When you think of Silicon Valley's big names, images of luxury, sleek offices and over-the-top perks come to mind. However, Eric Schmidt, former CEO of Google GOOGL, has a story that flips that stereotype on its head.
When he joined Google in 2001, the company had already raised $25 million in funding. Yet, Schmidt didn't walk into a lavish corner office. Instead, he found himself sharing a workspace with four engineers.
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“Eventually, I was given an eight by 12 office where my desk was a door which I’ve retained,” he recalled. Schmidt still keeps that door as a desk in his office today as a reminder of what it takes to build a successful company. It symbolizes the frugality and focus that helped Google grow from a scrappy startup to a tech giant.
The former Google CEO believes great founders are frugal and his time at Google was proof of that mindset. From the beginning, Google's cofounders Larry Page and Sergey Brin embodied this principle. They weren't wasting money on fancy office furniture or extravagant perks. Instead, every dollar was put to work in areas that mattered – product development, hiring the smartest minds and building the company's core technology.
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Why Frugality Matters in Startups
Schmidt highlighted that successful founders understand the value of every penny, especially in the early days. They're not focused on appearances but on building something groundbreaking. “Many of the most successful founders begin with no salary at all,” he said. As he put it, "If you're not prepared to live that way, you don't really understand what being a founder is like."
He also shared stories of Page and Brin's practical approach to money. In one instance, Schmidt had to lend his car to one of the cofounders because theirs broke down. Even after raising millions, their focus wasn't on upgrading their lifestyle but on making Google successful.
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Founders who focus on appearances – like renting a shiny office space or splurging on unnecessary luxuries – are often missing the point. Instead of burning cash on status symbols, great founders channel their resources into areas directly contributing to the company's growth.
“I can always tell when we’re dealing with a proper founder when we start with how are they spending their money. And so whenever I go into a startup that has beautiful offices and really nice chairs, I cringe because that means they haven't quite figured out it's not their money,” Schmidt pointed out.
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