Google’s very first employee, Craig Silverstein, is leaving the company to join the high-profile online learning phenom, Khan Academy.

News of the departure first appeared yesterday in a line in a newsletter on education-tech entrepreneurship EdSurge, and the search giant confirmed the departure to me.

[UPDATE: Here's a statement from a Google spokesperson -- and not CEO Larry Page (classy and appreciative of others as ever!, Larry!) -- on Silverstein's leaving: "Craig's been with Google since the early days. He was instrumental in the development of search and made numerous contributions to Google over the years. We wish him all the best at the Khan Academy and know that he will do great things to help them promote education around the world."]

Silverstein, who was actually Google’s No. 3 employee — that would be after its pair of founders, Page and Sergey Brin — has had a variety of technology jobs at the company over the years since it was founded in 1998.

But his first — helping them build the famed and lucrative search engine itself — was perhaps his most important. An experienced techie, Silverstein worked with Brin and Page on Google, from their dorm rooms as Ph.D. students at Stanford University, to their garage days, to the giant and diversified behemoth it is today, with tens of thousands of employees.

Currently, he has been working on a variety of projects, including mentoring engineers.

Having spent a some time with him over the years, I can tell you that he’s a lovely and adorkable guy, whose infectious enthusiasm and joy of tech has always embodied what I always refer to as “Good Google” (as opposed to, well, you know).

Silverstein will simply be a developer at Khan Academy’s Mountain View, Calif., offices, but I have emails for more details in to all parties.

Speaking of party — IMHO, Larry and Sergey should throw him a really nice one. Really nice — it’s well-deserved.

Here is Silverstein’s cute goodbye email to staff that I obtained (natch!):

[I couldn't possibly remember everyone who I should be sending this mail to, so please feel free to spread the word to anyone I missed!]

It is with decidedly mixed feelings that I announce, after more than 13 years, that I’m leaving Google. My last day will be Feb 10. I’ll be joining the Khan Academy as a developer.

Some of you thought this day would never come (as one person once put it: “Will you die at Google?”), and it was an extremely difficult choice. I am as passionate about Google’s mission now as I’ve ever been, and as proud of the work we’re doing to achieve it. While a lot has changed at Google over the years, I think we’ve done a remarkable job of staying true to our core mission of making the world a better place by making information more accessible and useful. I am looking forward to pursuing that same mission, though in a slightly different way, at Khan.

I’m extremely grateful to have had the opportunity to work with such smart, passionate, and interesting people — not just a few, either, but (almost :-) ) everyone I worked with. I’m grateful not just that I had so many co-workers I could respect, but even more that I had so many that I could count as friends. I will miss that most of all, and I hope you will continue to be in touch. I also accept lunch invitations!

When I write my massive 4-volume autobiography, “Craig Silverstein: the Man Behind the Legend,” I will devote an entire volume to my years at Google. I can’t emphasize enough how meaningful my time at Google has been, and how meaningful all of you have been to it. I mean it literally when I say: all the best,

craig

And here’s the video of a speech Silverstein gave at the University of North Carolina in 2008, about Google’s origins:

Please see this disclosure related to me and Google.

Sometimes I feel like it would be easier to find the Fountain of Youth than get apples-to-apples metrics about Web site and app usage.

Here’s what Google CEO Larry Page said: “Plus users are very engaged with our products. Over 60 percent of them engage daily, and over 80 percent weekly.”

I tried all sorts of nice ways to persuade Google spokespeople to clarify what exactly that means in terms of active users of the Google+ service. They told me that the text of Page’s remarks and an accompanying post by Google’s head of social, Vic Gundotra, spell it out exactly.

That is to say: Over 60 percent of Google+ users use Google products on a daily basis. Over 80 percent of Google+ users use Google products every week.

Gundotra worded his version of that stat slightly differently. He said in a Google+ image post that the same numbers refer to Google+ users who “sign in” to use Google products on a daily and weekly basis. (See image above.)

So, if you registered for Google+ any time since it launched this summer, and you used any other Google product — say, search! — in the past day or week, while signed into your Google account, you got counted in those percentages.

