectable MISTAKES Chapter 21 Chapter 22 Chapter 23 Mercks Vioxx Catastrophe and Other Problems MetLife Deceptive Sales Practices Ford Explorers with Firestone Tires A Killer Scenario Ill Handled 335 351 Conclusions What We Can Learn 380 Chapter 24 Index 333 365 400 CHAPTER ONE mental institution A t this writing, Marketing Mistakes has passed its thirtieth anniversary. Who would have thought?The first edition, back in 1976, was 147 pages and included such(prenominal) long-forgotten cases as Korvette, W. T. Grant, Edsel, Corfam, Gilbert, and the Midi. In this eleventh edition, seven cases from the tenth edition have been dropped, and seven added, several of these creation modified from earlier editions . Other cases have been updated, and in some instances reclassified. Two exciting new entrepreneurial cases, Google and Starbucks, are introduced, and the entire Entrepreneurial Ad hypothesiss moved to the front of the book as weaken I. I think your students will find these cases contingently interesting and even inspiring.The popular Marketing Wars is again included, this time as offset II, and it follows major competitors in their furious struggles. Two new parts have been added from older editions Part III Comebacks, and Part VI Ethical Mistakes. In response to your feedback, the section on notable successes has been continued. Some cases are as recent as to solar days headlines several bland have not come to complete resolution. A few older cases have been continued or brought back. For example, Borden last appeared in the ninth edition, but some of you thought the learning insights were important plenteous to reintroduce the case.We continue to seek what can be learnedinsi ghts that are transferable to other firms, other times, other moorages. What lynchpin featureors brought monumental mistakes to some firms and resounding successes for others? Through such evaluations and studies of contrasts, we may learn to improve batting averages in the intriguing, ever-challenging art of finis making. We will encounter organizational deportment cycles, with an organization growing and prospering, then failing (just as humans do), but occasionally resurging. Success rarely lasts forever, but even the most dear mistakes can be (but are not always) overcome.As in previous editions, a variety of firms, industries, mistakes, and successes are presented. You will be familiar with most of the organizations, although believably not with the details of their situations. We are always on the sentinel for cases that can bring out certain points or caveats in the art of marketing decision making, and that divide a balanced view of the spectrum of marketing probl ems. The goal is to present examples that provide 1 2 Chapter 1 Introduction somewhat different learning experiences, where at to the lowest floor some aspect of the mistake or success is unique. Still, we see mistakable mistakes occurring time and again.From the prevalence of such mistakes, we have to wonder how much decision making has really progressed over the decades. The contend is still there to improve it, and with it marketing efficiency and career advancement. Let us then consider what learning insights we can gain, with the benefit of hindsight, from examining these examples of successful and unsuccessful marketing practices. LEARNING INSIGHTS Analyzing Mistakes In looking at sick companies, or even healthy ones that have experience difficulties with certain parts of their trading operations, it is tempt to be overly critical. It is easy to criticize with the benefit of hindsight.Mistakes are inevitable, softened the present state of decision making and the dyna mic environment facing organizations. Mistakes can be categorised as errors of omission and of commission. Mistakes of omission are those in which no action was taken and the status quo was contentedly embraced amid a changing environment. Such errors, often characteristic of conservative or stodgy management, are not as obvious as the other category of mistakes. They seldom involve tumultuous upheaval rather, the unions competitive position slowly erodes, until management finally realizes that mistakes having monumental impact have been allowed to happen.The firms fortunes often never regain their former luster. Mistakes of commission are more spectacular. They involve headfirst decisions often based on faulty research, miserable planning, misdirected execution, and the like. Although the costs of eroding competitive position imputable to errors of omission are difficult to calculate precisely, the costs of errors of commission are often fully evident. For example, with Euro Di sney, in 1993 alone the loss was $960 billion from a poorly planned venture it improved in 1994 with only a $366 one one thousand thousand million million loss.With Maytags overseas Hoover Division, the costs of an incredibly bungled sales procession were more than $300 million, and still counting. Then there was the monumental acquisition of Chrysler by Germanys Daimler, manufacturer of proud Mercedes, for $36 billion in 1998. After nine tumultuous years, Daimler gave up and sold Chrysler to a cloistered fair-mindedness firm in 2007 for only $7. 4 billion. Although they may make mistakes, organizations with sharp managements follow certain patterns when confronting difficult situations 1. Looming problems or present mistakes are quickly recognized. 2.The causes of the problem(s) are cautiously determined. 3. Alternative restorative actions are evaluated in view of the phoners resources and constraints. 