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GOOGLE IS ABOUT TO CHA

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GOOGLE IS ABOUT TO CHA

JUNE 29, 2016 FORBES | 87

HA NGE EVERYTHING – AGAIN

New CEO Sundar Pichai is a brainy product guy who aims to reinvent

the world’s second-most-valuable company—and pretty much every

digital experience—with a heavy dose of artificial intelligence. By Miguel Helft

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HA NGE EVERYTHING – AGAIN

88 | FORBES JUNE 29, 2016

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google

moving to multiple screens and in some instances—such

as with Amazon’s surprise hit Echo smart speaker—no

screens. Interactions with devices and apps are quickly

becoming two-way conversations, sometimes employ-

ing smart “bots” promoted by Microsoft, Facebook and

others. Unlike apps, these bots run atop communica-

tions services like Facebook’s Messenger (900 million

users) or Microsoft’s Skype (300 million users). Google

has the wildly popular Gmail (more than 1 billion users),

but it lacks the kind of modern messaging system that

the younger set favors.

Pichai, however, believes this new tech world is

tailor- made for Google because of one thing: artifi cial

intelligence. Pretty much everyone can program sim-

ple, rudimentary conversations—Apple’s Siri was among

the fi rst—but to go beyond fl ashy “demo-ware” you need

more sophisticated algorithms. And artifi cial intelli-

gence has been in Google’s wheelhouse for years. The

company invested in fundamental building blocks such

as voice recognition, language understanding and ma-

chine translation long before most of its rivals. And after

years of preparation, Pichai says, the company is ready

to bring all that work together in compelling products

that will keep the company ahead of the competition.

“We have this vision of a shift from mobile-fi rst to an

AI-fi rst world over many years,” Pichai tells FORBES.

Onstage at the Shoreline, Pichai unveiled the early

fruits of those eff orts: a smart speaker called Google

Home that is aimed squarely at Amazon’s Echo (and

perhaps at an upcoming one Apple is rumored to be

developing) and a messaging app called Allo. Power-

ing both is a new service that Pichai calls the “Google

assistant,” the company’s own take on conversational

computing.

Think of it as Search 3.0—a new, interactive way to

communicate with Google itself. With it you’ll be able

to order a ticket, book a fl ight, play music, schedule

a task, reply to a message; the Google assistant might

even write it for you. It might prompt you to order

fl owers ahead of Mother’s Day or to pack for your up-

coming trip, and it might be able to pick up an ear-

lier conversation from where you left off . In other

words, it will be there, ready to help, in your phone,

your speakers, your television, your car, your watch

and eventually everywhere. “You are trying to go about

your day, and in an ambient way, things are there to

help you,” Pichai says. Making sure this assistant lives

up to its full potential will take years, and building it

will be harder than it was for Page and cofounder Ser-

gey Brin to create search itself. Adds Pichai: “In every

dimension it is more ambitious.”

The cheers of the Shoreline crowd weren’t enough

to distract anyone from the obvious. The release of Allo

OR MUSIC FANS THE 22,000-

seat Shoreline amphitheater

in Silicon Valley is iconic.

Legendary concert pro-

moter Bill Graham de-

signed it with inspira-

tion from the Grateful

Dead logo, and that band

played here 39 times.

Neil Young, the Bee Gees,

Bruce Spring steen—they’ve

all graced the Shoreline stage.

A few weeks ago, accompanied

by bouncy electronica music and arcade-inspired videos

fl ashing across giant screens, so did Google CEO Sun-

dar Pichai.

It would be an exaggeration to say he looked com-

fortable as he walked onstage. The cerebral 43-year-old

is built like a straw, his eyes darting behind rectangular

glasses, more Carl Sagan than Carlos Santana. No mat-

ter. At the annual Google I/O conference he was a rock

star, the headline act. As he took in the hoots and cheers

from the crowd of software developers, his face eventu-

ally settled into a smile. “We live in very, very exciting

times. Computing has had an amazing evolution,” Pichai

said in his south Indian accent, stretching amaaaaazing

as a way to get the crowd going.

Okay, not exactly Steve Jobs. Or even Mark Zuck-

erberg or Jeff Bezos or Tim Cook. Pichai is the clas-

sic insider CEO, a low-profi le, methodical brainiac who

would rather geek out over the future of computer sci-

ence than whip up a crowd of software developers with

choreographed product demos. And that’s exactly what

Google cofounder Larry Page was after when he hand-

picked Pichai last year to take over one of the greatest

tech franchises of all time.

The task at hand is monumental. With a market cap

of roughly half a trillion dollars, Google, or rather its

parent, Alphabet, is the world’s second-most-valuable

company, dominating vast swaths of the tech industry,

including search, digital advertising, mobile and video.