The thing is, Google envisions Google+ as a binding layer between all its products, rather than a discrete entity. While Gmail may have 350 million active users, as Page disclosed today, it’s not so easy to split out Google+.

The blurry numbers do make some sense. For instance, Google+ content will now show up in an increasing amount of search results for signed-in Google users. How do you count that?

The unspoken reference here is that Facebook has said for years that half of its active user count is composed of people who log in on a daily basis. (I can’t remember a time when Facebook ever gave out a registered user count. Those hundreds of millions of people you hear them talk about all log in at least once a month.)

So nope, no apples to apples to see here.

Would you like to read about foreign currency exchange and hedging programs? I know.

But Google would like Wall Street to think a bit about those topics, since it is blaming them for part of its Q4 earnings report shortfall. Google insists it had a great quarter, but both its revenue and earnings numbers came in well below the consensus.

One reason for that, Google says, is fluctuating currency rates: “Had foreign exchange rates remained constant from Q3 2011 through Q4 2011, our revenue in Q4 2011 would have been $239M higher,” the company says. Which means the company would have been much closer to investors’ revenue estimates, for starters.

But analysts on the earnings call didn’t want to spend time talking about FX — they wanted to talk about CPC. That’s “cost-per-click” for Google’s core search ad business, and it dropped 8 percent over the quarter. Google insists that is a number that they shouldn’t obsess about, since it will fluctuate based on changes Google makes to its ad products, and as long as overall revenue is going up, it’s not a problem.

That answer, which they gave over and over, didn’t take, though. And at one point, Larry Page asked, semi-seriously, for analysts to stop asking about CPC. The next question was about CPC.

————–
EARLIER
First look at Google Q4 earnings: $8.13 billion and earnings of $9.50. Wall Street was expecting much more — something like $8.4 billion and $10.50 a share.

Investors are behaving the way you might expect — they’ve dropped the company’s share price by 9 percent, to $581, in after-hours trading. Earlier today, GOOG was trading as high as $640.

“Google had a really strong quarter, ending a great year,” CEO Larry Page says, in a statement that doesn’t seem to acknowledge any weakness or slowdown. He also says Google+, the search giant’s answer to Facebook, is now up to 90 million users.

Google hired more than 1,000 people in the last three months of the year. It now employs 32,467 full-time workers.

If you’re looking for a positive spin on today’s numbers, Google is happy to help. Q4 revenue was up 25 percent over the past year, it notes, and 9 percent more than Q3.

Here, again, is Citigroup analyst Mark Mahaney’s guide to interpreting the numbers:

Google streams its earnings call (via YouTube, of course) but in case you’d like to spend your time doing something else, I’ll be listening in and taking live notes here at 4:30 pm ET:

4:30 pm: Good afternoon. Waiting for Google execs to come online to chat about Q4. Meanwhile, Google investors are shoveling shares out the door, and the stock is lurching, down more than 9 percent.

4:31 pm: Call is starting. On the line, the now-usual lineup: Larry Page, CFO Patrick Pichette, product head Susan Wojcicki, sales boss Nikesh Arora.

4:34 pm: Larry talking about “blowing past $10 billion” in revenue. Also the fact that David Beckham engaged in a Google+ “hangout” recently.

Larry talking about last week’s Google+ search revamp, “which I’m really excited about.” “To make a real impact in the world,” we need to shutter some stuff. We’ve turned off 12 projects in the last quarter, so we can double down on things like Chrome, Android, YouTube.

Android: 250 million devices, up 50 million in last quarter. Over 11 billion downloads from Android Market. “Wow.” (That’s from the script.)

“Chrome is on fire, too.” “People thought we were crazy. Who wants another browser?” But we were right!

Display (perhaps you’ve seen our piece in The Wall Street Journal just now). Now on a $5 billion run rate. DoubleClick up 130 percent year over year.

“Very pleased” with ads on YouTube.

That display ad run rate, by the way, is up 2x from October 2010.

4:40 pm: Now CFO Pichette. He’s also very pleased with the quarter. Walking through numbers:

Pichette talking up negative effects of foreign currency moves, which the company also stresses in its pullout slides. We’ll see if investors go for that (curious if analysts feel they have decent visibility into FX for GOOG).

