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Google Makes So Much Money, It Never Had to Worry About Financial Discipline
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- focusgroup0 10y agoXoogler here. About a week after joining, and having partaken of the food, massages, meditation rooms, fitness centers, shuttle bus, sports facility, arcade, juice bar, tech stops, shwag etc. - I remember thinking to myself "whatever we do here must be ridiculously lucrative". There weren't signs of obvious waste (at least in my org.), and coming from other corporate gigs where you had to pay for coffee it really opened my eyes to what a difference it makes for employee morale / productivity.
- ocdtrekkie 10y agoIndeed, it's amazing how profitable vacuuming up users' private data without their informed consent and monetizing it can be.
- michaelvoz 10y agoYou must be a joy at parties. How is any of the data private when you willingly use their tools, sites, servers, etc? You open up google.com and type things in, what privacy do you expect? Or am I missing something you are referring to?
- psbp 10y agoocdtrekkie is infamous for having endless anti-Google arguments on Google+ for the past 5 years. Trust me, you're not going to have a fruitful discussion.
- blub 10y agoWhat would the ideal result of such a fruitful discussion be? Accepting that Google is truth and Google is love? This is exactly what we need, exposing antisocial behavior for what it is.
- psbp 10y agoI'm not saying the argument is bad (I probably agree with it more than not), but from memory, it almost seems compulsive rather than an actual attempt to discuss Google's role. Many posters on G+ resorted to blocking him because it became insufferable.
- ocdtrekkie 10y agoThe problem is that Google's target market is largely people who are unaware of what the risks are, unaware of the extent of what Google does with their data. It's up to us in the tech community to protect people from companies that use dark pattern behavior like Google. yuhong: Responding to your question as an edit to my own comment since two -4 comments is probably enough for one day. Silently implementing opt-out features, and automatically opting everyone into new ways to violate their privacy, granting themselves the right to change their terms of service or privacy policy without notification. Using confusing terminology to make it difficult to discern what is the "more private" option. (Opting out of Google+'s "Featured Photos" feature, for example, requires you to switch ON the option to shut OFF Google stealing your intellectual property.) As existencebox noted, making ads on search look as close to search results as possible to mislead people into clicking on scam and malware laden Google Ads rather than real results...
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- yuhong 10y agoWhat dark patterns are you referring to?
- bzbarsky 10y agoMaking their ads on a search result page look more and more like their organic search results, for example. Or making Android Location History on by default and then using it for things like http://searchengineland.com/hood-google-adwords-measures-store-visits-222905 http://searchengineland.com/hood-google-adwords-measures-sto... -- yes, they're reporting anonymized data to the advertisers, but of course they're storing your actual location data, with a well-hidden knob to turn it off. Doing things people probably wouldn't like done to them if they knew about them with a well-hidden knob to turn it off is fairly dark-patterny as far as I'm concerned.
- bitmapbrother 10y ago>It's up to us in the tech community to protect people from companies that use dark pattern behavior like Google. Are you a self appointed privacy vigilante or were you elected by the people to protect them? Do you also protect people from Credit Card companies, ISP's, Cable Companies, e-Commerce sites and Cell Phone companies or are you just infatuated with Google?
- existencebox 10y agoWhat's always frustrated me is that there are perfectly legitimate complaints about how google has gained their market share; but people seem to like weakening the broader argument with more emotional arguments. I'll gladly cite examples: Search ad dark patterns. I remember a time when G was _proud_ of that their ads were entirely distinct from native search results, and never caused native results to fall beneath the fold. Now when I search on even a moderately sized monitor, literally half of the first page results are sponsored or ads (native content being entirely beneath the fold), to boot in a manner increasingly less distinct from the native results. (there used to be a separate ad box, and then a line between ads and native, and now just a tiny little 'ad' or grey 'sponsored' blip) I've seen these encroachments across the board; youtube/G+ integrated logins was another, dark patterns for data-gathering approval on droid ("do you want to share data; yes/cancel"), which I'd best summarize as a slow collapse of any legitimacy to their "don't be evil" mantra from early on. The one concrete point I can think of for "scraping data without approval" is that when various new data policies were established and yes/no controls added to your G profile settings, I believe some of them defaulted on? I've heard mumblings both ways in the HN discussions on this topic so it's a less strong point than my previous, but may be a basis for a more established argument of that aspect of dark patterns in private data acquisition that the parent was trying to pose.
