Last week, Google (GOOG) went through its second layoff this year, firing 200 fulltime employees and under 100 contractors to boot.
Here’s the scuttlebutt on the news:
- Q1 revenues are a little soft. The layoffs were a conservative measure to manage costs.
- This means Google is now a company that is prepared to manage costs in relation to revenues. Previously, this was an open question.
- If Google ever operates like a normal, cost-managing company in this way, it is thanks to new-ish CFO Patrick Pichette, who is able to be pragmatic and communicate to Google’s internal idealists.
- Firing 200 sales people, Google reasserted itself as an engineering-driven company.
- It’s not a coincidence the layoffs came as outside sales* boss Tim Armstrong leaves the company. Tim believed Google needed a (relatively, for the company) high touch sales force, pushing Google into new ad markets like print, radio and TV. This strategy required a larger sales force.
- That era is over. It ended with Tim’s group missing its numbers in Q1.
- Tim wrote the layoff memo to give new US outside sales boss Dennis Woodside a fresh start.
- The layoffs and Dennis’s arrival reflects a change in Google’s sales philosophy. Dennis is the anti-Tim Armstrong: an ex-McKinsey quant you won’t catch giving a keynote to the IAB. He’ll focus the sales team on selling what Google sells well: search ads.
- He learned this lesson watching Google’s Europe outside sales business, which is larger and growing faster than its US counterpart.
*Most of Google’s sales come from self-served buys online. The outside sales force handles the rest.