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©2008 Google
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THE Russian mathematician was 24 years old when he first saw a personal computer, one of only a dozen in the whole Soviet Union. That was in 1984.
A little over two decades later, Arkady Volozh is the chief executive and one of the founders of Yandex, Russia’s most popular internet search engine, a company now valued at £2.5 billion. Widely described as Russia’s answer to Google, Yandex was launched only eight years ago but is now visited by 8m people a day. More impressive still, Yandex and Volozh are credited with humbling Google, by denting its global domination.
Russia is one of only four countries where the American search giant fares considerably worse than local services – alongside China, where the internet is controlled by the government, South Korea and the Czech Republic. To “Google it” may be the common way of searching in much of the world but in Russia Yandex holds 55% of the market compared with Google’s 21%.
It is an advantage Google can ill afford to ignore. As Russia’s economy prospers and its middle class grows, the country is expected to become Europe’s largest internet-user market in the next five years – 60m people by 2013.
Thirteen years ago, when the Russian internet first took off, its entire traffic was small enough to fit on an ordinary flash memory card. Today, by contrast, 33m Russians, as many people as in Britain and already more than in France, use the web.
As a result Yandex is booming. In 2000, when the company was valued at only £7m, its yearly revenue was about £200,000. In 2007 it reached £85m, and industry analysts believe that this figure will probably double this year.
This autumn Yandex is planning to float on the Nasdaq exchange. A group of western investment funds that in 2000 gave the company some £2.5m is expected to sell about £700m worth of shares.
“These are very exciting times,” said Volozh as he prepared to move the company, which employs 1,200 people, to a vast new office in central Moscow. “Russia has the potential to become the largest internet-user market in Europe. It’s a huge market with fantastic growth. Every day more and more people in Russia are discovering the internet.
“We have better technology and understanding of the market. I take the competition seriously and every day check the latest figures to see where it is, but I think we will stay far ahead. What was enough for Google to conquer other markets isn’t enough in Russia.
“In two years since Google opened an office in Russia we haven’t lost a single specialist to our competitors because Yandex is one of the best companies to work for in Russia.”
Broadband penetration in Russia, currently at 10%, is forecast to triple in the next two years. Google, which in an attempt to fight back last month bought Begun, a contextual advertising company for £70m, expects the market for search-relat-ed ads in Russia to rise from £100m last year to £500m by 2010.
Yandex, the world’s second most popular nonEnglish search engine after China’s Baidu, is to open an office in Silicon Valley, headed by one of Yahoo’s former senior vice-presidents. Its New York flotation promises to be the largest yet in Russian technology.
Volozh, 44, who has a degree in applied mathematics, worked as a specialist at a Soviet state pipeline institute when the so-called “kooperativ” (small private businesses) were legalised in 1987. Destined to work for the state for the rest of his life, the young mathematician was unexpectedly ordered to start dabbling in business.
“Ironically, my first business experience was thanks to the Communist party,” said Volozh. “When the law about kooperativ was passed, our boss at the institute came to us and said: you guys are mathematicians, you start a business. We began trading computers and I was made technical director. I was only 24. [We were paid in hardware instead of cash and] I earned two personal computers in one year, a huge sum in those days – enough to buy my first flat, a two-bedroom Moscow apartment.”
By 1990 Volozh had co-founded a company that became one of the largest distributors of computer technology in Russia. At a time when most insiders believed the future of the industry to be mainly in selling hardware, Volozh had great faith in the talent and know-how of Russian specialists. With a group of five computer programmers working out of a cramped flat, he helped set up a search engine for patents.
The experiment led to Yandex (short for yet another indexer), an engine aimed at improving Russian-language searching, which is complicated because of its grammar.
Initial scepticism soon gave way to a giddy rise. Two years after its launch, Yandex took over Rambler, then Russia’s most popular search engine, and broke even a year later. It organised its own free wi-fi network with hotspots all over Russia long before Google got into that game in America and, far from being only a search engine, developed a series of special features.
Its mail service, said Volozh, is protected by unique antispam technology created by its software engineers; it has its own blog search, homegrown electronic-payment system, a social-networking site for business people as well as a real-time traffic-monitoring system, a feature Volozh proudly demonstrated on his mobile phone.
“Our technology is better suited for the Russian market,” he said. “We have brilliant mathematicians and programmers. We are very strong on data analysis and have developed better technology, which is cutting-edge in Russia. We are constantly inventing new programs to stay ahead.”
