New York: A handful of high-profile departures does not mean Google is facing a brain drain.
But the company is starting to suffer something that could have an equally significant impact: a drain of some of the entrepreneurial energy that drove its early growth and on which its unique culture depends heavily.
Talk of a potentially damaging loss of talent has been sparked by the departures of Sheryl Sandberg, who ran its AdWords programme, to Facebook, and Doug Merrill, the chief information officer, to EMI. Behind these headlines has been a trickle of other long-time executives, such as Ethan Beard, head of social media, and Chris Sacca, who led its wireless initiatives.
On the face of it, Google continues to suck in some of the best talent around. The company added more than 6,000 employees last year to take the total to 16,805. Even former Googlers pay tribute to the intellectually stimulating culture, good pay levels and extravagant benefits.
However, for some early hires, Google has lost two vital ingredients: the anything-goes approach of a start-up environment and the chance to strike it rich. The question now is how heavily its culture has been built on these factors.
"The financial incentive to stay was diminishing with time," says Sacca, who left this year. Like others who joined in the run-up to Google's 2004 initial public offering, Sacca had passed the company's four-year option-vesting deadline.
Equally important, he adds, was the greater organisational structure that has descended on the free-wheeling company as it has grown. "As companies get bigger, you are increasingly asked to focus on one thing. I like a start-up environment where irrespective of job criteria, everyone shares a goal."
That is part of what he says is a broader change: "I do think there could be a cultural shift there."
Google has only limited ability to address these issues. The 37 per cent fall in its stock price from the peak last November is an eye-catching reminder that early stock option fortunes are not likely to be repeated.
The company has already changed its pay practices to reward employees partly with restricted stock grants, which still have value as the share price falls, rather than just options, and it has always paid substantial cash bonuses.
Yet the stock price still has a disproportionate psychological effect. One media executive, who like others says that Google has become less of a magnet for all the top talent in the internet industry, says perceptions were shifting, regardless of Google's continued strong business fundamentals.
Changing mood
"[The mood] changes depending on the stock price and what gets written in the press and what gets said at a cocktail party," he says.
Stock price volatility has an equally strong psychological impact internally. "Google has a lot of people out of school who have never had to face a stock price that is worth less than it was," says Sacca.
The fading of its start-up culture also poses difficult questions about Google's ability to attract and retain the right sort of talent. One senior Google executive says that even as the company loses some of its early leaders who have a greater tolerance of working in high-risk companies, it is succeeding in drawing in a different type of executive: someone who values stability more.
This points to an underlying tension in Silicon Valley: between the start-up drive that has built successive generations of technology companies, and the more stable, long-term engineering-led cultures that companies such as Intel and HP have been able to instill.
One Silicon Valley headhunter, who also thinks that Google is no longer a magnet for all the region's best talent, questions whether the company could retain its creativity as it makes this shift - though, as this person adds, Apple at least has proved that it is possible for a mature tech company to remain highly creative.
That does not account for Google's particular culture, though. This relies on a form of barely controlled chaos in which workers are encouraged to come up with their own ideas for future products in what the company calls their "20 per cent time" - a system that is the complete opposite of the one that Steve Jobs has built.
"Apple is completely top-down, Google is bottom-up," says Sacca. As SiliconValley's entrepreneurial talent starts to look elsewhere for the next main chance, that could threaten the engine on which Google has relied to drive the next phase of its growth.