4. Corrective action is prompt. Sometimes this requires a unmerciful ax ing of the product, the division, or whatever is at fault. Learning Insights 3 5. Mistakes provide learning experiences. The same mistakes are not repeated, and future operations are consequently strengthened. Slowness to recognize emerging problems leads us to think that management is incompetent or that witnesss have not been established to provide prompt feedback at strategic control points.For example, a declining competitive position in one or a few geographical areas should be a red flag that something is amiss. To wait months before investigating or taking action may mean a permanent loss of business. Admittedly, consecrateals sometimes get mixed, and complete information may be lacking, but procrastination is not easily defended. Just as problems should be quickly recognized, the causes of these problems the why of the unthought resultsmust be determined as quickly as possible. It is premature, and rash, to take action before perspicacious where the problems really lie. Returning to the previous example, the loss of competitive position in one or a few markets may reflect circumstances beyond the firms immediate control, such as an belligerent new competitor who is drastically cutting tolls to buy sales. In this situation, all competing firms will likely tolerate market piece, and subaltern can be make except to stay as competitive as possible with determines and servicing. However, closer investigation may reveal that the erosion of business was due to unreliable deliveries, poor quality control, noncompetitive prices, or incompetent sales staff.With the cause(s) of the problem defined, various alternatives for dealing with it should be regularise and evaluated. This may require further research, such as obtaining feedback from customers and from field personnel. Finally, the decision to correct the situation should be made as objectively as possible. If drastic action is needed, there usually is little rule for delaying. Serious proble ms do not go away by themselves They tend to fester and manufacture worse. Finally, some learning experience should result from the misadventure. A vice president of one successful firm told me,I search to give my subordinates as much decision-making experience as possible. Perhaps I err on the side of delegating too much. In any case, I expect some mistakes to be made, some decisions that were not for the best. I dont come down too hard usually. This is part of the learning experience. yet God help them if they make the same mistake again. There has been no learning experience, and I interrogatory their competence for high executive positions. Analyzing Successes Successes deserve as much analysis as mistakes, although admittedly the sine qua non is less than with an emerging problem that requires quick remedial action.Any analysis of success should seek answers to at least the following questions Why Were Such Actions Successful? Was it because of the nature of the environm ent, and if so, how? Was it because of event research, and if so, what and how? 4 Chapter 1 Introduction Was it because of particular engineering and/or production efforts, and if so, can these be adapted to other operations? Was it because of any particular element of the strategysuch as service, promotional activities, or distribution methodsand if so, how, and is it transferable to other operations? Was it because of the specific elements of the strategy meshing well together, and if so, how was this achieved? Was the Situation Unique and Unlikely to Be Encountered Again? If the situation was not unique, how can these successful techniques be used in the future and defended against competition? ORGANIZATION OF THIS handwriting In this eleventh edition we have modified the classification of cases somewhat from earlier editions. As mentioned before, Part I, Entrepreneurial Adventures, describes and analyzes well-known recent endeavors.In Part II, Marketing Wars, we examine t he actions and countermoves of archrivals in hotly competitive arenas. Part III, Comebacks, studies trinity firms that faced adversity, and came back better than ever. In Part IV, Marketing Management Mistakes, we delve into seven firms guilty of a variety of mistakes that offer great learning insights. Part V, Notable Marketing Successes, offers paragons of successful marketing strategies and operations. Finally, in Part VI, Ethical Mistakes, we examine leash firms whose mistakes had major ethical and legal consequences.Let us briefly describe the cases that follow. Entrepreneurial Adventures Google is arguably the most outstanding successful new enterprise ever. It was pieceed by Sergey Brin and Larry varlet who dropped out of Stanfords Ph. D program to do so. With its search engine, it raised advertize to a new level targeted frequentize. In so doing, it spawned a host of millionaires from its rising investment party prices and origin options and made its two founders so me of the richest Americans, just under posting Gates and Warren Buffett. How did they do it?Starbucks is also a rapidly growing new firmnot as much as Google, but still greatand a credit to founder Howard Schultzs vision of transforming a prosaic product, coffee, into a epicurean coffee house experience at luxury prices. Boston Beer burst on the microbrewery scene with Samuel Adams beers, higher priced even than most imports. Notwithstanding thisor maybe because of itBoston Beer became the largest microbrewer. It proved that a small entrepreneur can compete successfully against the giants in the industry, and do this on a national scale. Marketing WarsPepsi and Coca-Cola for decades competed worldwide. usually Coca-Cola won out, but it could never let its guard down however, it recently did so in Europe. at present a Organization of this Book 5 trend toward noncarbonated beverages along with Pepsis non-drink diversifications is swinging the impetus to Pepsi. besides Coca-Col a is trying hard to recover. Dell long dominated the PC market with lowest-prices, direct-to-consumer marketing. Hewlett-Packard, the worlds second biggest figurer maker, chose Carly Fiorina, a charismatic