Skipping most of these numbers, since you can get most of it from release and also via supplementary slides.

Pichette warns that Google will keep spending a lot on capex, and that that spend will be “lumpy.”

4:45 pm: Arora to talk about sales. “Strong performance across the portfolio.”

Arora lays in a series of numbers that don’t really register with me, in part because Page and Pichette just mentioned some of them. That display ad number is still quite amazing, though we would of course love to know how that’s split up between “regular” Web ads, YouTube and mobile.

Another shout-out for David Beckham. (Who I assume is still a big international star, even though I’m pretty sure the U.S. has moved on after a brief flirtation.)

An actual “shout-out”! To international business teams.

4:51 pm: Wojcicki, who starts by explaining/defending “Search plus Your World” changes rolled out earlier this month. More personalized results: Pictures friends have taken, article mom had shared, etc. Just like Facebook, which is the point.

Sorry, lost the string here. But really, this is the part that you can always skip during the call: A number-free brochure.

4:57 pm: Q&A:
Q: Did you see a big shift in mobile use over the holiday?
A: Larry: Nikesh, you answer. Nikesh: “Mobile growing by leaps and bounds.” “So yes, we are seeing tremendous usage, and we also saw uptick during holidays,” when people were looking for stuff.

Q: So is CPC decline because more people went through mobile?
A: Nikesh: Susan, you answer that. Susan: Two biggest factors were FX and changes we’ve made, which increase paid clicks — better for everyone — but those clicks may have a lower cost.

Q: What’s in that $5B display number? Same as the $2.5B number from October 2010?
A: Pichette: Yep — take out text, count mobile, count YouTube. Apples to apples.

Q: How did Europe affect numbers? Also, can you give us a sense of “blended TAC rate” for that $5B?
A: Not talking about $5B breakout. On the economy: “Quite a solid Q4 performance.” Separate from FX issues, Europe was “quite healthy, despite the environment.”

Q: YouTube. Can you give us a little more insight there? Are you seeing signs that TV ad budgets are coming to YouTube? Where are YouTube monies coming from?

A: Pichette: “YouTube is doing absolutely terrific.” Larry on YouTube ads: “Tremendously excited about our growth … but it’s not significant compared to the overall video space.” TV advertisers not thinking about it. (Which is the point of the channel strategy.)

Missed Q on Android. Here’s Larry Page’s answer: Early stages of monetization. We do make money on it via ads, and some people are buying apps, too (most downloads are free). “I’m very, very optimistic.”

5:06 pm: Q: More on CPC being down. Question involves “rank order,” so my head hurts.
A: Pichette: Panda search changes will show up next Q. FX changes we can’t do anything about.

[Missed next exchange]

5:09 pm: Q: Another CPC question. Talk more about this, please. Also, your traffic acquisition costs are up. Why?
Pichette. TAC increase is “just a mix issue.” (Mobile mix or partner mix? “Yes,” says Pichette.)
Wojciki: Like I said, FX and changes we made to ad quality are the reason that CPC is down. This quarter, we made a lot of changes. Quarter before, we did a lot, too. Some Q3 changes show up in Q4. “But not any one big one — it was the sum of many other changes.”

Oh, Google earnings call. You are defeating my powers of concentration.

Q: Discussion of hedging program. “Is this working the way you want?” Also, CPC seems to be going the way you want, even though it costs you money. Please talk about that.
A: Pichette gives answer about hedging that is 100 percent jibberjabber to me, because I can barely master a checking account.

Larry Page on CPC: “I do think that CPCs do vary a fair amount, and we’re not surprised by that.” Some changes we make will push it up, others down. Not that big a deal.

Q: Are you happy with the results over the quarter? A: Larry: Like I said, yes.

Wojciki: Instead of focusing on CPC decline, you should note that paid clicks are up 34 percent.
Page: Can the next question not be about CPC?

Q: Nope, it’s a question about CPC.
A: Pichette: Overall, you’re seeing more clicking, and we’re getting a better overall result. If CPC goes down for some reason, “that’s just the nature of experimentation.”