- dexterdog 10y agoSo you would have no problems with your cell service provider keeping records of all of your calls and locations and recording conversations in the room even when not on a call? Most people don't know what data google is keeping and monetizing.
- nostrademons 10y agoDon't they do this already? https://en.wikipedia.org/wiki/Room_641A https://en.wikipedia.org/wiki/Room_641A
- bzbarsky 10y agoAnd the people who ended up with Chrome installed and set as their default browser because they installed some other application (like Flash) were using Chrome willingly, right? Yes, Google was doing that sort of thing for Chrome distribution for a while. They've stopped since, which is better than nothing, I guess. [Edit: apparently they haven't stopped, according to ocdtrekkie's comment! Or maybe they have started again.] Point is, a lot of people are NOT using Google's products willingly. They may be using them because someone else set them up with the product and they don't know how to change, they may be using it because they're required to for work (Google docs, e.g.).
- ocdtrekkie 10y agoThey still do it: https://get.adobe.com/reader/ https://get.adobe.com/reader/ (Checked today, Windows 10, while using Edge. Default checked on this page is to also install Chrome.) It's worth noting that Sundar Pichai's claim to fame at Google, prior to Chrome itself, was getting the Google Toolbar installed on everyone's PCs whether they wanted it or not. The CEO of Google isn't just a fan of software installation dark patterns like this, he's the guy responsible for it at Google.
- yuhong 10y agoGoogle Toolbar was one of the better browser toolbars AFAIK though.
- bzbarsky 10y agoThat's a pretty low bar. But in terms of the ethical question, we're now talking about how if I break into your house to steal all your unhealthy potato chips that's better than if I break into your house to steal your money. The fundamental problem is breaking into your house.
- ocdtrekkie 10y agoIf you're diagnosed with cancer, but it is one of the least fatal forms of cancer... you still have cancer.
- jrcii 10y agoOh no, a critical comment that doesn't conform with the political status quo in the IT industry, silence him!
- notheguyouthink 10y ago> informed consent Sidenote, and completely off topic: Is there a non-high-horse way to word this? I understand the meaning, but the same phrase can be used to be completely dismissive as well. It's a potential moral high ground, where if you don't agree you must be uninformed. I'm not saying OP meant it that way, it just brought up the honest question from me.
- sp332 10y agoI think it's medical/clinical. https://en.wikipedia.org/wiki/Informed_consent https://en.wikipedia.org/wiki/Informed_consent "Express permission" is also a little jargony but I think it avoids the problem you mentioned?
- ocdtrekkie 10y agoI'm not sure "express permission" indicates that you are aware of the full extent of that permission, merely that you were explicitly asked for it and you agreed to it. To answer the parent, I wasn't trying to say everyone who knows what Google does with their data would not actually consent. There are people who argue that "privacy is over" and that it's entirely okay for Google to know everything about them. Most Googlers fall into that category, along with a large number of extremely liberal tech people. I'd say most people on HN understand at least in large part how Google operates. But I'd argue the majority of society does not understand the extent to which Google collects and uses their information, nor grasps how that may affect their lives in the future.
- yuhong 10y ago"Most Googlers fall into that category"?
- notheguyouthink 10y agoHmm, not sure - Trekkie made some good points regarding express permission. Perhaps it's just a bit of a loaded word, and if i care to use it without being dismissive, i must be careful.. well, not to be dismissive haha. Appreciate your reply.
- BeingIncubated 10y agoJust stop using Google if that is a concern. Personally I use DDG.