visionary, to be its CEO, and she engineered a merger with Compaq. provided appendage in profitability did not follow, and early in 2005, the board fired Fiorina. Mark Hurd, an operational person, replaced her, and brought the company to PC dominance. still Michael Dell is fighting back. Boeing long dominated the worldwide commercial aircraft market, with the European Airbus only a peanut player. A series of Boeing blunders, however, coupled with an aggressive Airbus, brought market shares close to parity. Both firms are now introducing strikingly new planes, but are finding problems with their outsourcing key components to foreign suppliers.Comebacks McDonalds had long dominated the fast-flying regimen restaurant market. Then it began to falter, and hungry competitors made inroads into its competitive position. As it fought to regain its momentum, it explored diversifications and ever more store openings, while profitability plummeted. Recently, it found a new formula for profitable growth. In the early 1960s, Harley-Davidson dominated a static motorcycle industry. Suddenly, Honda burst on the scene and Harleys market share dropped from 70 percent to 5 percent in only a few years.It took Harley nearly three decades to revive, but now it has created a mystique for its heavy motorcycles and gained new customers. And its Rallies are something else again. The comeback of Continental Airlines from extreme adversity and de giganticated employee morale to become one of the best airlines in the country is an achievement of no small moment. New CEO Gordon Bethune brought marketing and human relations skills to one of the most rapid turnarounds ever, overcoming a decade of clamant adversarial labor relations and a reputation in the pits.Marketing Management Mi stakes Borden, with its enduring symbol of Elsie the Cow, was the countrys largest producer of dairy products. On an acquisitions binge in the 1980s, it became a diversified food processor and traffickerand a $7 billion company. But Borden allowed consumer acceptance of its many brands to wither through unrealistic pricing, unable(p) advertising, and an unwieldy organization. United Way of America is a nonprofit organization. The man who led it to become the nations largest charity perceived himself as virtually beyond authority.Exorbitant cut downing, favoritism, conflicts of interestthese went without criticism until investigative reporters from the Washington Post overtized the scandalous conduct. With its public image plummeting, contributions nationwide drastically declined. The real concern was whether United Way could ever regain its former luster. 6 Chapter 1 Introduction The merger of Chrysler with Daimler, the huge German firm that makes Mercedes, was supposed to be a merger of equals. But Chryslers management quickly found otherwise, and the top Chrysler executives were soon replaced by executives from Germany.Assimilation and coordination problems plagued the merger for years. Nine years later(prenominal), Daimler sold Chrysler to a private equity firm for tens of billions of dollars less than it paid. Newell, a consumer-products firm, successfully geared its operations to meet the demands of giant retailers, especially Wal-Mart, whereas Rubbermaid had in recent years been unable to meet those stringent requirements. In 1999, Newell acquired Rubbermaid, confident of turning its operation around, only to find that Rubbermaids problems were not easily corrected and that they negatively impacted Newells fortunes as well.What do you do now? In April 1992, just outside Paris, Disney opened its first theme part in Europe. It had high expectations and supreme self-confidence (critics later called it arrogance). The earlier Disney parks in California , Florida, and more recently japan were all spectacular successes. But rosy expectations became a delusion as marketing miscues finally showed Disney that Europeans, and particularly the French, were not carbon copies of visitors elsewhere. The problems of Maytags Hoover subsidiary in the United Kingdom almost concur reason.The subsidiary planned a promotional campaign so generous that the company was overwhelmed with takers it could neither proviso the products nor grant the prizes. In a miscue of multimillion-dollar consequences, Maytag had to foot the bill while trying to appease acerb customers. What can we learn from Maytags travails? Two faltering retail chains, Kmart and Sears, merged under the auspices of a hedge fund manager, Edward Lampert. Whether two weaklings could become one strong operation to compete with the likes of Wal-Mart and Target was uncertain, though investors bid both stocks up to extravagant levels in anticipation.The rosy expectations collapsed as we m oved into a niche in 2007 and 2008. Notable Marketing Successes Southwest Airlines found a strategic window of opportunity as the lowest cost and lowest price carrier between certain cities. And how it milked this opportunity Now it peril major airlines in many of their domestic routes. However, by 2008, competitors were beginning to counter Southwests price advantage. Nike and Reebok were major competitors in the athletic footwear and apparel market. Nike was overtaken by Reebok in the late 1980s, but then Nike surged far in the lead, never to be threatened again.What is the undercover of Nikes increasing dominance? Vanguard has become the largest mutual fund company, charging past Fidelity. Vanguards strategy is to downplay marketing, shunning the heavy advertising and overhead of its competitors. It provides investors with better returns through far lower expense ratios and relies mostly on condition of mouth and unpaid publicity to General Wrap-Up 7 gain new customers, whi le old customers continue to well out in money. Is Vanguard vulnerable to aggressive new competitors? Ethical MistakesMerck, the pharmaceutical giant, learned