Yandex’s management style is also very unusual for a Russian company – 120 key specialists have stock options in the business, a first in Russia. Employees, who walk around the office in T-shirts, determine their own timetable, have access to a free canteen and are allowed to play pool and table tennis at work.
In a country where the rich typically flaunt their money, live in lavish mansions, travel by private jet and are shadowed by bodyguards, Volozh – who industry analysts say could soon become a dollar billionaire – is an unlikely business tycoon. He owns neither a yacht nor a plane, drives a Volvo and insists that money has not changed his life.
Even more remarkable for Russia, where business and politics are often intermingled and where connections can be more important than know-how, Volozh never cultivated friends in high places.
Some say that may have to change now that Yandex has been valued at £2.5 billion and has become one of Russia’s best-known brands.
Interest in the company is growing. Alisher Usmanov, the metals bil-lionaire and Arsenal football club shareholder who has invested heavily of late in the Russian internet, was recently reported to be keen on buying a quarter of the company. For now at least, Volozh does not seem to be considering a sale.
“I’m very proud of the fact that we have created something so successful out of nothing, but above all a great brand that sends a positive signal about Russia and that says something about the great talent there is here,” he said.
“People abroad don’t realise that there are many positive things happening in Russia. Yandex is one of them. It’s the country’s best high-tech company. As for what the future holds – more growth, in Russia and abroad. There are huge opportunities for us in former Soviet countries and beyond.”
08.12.08
by Mark Hachman
Both Google's Gmail and Apple's MobileMe email services failed Monday. One company was quiet about the outage, and another stepped forward and apologized.Which company did what? Not surprisingly, Google issued a blog post detailing the problem, and apologized to users. Apple, however, left it to its customers to complain about the issue on its message boards.
Consider the differences:
"The issue was caused by a temporary outage in our contacts system that was preventing Gmail from loading properly," Todd Jackson, a Gmail product manager, wrote in a Monday night blog post. "Everything should be back to normal by the time you read this."
"Is it just me or would it be more in Apple's best interest to put actual DETAILS on the status page," user Dan Slocum posted to Apple's support forums. They have the red square up on the mail issue--- but what about some facts. What's the estimated time that service will be restored? Can they not even give a ROUGH TIMELINE? Am I the only one that gets angry with that attitude?"
Because of the lack of communication from Apple, it was impossible to determine whether or not the problem was widespread, or whether it affected just a small percentage of Apple's MobileMe users. Some complained of not being able to access email via the MobileMe service, but could access it via Web mail. One user reported that Apple had informed him that MobileMe mail was inaccessible from 1:16 to 1:43 PM PDT, but that service had been restored -- but not for him.
Apple previously claimed that just 1 percent of users were affected by the MobileMe email problems.
Apple added a MobileMe status blog in late July, promising frequent updates on any issues plaguing MobileMe. "Steve Jobs has asked me to write a posting every other day or so to let everyone know what's happening with MobileMe, and I'm working directly with the MobileMe group to ensure that we keep you really up to date," an unnamed Apple blogger wrote on July 25.
So far, however, the blogger, later identified as "Steven G.," has not issued any updates to the status blog describing the problem.
To date, Apple has not responded to requests for comment on MobileMe, although Apple representatives have assisted reporters on other topics, such as whether or not Mac users need antivirus programs on their system.
"In repsponse [sic] to those who tell us to stop whining about our MobileMe service constantly having problems, they are the ones who need to step back and take a breath," Mac user "Florida Max" wrote on the Apple support boards.
"Over the years Apple has taught us to expect products and services that are far superior to those that Windows users receive," Florida Max added. "Usually Apple comes through, but when they don't they had sure better expect us to speak up. The level of service we are receiving from Apple during their MobileMe growing pains is unacceptable. If I was able to reach tech support without a 156 minute wait to chat with a rep, maybe I wouldn't be so upset. But when I am paying $99 a year for services that I can get for free from many other sources, they had sure better be a lot more responsive and open about the problems than they are now."
(Updates with information that problems are resolved)
SEATTLE, Aug 11 (Reuters) - Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz) said on Monday it has resolved an issue with its contacts system that caused many users of its Gmail service to have trouble accessing their online e-mail.
The problems began at about 2100 GMT, or 1400 PST, and an announcement on the company's Gmail "Help Center" site said the the issue is now resolved.
Google said an outage in the contacts system used by Gmail prevented the e-mail system from loading properly. The company also said that there may be minor delays in deliveries even though all mail is safe.
