Sundar Pichai grew angry. Google’s much-heralded artificial intelligence bot Gemini had been launched in a disastrous and public manner, turning an opportunity for glory into a humiliation. Alphabet’s longtime CEO sent a memo last week to his 182,000 staff to let them know that this would never happen again.
He wrote that “structural” changes were coming. “Some [Gemini] responses have offended and shown bias – to be clear, this is completely unacceptable, and we got it all wrong,” he said. Pichai’s harsh criticism was not in keeping with his personality. The 51-year-old executive is known for being a soft-spoken, bookish executive. It reveals a new harsh reality: Pichai is fighting for his position. Doubts are growing about his ability to lead the company through an unprecedented technological shift.
Pressure has grown on Pichai since OpenAI, a 400 person start-up launched chatGPT November 2022. How could the $1.7 billion behemoth allow a small start-up to beat it in AI? Gemini and a $20 per month “Advanced Version” capable of converting text prompts to images, answering question and doing everything ChatGPT could do was his answer.
It was a catastrophe. Gemini’s responses were completely contaminated by political correctness. It couldn’t say if Elon Musk was more harmful to society than Adolf Hitler. It turned America’s founding dads Asian. Google engineers tuned the bot to make sure it didn’t offend anyone, but instead it did. The company, vilified by users, was forced to shut the image-generating tool down and fix the chatbot frantically. Alphabet shares dropped 6 percent in the aftermath of the saga, before recovering a little to close Friday at $139.78.
Insiders in the tech industry believe that the catastrophe was a logical result for a company on the brink of collapse. It may be the last straw for Pichai. Brad Gerstner is the founder of Altimeter Capital – a prominent hedgefund. He said what many others have been saying for months. He wrote that the “cultural mess” at [Alphabet] is not surprising. Gerstner argued Alphabet required a shock treatment similar to Mark Zuckerberg who laid off a third of Meta’s staff, or Elon Mus who fired 80% of the staff of X (formerly Twitter). Gerstner continued: “Sundar Pichai is a great human being but he does not appear to be capable of leading this company’s Zuck/Elon reset.”
Since a while, pressure has been increasing. Diane Hirsh Theriault a Google Engineer, attacked Pichai, and the entire leadership of Google, in a scathing LinkedIn post that garnered more than 8,00 (mostly positive) responses last month. Google does not have a single visionary leader. She wrote, “Not one.” From the C-suite, to the senior vice presidents, to the vice presidents, they’re all profoundly dull and glassy-eyed.
She is not the only one. The “Disaffected-Googler Farewell letter” has now become a genre. Praveen Seshadri who sold his company to Google, but left after three years in 2023, claimed that the once-favorite culture has weakened. He wrote that the mission of striving for invention had been replaced by an army coddled employees trapped in a systems that tacitly rewards inaction, and shuns decisions that could in any way threaten the bottom line.
He said that “risk mitigation is more important than anything else.” This makes sense when everything is going well and the main thing is to keep the ship afloat and avoid rocking it. There is risk everywhere in such a world. “People act accordingly.”
Pichai’s rise came at a crucial moment. August 2015 was the date. Larry Page and Sergey Brin turned their 1998 project, which they started as a student, into the largest advertising company in the entire world. Google’s monopoly profit meant they had enough money to pursue a variety of wild hares. From driverless cars and life extension, to wi-fi-hot-air balloons and fly-cars. The founders decided to step back. The founders created an umbrella firm to house the “other bets” and the core Google advertising business. Pichai was made chief executive of Google. He was born in Chennai and worked as a Google consultant before rising through the ranks.
Pichai’s tenure at Google has seen a tremendous amount of growth.
He’s had a great run. He grew his sales from $75 billion in 2015 to $307 billion last year. Profits grew five-fold, from $16 billion up to $75 billion. The company’s market value has risen from $400 billion up to $1.7 trillion. Its culture changed as Page and Brin’s first generation of executives, including Eric Schmidt, left to be replaced with a newer generation of Wall Street-oriented, corporate operators.
In the last year, the company’s ranks increased from 61,000 employees when Pichai became CEO to over 190,000. A war of attrition with Meta drove pay packages to unprecedented heights. Every year, more than two million applicants compete for just a few thousand positions. Ian Hickson left the company in November, after 18 years. In a post on his blog, he described how the mission of “organizing the world’s data” was replaced by profit motive.
Google is often compared to a glorified Yellow Pages where users have to navigate through a list of ads in order find organic search results. Hickson blamed Pichai for his “clear indifference to maintaining the cultural norms that were present at the beginning of Google”, said Hickson. The growing number of middle managers who are inept is a symptom. At a recent all-hands gathering, workers asked Pichai about the “growing rift” between the leadership and the employees.
Pichai is no stranger to crisis. He has faced several before. From an employee revolt in 2018 over Google’s Pentagon contract for drones, to another concerning his exploration of the Chinese market.
The only difference is that artificial Intelligence has finally arrived. This is the greatest threat Google has faced in its 25-year history. The future of Google will be a world without it, or at least not in its present form. Pichai hinted in his memo at “structural change”, which is likely to mean layoffs. Alphabet’s workforce ended last year at 182,000, just 8,000 below 2022. He fired 12,000 employees, but continued to hire. Chris Hohn is the hedge fund billionaire who runs The Children’s Investment Fund. He wants to see even deeper cuts. In a letter he wrote in January, arguing that Pichai must cut another 30,000 positions, which would bring the headcount to where it was prior to 2021’s hiring spree fueled by pandemics.
Pichai is being attacked by investors, but his fate rests in the hands of only two people: Larry Page & Sergey Brin. The company’s founders still retain a majority of the voting power. Pichai will be done if they lose their faith.
Page, who announced Pichai’s appointment in 2015, said, “We have long believed that companies get used to doing the same things, making small changes.” In the technology sector, where new ideas are driving the next major growth areas, it is important to remain uncomfortable in order to stay relevant.
Alphabet makes me uncomfortable. Its importance is at stake.