that its blockbuster arthritis drug, Vioxx, treble the risk of a heart attack or stroke. Over five years and $500 million in advertising, it had 20 million users in the United States at the time it recalled the drug September 30, 2004. Critics and civil wrong lawyers assailed the company for waiting so long to recall this drug, since some research studies as early as five years before had raised questions about the safety of Vioxx. What can we learn from Mercks handling of its great profit-making drug now discredited?The huge insurance firm MetLife, whether through loose controls or tacit approval, permitted an agent to use deceptive selling tactics on a grand scale, in the process enriching himself and the company. Investigations by several state attorneys general brought a crisis situation to the firm that it was slow to move to. crimsontually, fines and lawsuits totaled almost $2 billion. Product safety lapses that result in injuries and even loss of life are among the worst abuses any company can confront. Worse, however, is when such risks are allowed to continue for years.Ford Explorers equipped with Firestone tires were involved in more than 200 deaths from tire failures and vehicle rollovers. After news of the accidents began surfacing, Ford and Firestone each deuced the other for the deaths. Eventually, inept crisis management brought a host of lawsuits resulting in massive recalls and billions in damages. GENERAL WRAP-UP Where possible, the text depicts major personalities involved in these cases. Imagine yourself in their positions, confronting the problems and facing choices at their points of crisis or just-recognized opportunities.What would you have done differently, and why? We invite you to participate in the discussion questions, the handson exercises, the debates appearing at the ends of chapters, and the occasional devils advocate invitation (a devils advocate is one who argues an opposing viewpoint for the sake of testing the decision). There are also discussion questions for the various boxes within chapters. While doing these activities, you may feel the excitement and challenge of decision making under conditions of uncertainty. Perhaps you may even become a fast-track executive and make better decisions.QUESTIONS 1. Do you agree that it is impossible for a firm to avoid mistakes? Why or why not? 2. How can a firm speed up its awareness of emerging problems so that it can take corrective action? Be as specific as you can. 8 Chapter 1 Introduction 3. Large firms tend to err on the side of conservatism and are slower to take corrective action than smaller ones. Why do you suppose this is? 4. Which is likely to be more dearly-won to a firm, errors of omission or errors of commission? Why? 5. So often we see the successful firm in conclusion losing its pattern of success.Why is success not more enduring? PART ONE E N T REPREN E U R I A L A D V EN T UR E S This page intentionally left blank CHAPTER TWO GoogleAn Entrepreneurial Juggernaut I n 1998 Sergey Brin and Larry summon dropped out of the Ph. D program at Stanford to start Google in a friends garage. Along the way, they discovered a powerful marketing tool that would revolutionize advertising. sixer years later, on August 19, 2004, they took this Internet search and advertising firm public at a price of $85 a share. whiz year after the initial public offering (IPO), Google stock closed at $280.By 2007, the stock had gone over $700, and mounts of people had become very rich. But this was to cause some serious concerns for the firm. Brain Drain Craig Silverstein, a fellow Stanford Ph. D student, was the first remove of Page and Brin. He helped them move their equipment out of Pages dorm room and into a place with more space and, more importantly, a garage. In early 1999, fi ve months later, the enterprise had grown enough to move into offices on University Avenue in business district Palo Alto. The firms fortunes continued to improve, and Craig became director of engineering in charge of product development.Before many years, Craig realized he had become very rich indeed. From the beginning, Google gave its employees stock options in lieu of competitive salaries that in those days it could ill afford. These options gave employees the right to purchase a habituated number of shares of stock at a certain price, called a vested price, some years in the future. Even before going public in 2004, it had granted two big batches of such options. A 2002 grant that was priced at 30 cents a share vested in 2006. Another, priced at $4 a share in 2003, also vested in 2006.In May 2008, another round of options would be exercisable at $35, far more costly than the 30 cent option, but the way the stock was going up since the IPO, this higher price was of little conse quence. By 2007, Craig was worth well over $100 million in Google stock and was becoming richer with every passing day. He knew that some 700 of his associates were worth at least $5 million, and he knew that many of them were talk about quitting, with some wanting to start their own businesses. He knew that Bismarck Lepe, for example, who began working 11 12 Chapter 2 GoogleAn Entrepreneurial Juggernaut or Google in 2003, had left the firm immediately after his four-year options vested in 2007. He now had a few million dollars that would help him start his own firm2 million in only four years, wow Craig couldnt help pondering whether he should do the same. After all, how many hundreds of millions does one man need? But he did not really see himself as an entrepreneur. At his young age, about the same age as Sergey and Larry, he was not urinate to retire to some South Sea island and count coconuts. So he stayed, caught up in the challenge of solving tough problems with other smar t Googlers. Making the brain drain all the more tempting for many of these employees was Googles