Photos by Jim Block
“Classified” is a series spotlighting some of the more powerful lessons faculty are teaching in Haas classrooms.
Probal Banerjee had a hunch. It was Day 3 of “The Innovative Organization,” a semiannual course for executives at Berkeley-Haas, and the participants had dived deeply into one of the most cutting-edge companies in Silicon Valley: mobile game maker Niantic, which spun out of Google last year. On that June day, the New York Times happened to have posted not one, but two, stories about Niantic and its forthcoming game, Pokémon Go.
Banerjee and other program participants had spent two intensive days studying Niantic, the internal startup’s break from Google, and its CEO, John Hanke, MBA 96. The group of about 20 execs—which included Banerjee, a business intelligence architect at Atlanta-based Cox Enterprises, and top-level managers from Lockheed Martin Aeronautics, RAND Corporation, and Gilead Sciences, to a name a few—had all come to Haas to learn how to innovate.
Some had signed up for the Berkeley Center for Executive Education course—taught by Jerome Engel, who founded the school’s world-renowned Lester Center for Entrepreneurship two decades ago—looking for fresh ways to work within their companies. Others had come because they had startup dreams of their own.
Would you stay or would you go?
The question for students was whether Niantic’s spin-off from Google had been the right move for both companies, the employees behind the games, and Hanke. Students had all read a hot-off-the-press 14-page case study written by Engel—recently published as a Berkeley-Haas Case Study—and they had discussed at length the pros and cons of the move.
As he sat in the back of the Helzel Boardroom, Banerjee’s hunch was that the man seated to his left, wearing jeans, a T-shirt, and an untucked button-down, was Hanke. But Hanke wasn’t on the agenda and nobody had mentioned he might be there. The prospect was both exciting and nerve wracking, he recalls.
That’s because Hanke, MBA 96, is an A-list celebrity in Silicon Valley. A serial entrepreneur, he embodies the spirit of innovation at the heart of the region’s success. Among his many successes: co-founding Keyhole, which developed the technology that became Google Earth, Maps, and StreetView. Hanke then led Keyhole through its acquisition by Google in 2004, and guided the search giant’s 2,000-employee “geo division” through iterations of its mapping products. He founded Niantic inside Google in 2010, and built a team that’s at the forefront of the convergence of technology’s most dominant trends—mobile, maps, social media, and gaming.
Hanke was dubbed “Google’s Greatest Idea Man” by Inc. magazine in 2012. All this, years before Pokémon Go exploded on the scene.
Engel pointed out that what makes Hanke so successful is not only his ability to look at the larger trends in the economy, society, and deduce what’s really happening. Hanke also has a special quality: “People who own the opportunity have repeatedly invited this guy to be their adult supervision. He’s seen as leader who can make big decisions, and they are willing to accept him as a leader,” Engel says.
As it turned out, Banerjee guessed right about the inconspicuous stranger. Just as the participants were voting on whether they would have struck out on their own or kept Niantic in the fold, Engel called out to the mystery man. “Which side are you on? Should Niantic stay with Google or go?”
Hanke stood up and gestured, somewhat sheepishly, “Go.”
“Oh my god,” Carole Cuffy, vice president of communications at HM.Clause, the world’s fourth largest seed company, recalls thinking when she realized that Hanke was in attendance. “This is amazing!”
Hanke, left, gets a round of applause
What followed was a remarkably candid interaction. Hanke spoke plainly about the enormous leg-up Niantic got as part of the Google behemoth, including an instant global footprint thanks to Google’s vast resources and engineering talent. He was equally upfront about the personal, structural, and operational drawbacks he and his team experienced as part of a massive organization whose main line of business isn’t gaming.
Niantic’s multiplayer games are based on a new entertainment model that relies on augmented reality or A.R., which superimposes virtual objects onto physical ones to lure players off their couches and into the real world. Niantic’s first game, Ingress, has been downloaded more than 15 million times in more than 200 countries. Niantic went solo last summer, and—in conjunction with Nintendo—released Pokémon Go last week. In its first week, the game looks to be the most downloaded app for both Android and Apple phones ever.
The decision to spin Niantic out of Google was, Hanke explained, “incredibly challenging, [although] in retrospect it’s ridiculously obvious that that was the right thing to do.”
Front-Row Seat to What’s Next
Banerjee calls Hanke’s appearance the highlight of the five-day program—which also delved into the major trends driving 21st century innovation, the different forms innovation can take, the venture capitalists’ perspective, and companies that have successfully embedded innovation into their DNA.
Roy Brown, manager of business pursuits at Lockheed Martin Aeronautics, echoes that sentiment. “I’ve reviewed hundreds of business case studies and tried to put myself in the situation, but nothing brings a case to life like having the actual entrepreneur speak about the critical decisions,” he says.
For Engel, the Niantic case and Hanke’s experience as a professional entrepreneur highlight why Silicon Valley is a cluster of innovation.
“Certainly John, and dynamic entrepreneurs like him, are the heroes of our innovation culture. But his accomplishments demonstrate something even more profound than entrepreneurial excellence: What’s extraordinary about entrepreneurship in Silicon Valley is the way large companies and young companies collaborate to accelerate innovation.”
It’s “that process of open innovation that makes Silicon Valley unique. It is absolute magic,” Engel says.
Engel, right, listens as Hanke shares insights with the class