Q: Google+ question for Larry. Please describe how G+ can increase engagement on all properties.
Larry: Engaging with users, really deeply; really, really important. G+ really important part of that effort. Notion of identity really important. With “other big companies that work on social data … we’ve seen a general data to wall that garden off.” We like to partner with third parties. “But in general, companies have been walling that data off,” and we’d love to use it. (Here I would like to see the facial expressions of Dick Costolo and Mark Zuckerberg.)

Q: Do you need more markets for e-commerce play? Thirty markets right now.
A: Wojciki. Yes, we’re good. We’ll expand, but we need to learn from the places we’re in right now.

Q: Last year, in Q4, you talked about big changes “on the quality side.” Talk about that. Also, you hired less people this Q than in other Qs. Trend?
A: We talked about it last year, because it was a big deal. As far as hiring, Larry already said we were growing very fast — Larry interrupts here: “The edge of what was manageable” — so now we’ve slowed.

Last Q: More on Google Wallet, please. Are you going to double down on that? Also on Motorola: Given $12.5B size, won’t that affect “growth and margin profile”? So please talk about mobile philosophy.

A: Wojcicki: Like Larry said, we’re focusing on core products that people use every day, and you use you wallet every day, so it’s a big deal for us. “Very excited about Wallet, and will continue to invest in it.”

Larry: We’ll break out Motorola so you can see the results separately from the rest of the business. We’ve been clear that we will run it as a separate business, and won’t favor it compared to other OEMS (again, so why keep it?). Shows our commitment to Android, and how we want to keep “our freedom to innovate” (Translation: We need those patents.)

Pichette: Remember, for Q1, lots of resets every year at this time. So you won’t be surprised at the end of the quarter.

Alrighty, we’re done. Thanks for sticking around.

Groklaw reported the notifications on Friday. See the full filing here. These patent reexaminations are a routine part of patent lawsuits. One party, usually the one that’s alleged to be infringing, asks the patent office to reexamine the patent and decide whether or not the patent should have been issued in the first place. A rejection isn’t by any means a final nail in the coffin in Oracle’s infringement case against Google. But it doesn’t exactly help Oracle, either.

Oracle has six months to appeal the patent office’s finding, and it can also, as a final step, sue the patent office itself. But these things rarely go that far.

And these rejections are sometimes meaningless to the final outcome of a lawsuit. In 2005, as part of its epic patent litigation against NTP — the case that nearly barred the import of BlackBerry devices into the United States — Research In Motion won several rejections from the patent office, like this one, which I wrote about at the time, only to suffer later defeats in court that led it to pay a $612 million settlement.

Oracle has claimed that Google owes it more than $6 billion for parts of its Java software that were used in the Android mobile operating system; Oracle took over Java after it acquired Sun Microsystems last year. Google has argued that Oracle’s claims for damages are flawed. After face-to-face talks between Oracle CEO Larry Ellison and Google CEO Larry Page failed in September, the trial had been expected to begin in October. But it was delayed, and is now expected to get underway in 2012.

The new structure integrates design, product and engineering teams around key product areas such as privacy and communication.

A memo about the reorg was sent out at the company today. A representative for Facebook declined to comment.

We’ll update as we learn more.

The young company, led by CEO Mark Zuckerberg, had many management shake-ups in its early years, but recently it has been fairly stable at the top.

However, Facebook faces increased competition and scrutiny, as well as a looming expected IPO.

You have to see the parallel with what Larry Page did at Google earlier this year, shortly after retaking the reins as CEO. Page created seven integrated product areas from what had previously been separate engineering and product management groups: Chrome, social, Android, YouTube, knowledge, ads and commerce, and local.

Please see the disclosure about Facebook in my ethics statement.

According to sources close to the situation, neither CEO Mark Pincus nor one of its principal venture shareholders, Kleiner Perkins, will be selling any shares in its upcoming initial public offering.

While big investors often divest stock in IPOs, not all do. It is a carefully watched number by investors, who are always wary of insiders who unload a lot of shares in an offering.

But such activity by the fast-growing San Francisco online gaming company will be watched carefully since Pincus has recently been painted in a number of press reports as the greedy Mr. Potter of Silicon Valley.