hiring of the brightest young people, the very ones most likely to become entrepreneurs, if given the chance. Their ambitions fed on the great example of Google, as well as a plethora of smaller enterprises in this hotbed of renewal that was Silicone vale with its great research universities such as Stanford. SERGEY BRIN AND LARRY PAGE AND THE START OF GOOGLE In 1998 when the venture that was to be Google was only an idea, Sergey and Larry were both 25 years old and were doctoral students at Stanford.Sergey was a math whiz, having completed his undergraduate degree at 19, and aced all ten of the required doctoral exams on his first try, and teamed easily with professors doing research. His parents backgrounds were rich in science and applied science. His mother was a scientist at NASAs Goddard Space pip Center. His father, Michael, taught math at the University of Maryland. Sergey wa s born in Moscow, but he and his family left the Soviet Union when he was six, fleeing anti-Semitism and seeking greater opportunity for themselves and their children.Larry Page grew up in Michigan, also the son of a professor whose Ph. D was calculator science, and who taught at Michigan State University where Larrys mother also taught computer programming. He followed in the footsteps of his father and brother by going to the University of Michigan where he studied computer engineering, receiving his undergraduate degree in 1995. At first he had felt uneasy about being one of the select few to be admitted to Stanfords elite Ph. D program. In those early days, these sons of esteem professors were focused on pursuing their Ph. Ds, not on getting rich. In their families, nothing trumped the value of a great education. Neither of them had the slightest idea just how soon their heartfelt commitment to academia would be tested. 2 The line In the mid-1990s, the Internet was just emer ging. Millions of people were logging on and communicating through email. But researchers grew frustrated with the clutter of Web sites. Searching it for relevant information often resulted in an abundance of completely meaningless data. Search engines began to organize the Internet, and thus Yahoo and AltaVista among others were born. But they still left a lot to be 1 2Examples can be found in Quentin Hardy, Close to the Vest, Forbes, July 2, 2007, pp. 4042. David A. Vise, The Google Story, New York Delacorte, 2005, p. 31. Sergey Brin and Larry Page and the Start of Google 13 desired. The answer to more relevant research seemed to be a better use of inter-group communications, such as a highlighted word or phrase. In 1996, Page and Brin teamed up to work on downloading and analyzing Web links. In the process they developed a ranking system for searching the Internet that yielded prioritized results based on relevance to the object of the search, and useful answers could be found swiftly.In 1997, they made the search engine useable to students, faculty, and administrators on the Stanford campus, and popularity grew by word of mouth. As the database and number of users burgeoned, more computers were needed. In these early days, Brin and Page were able to scrounge around for unused computers and string together inexpensive PCs. By July 1998, they had an index of 24 million pages, with more coming. But their growth was stymied by lack of capital. They decided to take a leave of absence from the Ph. D program and start their own firm.This way they could develop a business of their own that would fit their search engine. If it was as good as they thought, and with Internet use growing so rapidly, growth could be virtually unlimited. Rather than selling out to some existing firm, wouldnt they be better off keeping control? Still, by August they had run out of cash and badly needed an angel. One of their professors suggested they meet his friend, Andy Bechtolshei m, a legendary investor in a string of successful start-ups. After listening to their presentation, he said, This is the single best idea Ive heard in years.I want to be part of this, and he left them a check for $100,000 made out to Google Inc. 3 It took them two weeks before they could formally represent the company, Google Inc. , and then open their first bank account. The check sustained the two entrepreneurs at first, and in fall 1998 they moved their computers from a dorm room into a garage and several rooms of a house. They also leased a friend, Craig Silverstein (mentioned earlier), as their first employee. After five months they outgrew the garage and moved into offices in downtown Palo Alto, barely a mile from the Stanford campus.By now, their search engine was handling 100,000 queries a day, all this through word of mouth, emails, and instant messages. But they were again running out of money, notwithstanding the now $1 million in musical accompaniment that they had c ollected from Bechtolsheim and other early investors, and through borrowing on their credit cards. But it was percipient that with upward of 500,000 searches per day toward the end of the year, they needed much more money. In the boomtown climate of Silicon Valley in early 1999, a public stock offering was one option, even though Google had no profits.But Brin and Page resisted this option, not wanting to reveal their trade secrets and lose some control. Efforts to license their search technology to other firms wishing to use it for research, found few takers. Eventually they went the venture capital route. But Brin and Page insisted on keeping control of Googles destiny and remain majority owners, or it was no deal. On June 7, 1999, less than one year after they left Stanford, they issued a press release announcing that two venture capital firms, Kleiner Perkins and Sequoia Capital, were investing $25 million in Google.On the Stanford campus and around Palo Alto, amazement reigned at the exorbitance of the sum seemingly without the two giving anything up in return. The announcement included details of the funding as well as additional information about Google, its impressive list of investors, and its growth 3 Vise, p. 48. 