Why Is Eric Schmidt Stepping Down at Google?

Was Eric Schmidt pushed or did he jump? Both.

According to close advisors, the Google C.O was upset a year ago when co-founder Larry Page sided with his founding partner, Sergey Brin, to withdraw censored searches from China. Schmidt did not hide his belief that Google should stay in the world’s largest consumer marketplace. It was an indication of the nature of the relationship Schmidt had with the founders that he acknowledged that the decision was made above his head. Schmidt, according to associates, lost some energy and focus after losing the China decision. At the same time, Google was becoming defensive. All of their social-network efforts had faltered. Facebook had replaced them as the hot tech company, the place vital engineers wanted to work. Complaints about Google bureaucracy intensified. Governments around the world were lobbing grenades at Google over privacy, copyright, and size issues. The “don't be evil” brand was getting tarnished, and the founders were restive.

Schmidt started to think of departing. Nudged by a board-member friend and an outside advisor that he had to re-energize himself, he decided after Labor Day that he could reboot. He couldn't. By the end of the year, he was ready to jump on his own. He is fifty-five, a billionaire, a man comfortable in his own skin. He would stay a year as executive chairman, said an advisor, and then do something else. In the meantime, Larry Page, who read books on business as a young man, who at age twelve read a biography of Nikola Tesla and took away the lesson that it was not enough to be a brilliant scientist if you were not also a good businessman who controlled your inventions, had more aptitude for management than Sergey Brin. It was always assumed that one day Page would be CEO. Now that he is about to be, he will have to change.