But Page and Pichai know all too well that tech behe-

moths often lose their way when they are strongest. And

while earlier tech giants, from IBM to BlackBerry, were

felled by a single foe, Google faces a bruising multifront

war with the other four superpowers in tech. It’s fi ght-

ing Apple in mobile and Facebook in advertising, video

and communications. It’s pitted against Amazon in com-

merce, a resurgent Microsoft in business software, and

Amazon and Microsoft in cloud services.

Pichai wages all these battles amid a fundamental

technological shift. As Google continues to navigate the

transition from desktop to mobile, computing is already

F

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google

mission and on transforming the company using ma-

chine learning and artifi cial intelligence,” he says.

F YOU RAN THE CLOCK BACK three or so

decades, you might fi nd Pichai stand-

ing on the front of a motor scooter,

his father holding the handlebars, his

mother perched on the passenger seat

with his younger brother on her lap as

the family navigates the chaotic traffi c of

Chennai. That’s where Pichai grew up, in a simple two-

room house. By Western standards his father, an elec-

trical engineer, and his mother, a stenographer, were of

modest means. For years they didn’t own a television, a

telephone or a car.

But his parents put a strong emphasis on education,

and Pichai earned a spot at the prestigious Indian Insti-

tute of Technology in Kharagpur. After graduating with

an engineering degree, he won a scholarship to Stan-

ford, where in 1993 he began graduate studies in mate-

rials science and engineering with the goal of a Ph.D.

and an academic career—his parents’ dream. As with so

many at Stanford, though, Silicon Valley beckoned, and

after his master’s he latched on to chip-industry pioneer

Applied Materials. An M.B.A. from the Wharton School

and a consulting gig at McKinsey & Co. followed.

Pichai landed at Google in 2004, when the fast-grow-

ing search company still considered Microsoft its most

formidable foe. Pichai was thrown into the trenches

of the company’s battle with the software giant. From

the very beginning he exhibited a methodical and stra-

tegic approach to decision making that propelled him

through Google’s managerial ranks. He was put in

charge of an unglamorous but critical piece of software,

the Google Toolbar, which allowed people to search

directly on their browsers without having to go to

Google’s home page.

Pichai’s strategic work on the toolbar led to his next

big bet: the Chrome browser. The project was con-

troversial inside Google, where some feared it would

unnecessarily irk Microsoft, whose Internet Explor-

er dominated the browser market. Pichai argued that

Google could build a better browser and that it risked

losing a substantial chunk of its search revenue if Mi-

crosoft, as many feared, tweaked Explorer to make

it more diffi cult for users to access Google. With a

small team, Pichai, who at the time worked for Maris-

sa Mayer, now the CEO of Yahoo, developed the prod-

uct quietly. While its carefully orchestrated launch in

2008 was a p.r. fi asco, courtesy of a German blogger

who obtained marketing materials and broke the news

early, Pichai’s browser was slicker and faster than any-

thing else in the market, and his team managed to

glaringly reinforces the reality that Google is nowhere in

messaging and that it badly needs to get somewhere fast.

Google Home suggests that no one at Google saw the

smart-speaker wave coming—Amazon had to show the

way. And these defi ciencies underscore one of Pichai’s

most signifi cant challenges: While no one disputes that

Google excels at complex technologies like AI and ma-

chine learning, it is not always a leader when it comes to

turning those technologies into killer products.

“The risk for Google is that their ability to do re-

ally hard AI leads them to overlook simple opportu-

nities to create good-enough user experiences,” says

Tim O’Reilly, the founder of O’Reilly Media. Google

Home will be a test, though the results remain a few

months away. What’s more, if conversations and mes-

saging, rather than the desktop or even your smart-

phone’s home screen, are to become the new conduits

for bots and other digital services, Google needs to

lure those services quickly and eff ectively, just as Face-

book, Microsoft, Amazon and perhaps Apple try to do

the same. “In the end every third-party developer will

not connect to every platform,” says Harvard Business

School’s David Yof-

fi e, a respected stu-

dent of the tech indus-

try. “The question is

who is going to be most

successful.”

Pichai’s job is to en-

sure that the answer

is Google, while keep-

ing a company of some

60,000 employees and

$75 billion in annu-

al revenue humming.

This enormous task un-

derscores why Page

went for substance over

style. Pichai’s to-do list

starts with monetizing

a sprawling digital em-

pire that spans search,

Android, maps, You-

Tube, Play and many

lesser properties. It in-

cludes maintaining the

cohesion of the disparate coalition of competing compa-

nies that make up the Android world; unifying Google’s

two operating systems, Android and Chrome; and grap-

pling with antitrust and tax investigations in Europe

and elsewhere.