14 Chapter 2 GoogleAn Entrepreneurial Juggernaut rate of 50 percent per month. All this put the company in the global limelight, giving it the opportunity to grow further through free media publicity. 4 But Google still had not earned any appreciable receipts to upport its heady growth, and no plan for this was revealed in the press release. THE EARLY GROWTH YEARS By the end of 1999, Google was averaging 7 million searches per day, but its revenue from licensing remained small. If the business could not be reasonably profitable, they could hardly maintain their vision of vast information unattached to users without charge. With licensing its search technology to businesses proving to be such a limited revenue source, they finally were forced to consider allowing advertisers access to their multitude of users.Brin and Page could see a relationship between their search engine and the television networks those offered enjoyment and news for free, while charging millions for the advertising. But the two shuddered at the flashy banner ads that littered the Internet. Still, they recently recognized that advertising was where vast sums were being spent, not in licensing, Creating a Different Advertising illustration They wanted to avoid the clutter of almost out-of-control, irrelevant ads, and they developed strict standards for size and type of ads.They set-apart the free search results from the ads, which they would label Sponsored Links. These Links, because of their relevance to the search, would be clicked on more often than if they were labeled but Ads. They decided to display the links in a clearly marked box above the free search results. The ads would be brief and look identical, with just a headline, a short description, and a link to a web page. But these would be targeted ads, offering a major advantage for advertisers confronted with the huge wastage of advertising reaching uninterested audiences.At first Google sold this advertising to large businesses that could afford expensive ad campaigns, but it soon found substantial market potential in letting smaller advertisers easily sign up online with a credit card, and their ads could then be running within minutes. This gave Google an edge over similar providers unable to offer such fast service, and also minimized its own costs of selling advertising. briefly after turning to its advertising model, Brin and Page had another innovative ideathey would rank ads based on relevance.And relevance would be determined by how often ads were clicked on by computer users. This would provide valuable feedback to advertisers and influence the selling and pricing of ads. CHARGING AHEAD When the Internet stock price bubble burst in 2000, it ravaged the former highflying entrepreneurial firms of Silicone Valley with major layoffs and bankruptcies. But Google stood poised at the nadir of its great growth to come and was one of 4 Vise, p. 69. Charging Ahead 15 the few firms able to hire outstanding software engineers and mathematicians, many holding worthless stock options.This pool of talent stimulated Googles growth as it moved to a large plate in business deal View, named the Googleplex, 40 minutes south of San Francisco. There Brin and Page developed a work environment practically unprecedented. cover the following Information Box for some examples of this culture that was designed to cultivate strong loyalty and product line satisfaction and to foster a creative, playful environment where Googles employees, mostly young and single, would be impulsive to spend their waking hours. By early 2001, Google was recording 100 million searches per day.It was also entering the lexicon as a verb, as for example, to goog le each other before dates. Now large firms, such as Wal-Mart, the worlds biggest retailer, and Acura, a major automobile manufacturer, joined the entourage of firms advertising their wares on Google. What was the secret behind the rapid growth of Googles advertising program? As we saw before, Google came up with an unique approach to advertising, an INFORMATION misfortune WORK CLIMATE AT GOOGLE Employees worked long hours but were treated like family. There was even a gourmet chef, with free meals, healthy drinks and snacks.The chef took pride in providing better meals than found in area restaurants. Given the international mix of employees, the menu was varied to cater to all tastes Southwestern, clean Italian, French, African, Asian, Indian, etc. The argue Street Journal sent a reporter out to investigate. Where else but the Plex can you zip around on a bicycle and choose from multicultural comfort food, American regional food, small plates, entrees made with five ingredients or less, and dishes based on raw materials supplied from within 150 miles of Mountain View?Many employees eat three meals a day at the Plexs 17 food venues, open any time day or night. . . . We were told that Messrs. Brin and Page chow down with the troops. (Raymond Sokolov, Googling Lunch, Wall Street Journal, December 12, 2007, pp. W1 and W5. ) Also furnished were such conveniences as on-site laundry, hair styling, dental consonant and medical care, a car wash, day care, fitness facilities with personal trainers, and a professional masseuse. Brightly sorry medicine balls, lava lamps, assorted gadgets and sports equipment gave the appearance of a college campus.Chartered buses had internet access so that commuters to San Francisco could use their laptops. Social events and entertainment were Friday afternoon and evening features. As a spur for creativity, a policy was set that software engineers spend at least 20 percent of their time, or one day a week, working on whatever proj ects interested them. Do you see any downside to these workplace amenities? Would these influence your choosing to work for Google disdain less money? Would some of these be appropriate to other firms? If so, what kind of firms? 