If Google wants a peek at its future, think of Microsoft

The company's been on quite a run. But if you thought Sheryl Sandberg's defection was a one-off, think again.

Why believe Schmidt can succeed where Gates couldn't? CNET

No doubt it was a platinum opportunity, one that Sheryl Sandberg could not turn down. But the departure of a highly regarded Googler to become Facebook's chief operating officer is more than just another Silicon Valley tale of lighting out for greener pastures.

Sandberg may be the headliner, but about one third of the company's first 500 employees have already left Google. Meanwhile you've got roughly 2,000 people who are pre-IPO veterans now waiting out the clock before their shares vest. I don't care how delish you find the free food in the corporate cafeteria. There's potential here for major employee churn on the horizon.

"Google's about to become the story," says a senior industry executive familiar with both companies. Just as Microsoft went through a period of churn, this person believes Google's turn is next. "A lot of people over there have way more money than know what to do with" thanks to stock options cashed in over the years.

In that sense, Sandberg's exit fits into a familiar narrative. Every big successful technology company reaches a juncture where the loyalty of the rank-and-file wavers. The "let's burn the midnight oil" exhortations only work for so long before the hired help start to wonder about making a fresh start elsewhere.

"This is what happens where people with a lot of ambition decide that it makes no sense staying around any longer," a former Microsoft exec told me. "It's nothing extraordinary but it becomes a management challenge. They're already wealthy. How do you keep them fired up when the basic corporate rules of the road have already been decided?"

Microsoft lost employees to start-ups during the go-go days of the 1990s and Bill Gates and Steve Ballmer were not able to do much to stem the defections. The irony is that the subsequent economic recession turned out to be Microsoft's best weapon for retaining its people. Why throw the dice when you've got a sure job with a steady paycheck?

Back to Google. The company's enjoyed an incredible run. But with the wilting of the company's shares, toughing it out for the duration suddenly sounds a lot less appealing. With all due respect to Google's ruling troika, "Do no evil" is not poetic enough to set many hearts aflame. Not with sundry headhunters banging on the door because they believe you're so much smarter than the average bear.


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