Frugal after Google

April 16, 2010, 12:52 a.m.
Frugal after Google
Computer science professor and early Google investor David Cheriton is a certified billionaire, yet he continues to enjoy life's simplicities. HELENA VILLALOBOS/Staff Photographer

Nerds aren’t just about computers,” says David Cheriton, professor of computer science. And as his case proves, some of the most successful nerds aren’t just about money either.

The Canadian, Google-investing computer science Ph.D. holds assets valued over $1 billion, largely as a result of having an eye for business and the skill of assessing the potential of groundbreaking Silicon Valley IT. But despite Forbes Magazine listing him as the 616th richest man in the world, Cheriton is known to cut his own hair and drive a 1986 Volkswagen. He instead feels his wealth comes from his work.

Like Bill Gates, Cheriton started programming on massive mainframe computer–which he calls “dinosaurs”–before computers were a mainstay of everyday life. Back then, Cheriton and his fellow students at the University of Alberta were allotted tickets known as “dinosaur fodder.” With limited access to the mainframe, computer science majors at that time did not enjoy the trial-and-error luxury of today’s introductory computer science classes.

“I’m sure many people have trouble relating to this if they’re taking 106,” Cheriton said, citing Stanford’s introductory programming methodology class.
By the end of Cheriton’s first computer science class, only 35 of the initial 100 students remained. Cheriton made the cut. He found an interest in computing that he counterbalanced with his passion for music. His enrollment in the University of Alberta’s mathematics program was partly a result of the music department’s choice to reject him.

Despite the initial setback to his musical career, Cheriton spent his college time playing guitar, taking opera courses and participating in musical theatre.
“I had friends who thought I was a guitar player!” he said, laughing.
He ended up securing a Ph.D. from the University of Waterloo in Ontario, Canada. He has stayed loyal to Waterloo: in 2005, the university renamed its computer science school the David R. Cheriton School of Computer Science following the establishment of a $25 million endowment.

Cheriton moved to Palo Alto in 1981 after being denied a $25,000 research grant at the University of British Columbia, where he taught at the time, in the days when a 32-kilobyte memory card cost $10,000. Stanford, in turn, had recently allocated $1 million to computer science research.

“I felt like I was being starved in Canada,” he recalled. “Coming to Stanford was like traveling to a different planet.”

As an “impoverished university professor,” Cheriton paired up with Andy Bechtolsheim–who later went on to co-found Sun Microsystems–to start a tech company in 1995. After existing for about 18 months, the startup was bought up by Cisco for $200 million. In his own words, the venture took Cheriton “from the category of having to work for a living to the category of not having to work for a living.”

Meanwhile, Google founders Sergey Brin and Larry Page were working on their Ph.D.s on the fourth floor of Margaret Jacks Hall, Stanford building 460. Though Cheriton had never personally taught or advised either of the two, the rumor that the Canadian professor down the hall knew a thing or two about both the Internet and business drove Brin and Page to seek out Cheriton for counsel.

Whereas Brin and Page worried about licensing their technology and raising money for the yet-to-exist Google company, Cheriton simply told them that, “If you have a baby, you need to raise it.”

He calmly explained the business theory that he wanted to impart to the Google guys.

“Raising the money isn’t the hard part–building the company is,” he said, reflecting on the initial days of the startup that today holds assets totaling $43 billion. “Money doesn’t turn anything into a company. It means you have something in your bank account until you’ve spent it.”

The 2005 book titled The Google Story gives Cheriton credit for realizing that “Bechtolsheim’s involvement…could drastically increase [Brin and Page’s] prospects for success.”

Believing that the students had the technology to create the kind of search engine they envisioned, Cheriton set up the meeting between the Google founders and their first investor on his own front porch in Palo Alto, at the house that he still lives in today.

The Web site was demonstrated outdoors. As Cheriton remembers it, Bechtolsheim ran to his car to grab his checkbook and wrote out a check on the spot. At the time, Brin and Page didn’t even have a bank account.

“Bechtolsheim just said, ‘Well when you do, stick it in there,’” Cheriton remembered.

In the process, Cheriton threw in some $200,000 himself, and Brin and Page rushed to officially incorporate their company so that they could cash the checks issued to “Google Inc.”

Cheriton cashed in too–“Yeah, the media likes to make a big deal about that,” he laughed.

But Cheriton doesn’t. He was listed in the Business Insider as one of “The 10 Cheapskate Billionaires Who Live Like Paupers.” His explanation: spending his money would take too much time.

Like most Stanford professors and students, Cheriton finds himself with a packed schedule. But while most undergraduates cut back on sleep in response to their struggle to do it all, Cheriton has, in comparison to his fellow billionaires, let spending take a back seat in his day-to-day activities. The nerd in him doesn’t like to waste time on comparatively inconsequential things.

In that sense, Cheriton still lives by the advice he gave to Page and Brin many years ago about not letting money dominate one’s concerns: “if you have a baby, you need to raise it.”

“I’m very involved in technology still, involved in too many things,” he said in his fourth-floor corner office in the Gates Computer Science building. “If you buy a fancy car you have to figure out which car and who’s going to look after it and all that sort of stuff.”

Login or create an account