Users across the United States, Canada and India reported problems with Gmail and a Google employee also reported that the company's own corporate e-mail account was down. (Reporting by Daisuke Wakabayashi; editing by Carol Bishopric)
Correction Appended
Two months ago, Google held a series of secret focus groups with employees who have children in Google’s day care facilities. The purpose was to gauge their reaction to the company’s plan to raise the amount it charged for in-house day care by 75 percent.
Parents who had been paying $1,425 a month for infant care would see their costs rise to nearly $2,500 — well above the market rate. For parents with toddlers and preschoolers, who were charged less, the price increases were equally eye-popping. Under the new plan, parents with two kids in Google day care would most likely see their annual day care bill grow to more than $57,000 from around $33,000.
At the first of the three focus groups, parents wept openly. As word leaked out about the company’s plan, the Google parents began to fight back. They came up with ideas to save money, used the company’s T.G.I.F. sessions — a weekly meeting for anyone who wanted to ask questions of Google’s top executives — to plead their case, and conducted surveys showing that most parents with children in Google day care would have to leave Google’s facilities and find less expensive child care.
Do you think you know how this story ends? You’re probably guessing that because it involves “do no evil” Google, Fortune magazine’s “Best Company to Work For” the past two years, this is a heart-warming tale of a good company reversing a dumb decision.
If only. Although Google is rolling back its price increase slightly and is phasing in the higher price over five quarters, the outline of the original decision remains largely unchanged. At a T.G.I.F. in June, the Google co-founder Sergey Brin said he had no sympathy for the parents, and that he was tired of “Googlers” who felt entitled to perks like “bottled water and M&Ms,” according to several people in the meeting. (A Google spokesman denies that Mr. Brin made that comment.) On Monday, Google began the first phase of its new day care plan, letting go of the outside day care firm it had been using.
In recent months, Google has hit the first rough patch in its short, magical life as a public company. From November to April, Google’s once high-flying stock dropped 44 percent, to $412 from $744. (It has since gained some of that back, closing on Thursday at $537.) It may be a stretch to equate the day care fiasco with the fall in Google’s stock. But maybe not.
When a stock was rising as fast as Google’s once was, it was easy to buy the view that there was something truly special about Google. But when the stock is falling, overlooked problems start to loom large. Having discovered that Google is not, in fact, the promised land, a number of Googlers have left recently to join start-ups, hotter companies like Facebook — and even Microsoft.
“There are many things about Google that are not great, and merit improvement,” blogged Sergey Solyanik, who recently returned to Microsoft after a stint at Google. “There are plenty of silly politics, underperformance, inefficiencies and ineffectiveness, and things that are plain stupid.” Starting, it would appear, with day care.
•
Google first began offering day care three and a half years ago, and perhaps it is only coincidence that this occurred not long after a woman named Susan Wojcicki returned to the company from maternity leave. Ms. Wojcicki is a figure of significant stature at Google; hers was the garage that Mr. Brin and Google’s other founder, Larry Page, rented while starting up Google. Today she is the company’s vice president for product management, though as I discovered in talking to unhappy Google parents this week, not many Googlers seem to know what her exact duties entail. Everybody, however, knows that she’s Mr. Brin’s sister-in-law.
From the start, Ms. Wojcicki has been a passionate advocate for Google’s day care efforts, though there is some dispute about how much decision-making authority she has. Parents who know her point out that the company’s day care approach is very much aligned with her views; for its part, a Google spokesman insists that “these decisions were not made by her; they were made by the executive management team.”
Google’s first facility, called the Kinderplex, was run by the Childrens’ Creative Learning Centers, or C.C.L.C., which, according to its Web site, offers “learning in a play-based, developmentally appropriate environment that incorporates a variety of activities and multicultural aspects in a thematic style.” That sounds perfect for Silicon Valley, doesn’t it? One of C.C.L.C.’s longtime Silicon Valley clients, Electronic Arts, sent me an e-mail statement telling me how happy it has been with C.C.L.C.’s services.
According to Google, there were numerous complains about C.C.L.C., but the Google parents I spoke to disagree. They say that at the Kinderplex, child-teacher ratios were low, teachers were first-rate, the facility was clean and upbeat, and the food — organic, naturally — was terrific.
But at least one parent wasn’t happy: Ms. Wojcicki. She is a proponent of a preschool philosophy called Reggio Emilia, the hot kiddie philosophy of the moment, which stresses even small children’s ability to chart their own learning paths.