Among the allegations is that he runs a poisonously tough culture that tracks its employees’ output and performance via elaborate data models that require extraordinary amounts of work, along with nefarious list-making of who’s naughty and who’s not.

That big-brother behavior has reportedly included taking away high-ranking jobs and the sweet stock options that go along with them from those execs found wanting.

While there is no doubt Pincus is a hard-charging personality, his defenders note that it’s due to a belief that life at Zynga is a meritocracy and that his practices are not any more heavy-handed than those at other firms.

Indeed, Pincus has a lot of competition in the tough-guy tech CEO category from longtime legends such as Microsoft’s Bill Gates, who set the gold standard for mean, as well as Amazon’s Jeff Bezos and now Google CEO Larry Page.

Pincus does not even rate in this pantheon, which is more typical of tech companies than anyone would care to admit or, to be fair, care to care about. With big benefits, vast wealth and much latitude, many in tech don’t mind the grueling work schedules.

After all, it’s not exactly ditch-digging, now is it?

In any case, sources said the coverage has hit Zynga staff hard, as well as Pincus, who has not responded due to the IPO’s quiet period. That’s in contrast to Groupon, the daily-deals site whose own rough process was rife with highly negative stories about the company’s prospects.

While those media accounts were more aimed at the business itself and less personal, Groupon CEO Andrew Mason vociferously defended the company in a controversial letter that was then leaked and published (to me and by me!).

Pincus will doubtlessly have a lot to say to investors who ask about the company’s culture and its possible negative impact on attrition, as some stories have charged.

His decision not to sell, sources said, was inspired by Zynga investor and close friend Reid Hoffman, who has sold very little of the stock of LinkedIn, where he serves as chairman.

The action all begins next week, according to multiple reports, when Zynga takes its show on the road in preparation for an IPO that is expected to value the company at $15 to $20 billion and will take place before the new year.

It will debut under the ZNGA ticker on the Nasdaq market.

While some have been worried about Zynga’s future growth, its past performance has been a lot stronger than other Internet offerings. In the first nine months of the year, the company posted $828.9 million in revenue, double the amount from a year ago, with net income of $30.7 million.

Pincus’s holding onto shares will be seen as a plus, of course, although he has sold a large amount of stock in Zynga’s history.

According to its S-1 filing:

“From our inception in October 2007 to date, Mr. Pincus, our Chief Executive Officer, Chief Product Officer and the Chairman of our Board of Directors, has purchased an aggregate of 149,197,328 shares of our common stock. To date, Mr. Pincus has sold an aggregate of 43,629,310 shares of our common stock at prices ranging from $0.42 to $13.96.”

Pincus now holds 91.4 million of Class B shares, 16 percent of the total, as well as 20.5 million of Class C shares, 38 percent of that group. Kleiner holds 65.2 million shares, or 11.2 percent, of Class B shares.

Other big Zynga owners, who might or might not sell at the IPO, include Institutional Venture Partners, Union Square Ventures, Foundry Venture Capital and Avalon Ventures.

The top four most powerful people are politicians, including Barack Obama in the top spot. At No. 5 is Bill Gates, who ranks high for his philanthropic role as co-chair of the Bill & Melinda Gates Foundation.

Some of the other tech leaders and their rankings:

5. Bill Gates, co-chair, Bill & Melinda Gates Foundation.

9. Mark Zuckerberg, founder, Facebook.

30. Sergey Brin and Larry Page, co-founders, Google.

40. Jeff Bezos, CEO, Amazon.

42. Robin Li, CEO, Baidu.

44. Li Ka-shing, chairman, Hutchinson Wampoa.

58. Tim Cook, CEO, Apple.

60. Masayoshi Son, CEO, Softbank.

In March of 2010 , the New York Times used the ju-jitsu theme to depict the fight between Google and Apple over smartphones. As you can see below, the late Apple CEO and co-founder Steve Jobs faces off with an iPad and iPhone against then-CEO (and now Executive Chairman) Eric Schmidt, who is armed with an Android device.

Jobs gets to do the cool, in-the-air kick.