Pichai says he’s ready to lead Google’s metamorpho-

sis. “Personally, there is a renewed sense of focus on our

“THERE IS A RENEWED SENSE OF FOCUS ON OUR MISSION AND ON TRANSFORMING THE COMPANY USING MACHINE LEARNING AND ARTIFICIAL INTELLIGENCE.”

I

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“THERE IS A RENEWED SENSE OF SENSE OF FOCUS ON FOCUS ON OUR MISSION OUR MISSION AND ON AND ON TRANSFORMING TRANSFORMING THE COMPANY THE COMPANY USING MACHINE USING MACHINE LEARNING AND LEARNING AND ARTIFICIAL ARTIFICIAL INTELLIGENCE.”INTELLIGENCE.”

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google

cial-intelligence programming techniques called deep

learning and neural networks. Computer scientists had

developed the techniques years earlier, but they hadn’t

been properly tested because they required massive

amounts of computing power. Google had that power,

so it brought one of its leaders in large-scale comput-

ing systems, engineer Jeff Dean, together with AI ex-

perts. They trained the systems on the task of recogniz-

ing images, and the results were immediately encourag-

ing, delivering huge improvements over Google’s exist-

ing methods.

Google Photos, released a year ago, brought those im-

provements to the masses and wowed the tech world

with its ability to recognize and search images and to

automatically organize them. You can search for a per-

son, a type of animal or images of people hugging. De-

spite intense competition from rival products, Google

Photos now has 200 million users. To Pichai it’s a clas-

sic example of how better AI can help Google win.

“Were people using other photo products?” Pichai asks.

“Yes. Have we seen tremendous adoption and traction

with Google Photos? The answer is yes.”

What worked for image recognition turned out to

work when applied to voice recognition, translation and

other similar tasks. When Dean’s systems were trained

to recognize speech, accuracy jumped dramatical-

ly. That means there are far fewer times when an “OK

Google” query on an Android phone is misunderstood.

It also means that Google is more likely to understand

someone like Pichai, with his lilting accent, or to detect

what is being said in a noisy bar and do it in more than

55 languages.

Similarly, the techniques used to recognize images

in Google Photos are able to power StreetView’s ability

to “read” signs and Project Sunroof ’s ability to identify

rooftops that are suitable for solar panels based on aer-

ial images. It’s also enabling a small experimental team

at Google to eff ectively detect diabetic retinopathy, an

eye disease that can lead to blindness, by looking at iris

scans. “It’s a pretty signifi cant shift,” Dean says. “Word

is spreading throughout the company that there is this

keep it ahead even as rivals raced to catch up. By 2012

Chrome had become the No. 1 PC browser, and thanks

to the growth of Android, it’s also the most popular on

mobile devices.

Chrome’s improbable victory cemented Pichai’s rep-

utation as a product whiz and, even though he never

started a company, something of an entrepreneur, and

it set him on a vertiginous ascent up Google’s corporate

ladder. “There is a part of Google that has a professori-

al style, and Sundar fi ts that perfectly,” says a former se-

nior executive. “But people underestimate how deeply

technical and how entrepreneurial he is. He’s very, very

good at that stuff .”

His responsibilities grew as some of his would-be

rivals fell out of favor. Mayer, his onetime boss, was

sidelined and left for Yahoo. In 2013 Pichai,

who had gone on to develop an operating sys-

tem and a set of laptops based on Chrome, was

handed control of Android, one of Google’s

crown jewels, after Andy Rubin, its creator, was

pushed aside. A year later Vic Gundotra, the se-

nior exec who led Google +, the company’s ex-

pensive and ill-fated push into social network-

ing, was forced out as well.

Throughout it all, Pichai remained unfl appa-

ble, burnishing his reputation as a collegial ex-

ecutive and, more important, earning the trust

of Page. “He will make tough and diffi cult decisions, but

there is not much swirl around them,” the former se-

nior executive says. “People love the lack of drama and

the thoughtfulness. It’s led to more cohesion.” At a re-

treat for Google’s top brass last spring, Pichai was asked

to sketch a vision for how apps would evolve in a mul-

tiscreen world. When he was done, a beaming Page

stepped up to say he couldn’t have painted a clearer pic-

ture of the future, according to a person who was there.

“They really see eye to eye on what the future will look

like,” this executive says. A few months later, when Page

reorganized Google into a holding company called Al-

phabet, he named Pichai CEO of Google. It accounts for

99% of Alphabet’s revenue and all of its profi ts.

ROUND ZERO OF PICHAI’S push into an

AI-fi rst world is a nondescript two-sto-

ry building across the street from the

center of the company’s sprawling

Googleplex headquarters in Mountain

View, Calif., where a skunkworks, ap-

propriately called Google Brain, develops

much of the intelligence that will bring Google and its

products into the future.