A year after the Kinderplex opened, Google opened its second day care center, called the Woods, which Google ran itself. The Woods was an expensive undertaking; in terms of the square footage per child, the aesthetics of its toys, and the college degrees of its teachers, it put the Kinderplex to shame. It also used the Reggio Emilia philosophy.
With the Woods open, Google decided to upgrade the Kinderplex to match the salaries and the teacher-student ratios of the Woods. Google now had 200 day care spots — and such wonderful day care at that! — and was promoting this new perk as a recruiting tool. The company was growing like crazy — its work force now numbers 19,000 — its young employees were starting to have babies, and well, you can just picture what happened next. The wait list ballooned insanely, finally reaching over 700 people. New employees who arrived at Google thinking they were getting in-house day care were stunned to discover that it could take up to two years to land a coveted spot.
Meanwhile, someone at Google woke up one day and realized that the company was subsidizing each child to the tune of $37,000 a year — which nobody had noticed up until then — compared with the $12,000-a-year average subsidy of other big Silicon Valley companies like Cisco Systems and Oracle. Faced with this dilemma, Google decided that the way to solve the dual problems of a too-long wait list and a too-large subsidy was — are you sitting down for this? — to get rid of C.C.L.C. and make the Kinderplex more like the Woods! (Google says it was always planning to replace C.C.L.C.) Given that decision, the only possible way to reduce the subsidy was to raise prices through the roof.
If you are shaking your head at this point, that’s because you lack the proper understanding of Google’s culture. Having conquered the Internet, Google’s executives tend to believe that they can do pretty much everything better than everybody else — even day care. When I spoke to Laszlo Bock, the company’s vice president for “people operations” (a k a human relations), he told me that “what is really driving the cost is eliminating the two-year wait list while focusing on providing really high quality.”
Google can’t just have low teacher-child ratios — it has to have the lowest of anybody. Its teachers have to be the best. Its toys have to be the most advanced. If it costs a lot of money to provide the Greatest Day Care on Earth, well, that’s life.
Plus, the high price of Google day care solves the waiting list problem. Indeed, getting the waiting list down was a huge priority for Google; the spokesman told me that forcing people to wait two years for day care was “inequitable.” And maybe it is.
But parents who talked to me said that several times during the six-week-long day care brouhaha, Mr. Brin made comments indicating that he viewed the whole thing as a giant economics experiment. “This is a supply-and-demand issue,” he told one group of parents — adding that Google needed to charge what the market would bear. (Through a Google spokesman, Mr. Brin denies making such a statement.) Given that Google has lots of pre-I.P.O. millionaires, it can clearly charge a lot.
Indeed, at one meeting, Ms. Wojcicki, a multimillionaire herself, told the parents that she planned to keep her own children in Google day care, despite the higher cost. “I’ve had firsthand experience with the great care provided by these centers and I want as many other parents as possible to have access to it,” Ms. Wojcicki noted in an e-mail message.
Google has also started charging people several hundred dollars to stay on the waiting list; as a result the list has dropped to around 300 parents. By next fall, Google plans to open new facilities with another 300 places. See? No more waiting list.
Google, I should note, believes that it has handled the day care issue in a “Googly” way and object strongly to the criticism by the parents. The company points out that the prices are somewhat lower than originally planned, that it is expanding its day care operation, that its facilities will be state of the art and that it will be giving scholarships to parents who can’t afford to keep their children in Google day care. (Although yet to release the details of the scholarship plan, the company says that employees will have to show proof of household income to qualify.)
But here’s the real problem: providing day care isn’t an economics experiment, nor should it be just another Google perk, alongside organic food and free M&Ms. Day care matters to people’s lives in a way that few other perks do. There are many people in this country — including, I’ll bet, many Googlers — who believe that employer-provided day care, at affordable prices, ought to be like health insurance, a benefit that every company provides as a matter of course. Yet as the technology blog Valleywag noted recently, Google doesn’t even advertise day care as a benefit for its employees anymore. That’s the real shame.
Google may be providing the greatest day care ever, but so what? It doesn’t matter how good the day care is if only its wealthiest employees can afford to use it. If Google had really wanted to do something path-breaking about its day care crisis, it would have spent less time creating elitist day care centers and more time figuring out how to “scale” day care for everybody no matter what their salaries.
Instead, Google has shown that it thinks about day care the same way every other company does — as a luxury, not a benefit. Judging by what’s transpired, that’s what Google is fast becoming: just another company.
E-mail: nocera@nytimes.com
Correction: July 10, 2008
The Talking Business column on Saturday, about
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