Now, this week, on the cover of Fortune magazine, it is Facebook’s CEO and co-founder Mark Zuckerberg doing the floating hi-yaaa against Google CEO and co-founder Larry Page.

Leaving aside the fact that neither ever wears suits to do anything, let alone karate, it’s almost exactly the same, as you can see below.

Personally, I would have used Nerf guns at dawn.

But before you envision the rollout of a nationwide Google pay TV service, consider: Building out and maintaining a cable TV (and broadband) service is enormously time-consuming, expensive and messy.

Think, for example, of all those angry/confused service inquiries your local cable guy has to deal with. And recall that last year, when Google tried to sell its own line of smartphones, it was hoping to get by without setting up a customer service operation that gave buyers the ability to talk to a real live human.

Verizon spent some $23 billion on its FiOS rollout, and by the time it stalled out last year, it still wasn’t clear if it was a good idea for the telco to build out a cable/broadband service. So why does Larry Page think it makes sense for him?

He doesn’t, according to Sanford Bernstein analysts Craig Moffett and Carlos Kirjner in a note this morning. Instead, they argue, Page and Google have to be thinking about Kansas City as an R&D experiment meant to accomplish three things:

First, it helps Google (slightly) on the public policy front as it promotes the agenda of faster broadband, and it potentially adds to their status in promoting net neutrality. Faster broadband means more Internet usage, more searches, and more ads. Of course, the real regulatory game is a few orders of magnitude more sophisticated, but every little arrow in the quiver helps.

Second, it is a laboratory for Google to learn about technology and consumer behavior, ranging from the impact of higher speed access on Internet usage to the potential and economics of different ad formats and models, on different platforms, particularly when it comes to advertising associated with video and TV.

Third, it is an opportunity for Google to learn about the economics of deploying and running infrastructure. And learn they will…

Analysts like to pull their punches, but Moffett and Kirjner are crystal clear here: There’s no way they think Google becomes the “world’s biggest cable company” or anything like that.

Just to beat this into the ground, here’s another excerpt from their report (well worth reading the whole thing) where they spell out just how ugly the economics of this kind of venture would be:

From a [return on invested capital]-based perspective, the difference between Google’s current business model and that of a facilities-based wireline service provider like Verizon could not be starker. In 2011, we expect Google to post an ROIC of 56%, or 38% when including goodwill. In 2010, Verizon’s wireline segment (which includes FiOS) sported an ROIC excluding goodwill and “one-time items” of… wait for it… just 1.6%. Including goodwill and similar intangible, and smoothed one-timers, it was -1.0%.

Still. It’s quite obvious that something has changed in Google’s thinking over the years.

The company that strove to stay away from anything approaching the content business has now leapt in with both feet. See, for example: Google Music, Google Books, YouTube, and YouTube’s new “channels” project. And recall that Google just made a plus-sized bid for Hulu.

So the notion that Google is now willing to consider even testing out life as a cable TV service is still telling. As is the notion, buried lower in the Journal piece, that Google has floated the idea of turning YouTube into an “over the top” cable service, though that doesn’t seem like it’s on the table right now.

Android boss Andy Rubin even spelled it out at the AsiaD conference in Hong Kong last month: “Google is in the very, very early phases of adding consumer products to our portfolio.” So even if that doesn’t mean it’s ready to become a cable guy, it’s still going to evolve into something much broader than a search company.

In a filing yesterday (see below), Judge William Alsup proposed a trial plan to lawyers for both sides, stating that the trial “will not be in 2011.” Alsup said he expects a long trial that will likely be considered a hardship by people selected to sit on the jury. “Although the trial will not be in 2011, the Court needs some lead time to pre-clear a venire for hardship for a long trial,” Alsup wrote in the filing. The word “venire” refers to the jury selection process. Alsup didn’t hint when he expects the trial to begin.

Court-mandated face-to-face talks between Oracle CEO Larry Ellison and Google CEO Larry Page failed last month. The trial had been expected sometime this month.

Oracle has claimed that Google owes it more than $6 billion for parts of its Java software that were used in the Android mobile operating system, which Oracle took over after it acquired Sun Microsystems last year. Google has argued that Oracle’s claims for damages are flawed.

Goog Orcl Delay