16 Chapter 2 GoogleAn Entrepreneurial Juggernaut pproach that most advertisers previously could only dream of i. e. , Targeted Text Ads. The unobtrusive ads are seen only by potential customers who are searching for information on that specific topic. In one swell coast this advertising virtually eliminates the great waste of most mass media advertising that is viewed by a vast audience who have no interest whatever in the product being advertised despite millions and hundreds of millions of dollars being spent. For an example of the waste of such untargeted ads, consider an airline spending $1 million or more on a TV ad campaign that gains only 100 new first-class mail customers as a result. Furthermore, in Google-placed ads no intrusive banners compete for attention. The text ads (links) and websites are read carefully by users or potential users, and these often find the ads as valuable as the actual search results. A New CEO In early January 2001, at the urging of its venture capitalists, Larry and Sergey reluctantly consented to hire a chief executive officer to run operations. Eric Schmidt was highly recommended by one of the venture capitalists. He not only had entrepreneurial experience as founder of Sun Microsystems, and CEO of Novell, but also academic credentialsa Ph.D in computer science from the University of California at Berkeley, and a degree in electrical engineering from Princeton. Then there was research experience at Xerox Palo Alto Research Center and Bell Labs. At 46, he was a seasoned tech executive and brought a needed mature balance to this organization of young people. Besides, he was willing to invest $1 million of his own money to buy preferred stock in Google, this at a time when the company was running short of cash again. (It would soon never again run short of cash. ) Google entered into pacts with Yahoo, AOL, EarthLink, and Ask Jeeves.This gave it relationships with most of the biggest Internet properties. By the end of 2002, Google and its venture capitalists could see that the search engine was going to be a huge financial success. For the year, it had recorded $440 million in sales and an amazing $100 million in profits. Virtually all of these profits came from people clicking on the text ads that were on the right side of search results pages at Google. com and the pages of its partners and affiliates. But the world did not realize the extent of this profitability since Google was still a private company.This silence about the profitability of the online search and advertising business model undoubtedly kept other firms, especially Microsoft and Yahoo, from investing in or developing search engines of their ownuntil Google had an almost insurmountable head start. The advert ising industry was being transformed as well, as billions of dollars of advertising was being shifted from television, radio, newspapers, and magazines to the Internet. But the time was nearing for Google to go public, and with this full disclosure would shock the investment community and make Google stock the darling of investors and employees alike. Example cited in Seth Godin, Your Product, Your Customer, Forbes, May 7, 2007, p. 52. Going Public 17 GOING PUBLIC Finally in early 2004, Larry and Sergey reluctantly started the process of taking Google public. In truth, their decision was practically dictated by federal official rules that required public disclosure of financial results by companies with a substantial amount of assets and shareholders, and Google had exceeded these limits with many of the company employees having been given stock in the then-private firm. This move would enable them to convert their holdings to cash.The venture capitalists who had supplied the early crucial money would also benefit from the liquidity that going public would provide. For most entrepreneurs, taking their new firm public was the ultimate goal since the IPO (initial public offering) would often make them instant millionaires. But for Brin and Page, the reality of being billionaires was not all that appealing. They both lived relatively modestly, loved the privacy, and cared little for the accumulation of wealthiness and the accoutrements of wealthsuch as grand homes, planes, and yachts to attest to their success.The company was debt free, self-funded, had plenty of cash, and had no need to sell stock to the public to raise money. They were not sure they wanted the immense publicity and what it would entail and affect the freedoms they had enjoyed, and that of their families. For example, would they need bodyguards? How about the paparazzi? And their employees who would become instant millionaires, how would this affect their intensity and focus? And would they e ven stay with Google, or go out on their own? (We know that many left to start their own enterprises. In early 2004, the employees were piano told that the company was going to file a public offering. And thousands of Google employees, spouses, and interested others began an eight-month guessing game of how much the company and themselves would be worth. The eight months proved to be a stressful time for almost all concerned, but probably most of all for Brin and Page. Their reluctance to disclose much before the public auction did not endear them to the media. Then an ill-advised Playboy interview did not go well and even triggered a SEC investigation.To make matters worse, the stock market was tanking as world oil prices spiked, and many analysts were warning of a global recession. Also, the Athens Olympics were starting amid great fears of terrorism. Google and its bankers realized that the initial price range of $108$135 would probably not be acceptable to the market at this ti me, and on August 19, Google finally went public at $85 a share. By the end of the first day, the stock had reached nearly $100. By the next day it was $108. It reached $200 in November and kept climbing from there.Forbes, in its listing of the 400 Richest Americans cited Brin and Pages wealth at $4 billion each at the end of 2004, due to the success of the IPO. Then in 2006, The Google Guys crack the top 10 of the Forbes 400, each now worth $18. 