The group was formed about four years ago as some-

thing of a research experiment involving a set of artifi -

“THE RISK FOR GOOGLE IS THAT THEIR ABILITY TO DO REALLY HARD AI LEADS THEM TO OVERLOOK SIMPLE OPPORTUNITIES TO CREATE GOOD- ENOUGH USER EXPERIENCES.”

G

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“THE RISK FOR GOOGLE IS THAT THEIR ABILITY TO DO REALLY HARD AI LEADS THEM TO OVERLOOK SIMPLE LEADS THEM TO OVERLOOK SIMPLE OPPORTUNITIES TO CREATE GOOD-OPPORTUNITIES TO CREATE GOOD- ENOUGH USER EXPERIENCES.”ENOUGH USER EXPERIENCES.”

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google

Pichai is convinced Google is further along than

its competitors. He cites AlphaGo, which recently de-

feated the world’s best Go player—and may someday

be applied to more practical problems—as the kind of

investment that will keep it at the head of the pack.

“When you look at machine learning and AI, there are

things you can do now, some in two to three years and

some that are deeper and will take more time to do,”

Pichai says. Observers like Yoffie, the Harvard profes-

sor, agree that Google is well-positioned to lead the

transition to an AI-powered world. “Sundar is jumping

on the right categories and making a lot of good deci-

sions,” Yoffie says. Then he adds: “But he hasn’t really

been tested yet.”

new capability to solve problems in this way,” he says, in

reference to the new AI techniques.

What started as a research project with a handful of

people has grown to perhaps hundreds—Dean re fuses to

say how many—who have developed algorithms, com-

puter systems and, more recently, Google’s own chips,

all customized for these AI approaches. (Google Brain’s

software tools are known as TensorFlow and the chips

as Tensor Processing Units.) As a result there are now

more than 2,000 projects inside the company applying

Google Brain’s capabilities to scores of products. Dean’s

group has held machine-learning office hours, and thou-

sands of Google engineers have gone through internal

courses that can last weeks. “It went from being a re-

search project to a mainstream engineering activity,”

says John Giannandrea, an AI expert appointed by Pi-

chai to lead the company’s search efforts.

To see the immediate potential of machine learn-

ing to create a new generation of digital products—ones

that could change how humans themselves live—Allo,

which won’t be publicly available until later this sum-

mer, is a good place to start. Despite a mature and satu-

rated market for communications apps, Pichai bets that,

as with Photos (and with his Chrome browser), a few

smart features will help it gain a following.

One of them, Smart Reply, automatically suggests

three different prewritten answers to a message based

on its content. Google developed Smart Reply in less

than a year and first tested it in Inbox, a mobile e-mail

app. It allows users on the go to select one of the an-

swers and reply with a single tap. With Allo, Google

went one step further, blending Smart Reply with image

recognition, so it can suggest responses to photos sent

via message. Send your friend a picture of yourself sky-

diving and Allo may suggest replies like “awesome,”

“brave” or “scary;” send a picture of a kid or pet, and it

may suggest “cute.” In Allo the Google assistant might

also pop up in the middle of a conversation to help you

book a restaurant or plan a trip.

Google’s rivals are also rushing into an AI-powered

world. Microsoft has an initiative similar to Google

Brain that involves pushing machine-learning tech-

niques into scores of products; its CEO, Satya Nadel-

la, recently showcased conversational bots built atop

its Cortana digital assistant. Facebook’s Zuckerberg has

quickly built a team of hundreds of AI researchers who

have made breakthroughs in image recognition and lan-

guage understanding, and he’s demonstrated bots built

atop Messenger. Amazon’s Bezos has more than 1,000

people working on the family of products tied to Alexa,

the conversational interface that powers the Echo smart

speaker. Apple is busy expanding Siri’s capabilities and

is expected to open it up to third-party developers soon. Sir i ip

h o

n e

: k

A r

e n

B L e

ie r

/A F

p /G

e t

t y

im A

G e

S

AmAzon. After four-year Ai push,

more than 1,000 people are working

on its Alexa intelligent assistant, which

powers the echo family of products

and can be embedded by third parties

into their devices. outside developers

can teach it new “skills.”

Apple. the company pioneered the digital as-

sistant category with Siri, which already lets users

do things like search through

photos, set reminders and

get directions. Apple is busily

expanding Siri’s capabilities as

it seeks to catch up with rivals

that leapfrogged it. it is widely

expected to open Siri to third-

party developers soon.

FAcebook. Fast-growing Ai research

team developing “m” virtual assistant

and smart chat bots built atop mes-

senger and pushing into language un-

derstanding, translation and computer

vision. more than one in four engineers

tapping company’s Ai “backbone.”

microsoFt. Large Ai and

machine-learning research group.

created “cognitive services” and

“bot framework” to allow third

parties to use its Ai-powered

tools and is integrating Ai into its Azure cloud

computing services.

AI BATTLE ROYAL

F

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