- takeda 10y agoI use DDG, as well, but I think you're missing the point. It's virtually impossible to avoid Google. You visit some sites, and they use scripts or fonts hosted by them, or use their services such as captcha, maps, etc. If you use Android, virtually all apps rely on Google Play Services, and interestingly you it will autoupdate even when you explicitly tell it not to. Using google maps to navigate (now even Waze is theirs), people sending links to google docs, google pictures etc.
- pgeorgi 10y agoRegarding fonts, see https://developers.google.com/fonts/faq#what_does_using_the_google_fonts_api_mean_for_the_privacy_of_my_users https://developers.google.com/fonts/faq#what_does_using_the_... While some data is stored, no cookies are sent, plus there's heavy caching involved: "The result is that website visitors send very few requests to Google: We only see 1 CSS request per font family, per day, per browser." All in all, those services (IIRC the JS library CDN is similar) don't seem to be designed to be a tracking data source except for some popularity stats about the data hosted there.
- mahyarm 10y agoA lot of that stuff although is cheaper for the corporation to provide than for the employee to pay for themselves in money and time. The corp has a tax advantage and a bulk purchase advantage. Not having a payment infra probably adds a little bit of efficiency too.
- lmm 10y agoYeah. Which is why I'm always amazed how many companies will nickel-and-dime on that stuff. Those benefits more than pay for themselves, a smart company would commit to them especially when times are bad.
- hkmurakami 10y agoCompared to the salary you're paying your staff, it really does come out to mere pennies.
- gph 10y agoWhich does seem like sort of a loophole. Don't companies have to add perks over a certain amount to the employees pay so that it gets taxed? Wouldn't feeding an employee every day qualify? It would be sort of weird if we turn back into having sort of 'company towns' where your employer provides a lot of what you need except they pay for it. It's not just Google this would be beneficial for, even if you run a factory you could pay employees a tiny bit less, but provide food/services for them that would make up for it. And because of the taxes/bulk situation it could be economically beneficial for both sides.
- __derek__ 10y agoI was surprised to see no mention of Bell Labs or Xerox PARC in the article.
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- Periodic 10y agoSo many companies try to emulate how Google works. There are multiple books, hundreds or thousands of articles. People speculate on the perks, the review structure, the hierarchy, the autonomy. However, when other companies try to imitate Google they always fail because they're missing a crucial piece: Billions of dollars in ad revenue Google doesn't work the way it does to be successful. It works that way because it is successful. I found this no more evident than when I worked on Google Search itself.
- __derek__ 10y agoWe humans have a hard time reasoning about correlation and causation. Superstition comes so naturally.
- smallnamespace 10y agoThat's because causation is really hard to reason about. Often times it's not that A causes B or B causes A, but C causes both, or A and B causes each other at the same time.
- Afforess 10y agoNo. You're correct, causation is complicated, A-Z and all the greek letters too are part of a single cause. But the situation is worse than that. The reason humans are superstitious is that we don't seek answers, we seek narratives. We seek to explain without disrupting what we already believe. We might see the real cause and effect and rewrite what we see to fit what we want.
- __derek__ 10y agoYou sound like someone who's read The Black Swan. If you haven't, though, you probably don't need to.
- shmulkey18 10y ago"We are pattern-seeking story-telling animals." -- Ed Leamer in "Macroeconomic Patterns and Stories"
- digi_owl 10y agoBest i recall, the Glass problem was more Brin over-hyping than the tech itself. And i do not recall reading about the car getting into trouble while under computer control. Either someone ran into it or it ran into something while human operated.
- pageld 10y agoThe car actually did hit a bus while in autonomous mode. To me, it was an odd situation though. The lane the car was in was for parked cars as well as traffic and it was ending at a turn lane or something. http://www.latimes.com/local/lanow/la-me-ln-video-google-car-20160309-story.html http://www.latimes.com/local/lanow/la-me-ln-video-google-car...