5 billion. This placed them as the fifth richest Americans, in the company of Bill Gates and Warren Buffett, ahead of Michael Dell of Dell Computer, and way ahead of Donald Trump. And they were both only 34. 6 6 Forbes, Forbes 400 The Richest People in America, October 8, 2007, p. 78. 18 Chapter 2 GoogleAn Entrepreneurial Juggernaut AFTER THE IPOAfter the IPO, the pace of innovation at Google got into high gear. New products and innovations were being spawned and made addressable to millions of customers around the world. Google became the darling of the media no other firm or individual got the press coverage of Google. The fact that it was now a public company with its financial performance readily availableand as such now well covered by financial analysts who did not cover private firmsmade its lustrous results and potential very visible. It expanded the lead in its core search and advertising business in the United States and much of the world.And with its new cash horde, it eagerly branched out into new areas, even such far out visions as a Green renewable-energy program to find ways to generate electricity more cheaply than by burning coal. 7 Not surprising, the growth of Google was being comparisond with that of Microsoft two decades earlier. Google was also becoming a major competitor of Microsoft, not in PCs, but in a later phase of technology that was surpassing the earlier technology, this time by the power of the Internet revolution. But possibly the real competition was in recruiting and retainin g the brightest technology minds in the world.But more about this later. For now, let us compare this early growth of Google with Microsoft in the Information Box beginning on page 19. Googles poach of Talent As the business burgeoned in the spring and summer of 2005, Google added more than 700 employees in just three months. The total headcount now was 4,183, nearly double the total the previous year. Google was hiring Ph. Ds from the top universities across the country, and even trespassing on Microsofts own neighborhood, at the University of Washington.It opened a facility in a Seattle suburb just down the road from Microsofts Redmond plant, and now it was easy for their engineers and scientists to move over to Google. They didnt even have to move to a new city or change their commute. In these days, Microsoft was viewed as a mature business. It no longer had the sex appeal that Google had grasped. Microsoft was struggling to keep its best people, even offering more money and pe rks. But the amazing growth and potential of Google brought the lure of great riches as stock options became valuable.As mentioned before, not the least of the perks that Google offered were the free restaurants and other amenities at its Googleplex headquarters in the Silicone Valley 40 minutes south of San Francisco. The increasing poaching of talent climaxed with Dr. Kai-Fu Lee, a highly regarded scientist, who wanted to leave Microsoft to become president of Google China. Microsoft began an all-out legal assault alleging that Google improperly desire to induce Lee to violate the terms of his employment contract with Microsoft. A temporary triumph over Google raised the specter of litigation for any senior Microsoft employee who left for Google.The wide publicity served to illustrate how severely Microsoft regarded the threat posed by its smaller rival. 8 7 Rebecca Smith and Kevin J. Delaney, Googles Electricity Initiative, Wall Street Journal, November 28, 2007, p. A16. 8 Vise , p. 274. Analysis 19 ANALYSIS Here we have seen perhaps the greatest growth ever of a new enterprise. In the exuberance of this growth, investors bid up its stock market price to make the company more valuable than such long-established firms as Coca-Cola, Hewlett-Packard, Time Warner, AT&T, Boeing, Disney, McDonalds, and General Motors and Ford.INFORMATION BOX COMPARISON OF MICROSOFT AND GOOGLE Table 2. 1 Comparison of Microsoft and Google Growth in Revenues from Their Beginnings Microsoft Beginning Went Public Years from Beginning 1975 1986 11 years Revenues (millions) 1986 1987 1988 1989 1990 1991 1992 Google Y/Y Growth $ 1996 2004 8 years 40. 7% 75. 1 70. 1 36. 0 47. 3 55. 8 49. 7 197 346 591 831 1,183 1,843 2,759 1996 28,365 32,187 36,835 39,735 44,282 Y/Y Growth $ 409% 233. 9 117. 5 92. 5 72. 8 9. 400 2002 2003 2004 2005 2006 Revenues (millions) 13. 5 14. 4 7. 9 11. 4 439 1,466 3,189 6,138 10,605Source Calculated from company annual reports. gossip The much faster start of Google is mind-boggling. The experts thought Microsoft was the model of the most successful entrepreneurial start ever. Bill Gates did not rush to take his venture public, waiting 11 years to do so, at which time revenues were almost $200 million. Google on the other hand delayed only six years before going public, but its revenues were already over $3 billion. As we can see, the year-to-year growth rate also strongly favored Google, with around a hundred percent growth since 2004. The two years before going public showed growth over 400 percent and 200 percent each year. ) The comparison between a young growth company and a mature Microsoft is clearly evident. (continues) 20 Chapter 2 GoogleAn Entrepreneurial Juggernaut COMPARISON OF MICROSOFT AND GOOGLE (continued) Table 2. 2 Comparison of Microsoft and Google Net Income from Their B