5 challenges for Google in the Larry Page era

The other Google co-founder - and now company CEO - Larry Page
Chris Hondros

Google officially welcomes Larry Page as its CEO on Monday and the years ahead should be very interesting. What's unknown is whether Page, part of a three-headed management structure, will be Steve Jobs or Jerry Yang as CEO.

Previews of Page's first day abound, but the bottom line is this: The new CEO has vast challenges ahead and a lot of pressure. First, he has to fill the shoes of Eric Schmidt, who will be executive chairman with a focus on government relations and dealmaking. And then Page picks up the Google reins just as the company is more complicated than ever.

Managing a large company and recapturing startup mojo: Page was CEO when Google was founded. That was roughly 24,200 employees ago. Processes, procedures and the usual corporate bloat all become risks at a company as large as Google. Page wants to recapture Google's startup days, but it won't be easy. Another problem: Page has no experience running a company as large as Google.

Finding Google's second trick: Google's business model revolves around advertising. Yes, there are some promising areas such as mobile, but for the most part Google is a one-trick search advertising pony. Page's task: Develop new revenue models. Here Google needs to be more like Microsoft, which has two cash cows Windows and Office. Google needs to find its second trick. "We look to see if Page can better increase the integration of Google's technology with business models to generate new revenue," said BGC analyst Colin Gillis.

Trust: Folks trust Google with a large amount of data. However, the Federal Trade Commission just slapped Google for its Google Buzz implementation. It's highly likely that Page will face some trust crisis at some point. How he manages privacy issues will determine how Google navigates consumer and partner wariness. Although Schmidt is focused on government relations rest assured Page will have to be involved too.

Balancing Wall Street expectations and investment:.: Page takes over at Google during its slowest part of the year. Meanwhile, Google expenses are surging due to a 10 percent salary increase for all employees. CEOs buy goodwill by delivering strong quarters. You can't stumble out of the gate. Stifel Nicolaus analyst Jordan Rohan is already worrying about Google's first quarter. He said in a research note:

Ahead of Google's 1Q11 earnings report, we are trimming revenue estimates after channel checks that suggest slightly weaker U.S. paid search activity, in addition to our expectation of a $40 million disruption in Japanese operations. We also note that margins are particularly difficult to predict this quarter, after a confounding increase in sales and marketing spend in 4Q and the expected 10% increase in base salaries.

Being the front man: The San Francisco Chronicle spent a lot of ink fretting about Google's perception and image problems. The story portrayed Page as aloof and recommended a comprehensive PR strategy of sorts. The Chronicle was a bit overwrought, but does pose a good question: Can Page handle the public and regulatory scrutiny? Part of the CEO gig is being a cheerleader. Page will have to adapt to that role.

This piece originally appeared on ZDNet