- zigzigzag 10y agoThe robotics effort sounds like an absolute disaster. How shareholders haven't been demanding answers there is beyond me. Acquiring 11 companies to, apparently, satisfy Rubin's obsession with robots (it's named Android for a reason) and then trying to shut them all down or flog them off ... but nobody wants them? Yikes. How did they get so starry-eyed about Rubin that keeping him (also failed) was apparently worth such a huge effort? Yes, he ran a successful operating systems project and fully demands enormous praise for Android's wild success. But where are the limits to retention efforts?
- compiler-guy 10y agoShareholders can demand answers, but it won't get them anywhere. For better or for worse, Larry, Sergey and Eric own Google and can do whatever they want.
- dx034 10y agoShareholders can sell and thus lower the stock price (and the owners' wealth). The fact they don't do it means that many people seem to believe in management's ability to earn future profits.
- digi_owl 10y agoThis bring to mind how Michael Dell decided to take the namesake company private so that it could focus on long term projects. Similarly i can't shake the feel that the handset division of Nokia, never mind similar efforts at HP, got sunk because of board room having blinders for all but the quarterly earnings report.
- T2_t2 10y agoActually, he did that because he felt the public price was undercooked, and there was more value in the company people weren't seeing. http://www.bloomberg.com/view/articles/2016-06-01/michael-dell-bought-his-company-too-cheaply http://www.bloomberg.com/view/articles/2016-06-01/michael-de... is a great read on that.
- nunez 10y agoYup. There was SOOOOOOOOO much bullshit work being done there that could ONLY be done because Google can afford so much top-notch talent to work on research, even if it reinvents the wheel. It was a big part of the reason why I left. That being said, at least they didn't invest their dollars on loads of red tape, though to be fair it isn't like all of Google is incredibly regulated unlike many other multi-billion dollar companies
- baccheion 10y agoIf you actually have a worthwhile idea or something you're working on starts going somewhere, the masses will descend trying to stall it out. They'll also magically try to slap their face/name on it, while trying to push you out. Also, it's funny how many random things are being worked on, as it seemed impossible to get time or support to work on anything. I wonder what process/reasoning goes into deciding who gets to work on their own thing. This company is so typical regarding many things that most of their PR/marketing sound like outright lies.
- puzzle 10y agoExcept in 2008, during a developing worldwide financial crisis, when the new CFO Patrick Pichette started figuring how much was actually getting spent on things such as cafeterias and childcare subsidies (for the onsite service). So, yeah, never.
- cooper12 10y agoI'm no businessman, but does anyone else feel this will kill a lot of potential innovation? Not every project pays dividends immediately, and some are worth pursuing even at a long-term loss. (imagine if we all had fiber today and bandwidth was ridiculously abundant. Just how different would the internet be, just as when electricity became abundant?) Also I understand that Google is a business, but the need for a business model for research might stymy forays into interesting tangents. (I can't currently list any, but history is full of examples of things that were invented while looking for a solution to a different problem) Sure a company shouldn't be hemorrhaging money or throwing it at anything that moves, but it also shouldn't be completely beholden to (my generalization of) investors who can be quite short-term-thinking and risk-averse.
- Mahn 10y agoI don't imagine that Google will become super conservative and short sighted overnight; it's probably more about managing moonshots a bit more closely rather than not betting in them at all. It wouldn't be Google if they stopped placing bets that don't pay off immediately.
- digi_owl 10y agoVery much so. Michael Dell effectively rescued his company from board room rampant shorttermism some years back because of just such a problem. And we basically witnessed Nokia and HP effectively crash and burn because of boardroom demands for short term profits while the execs were trying to pull of long term "pivots".
- flinty 10y agoYeah, you hit the nail on the head. Short(shorter than usualy for Google) term financial motives kill any far fetched ideas from ever having a chance. Wall Street demands up and to the right movement every 3 months. Companies like Microsoft, Facebook, Google, Apple try to have their own internal cadence of some goals in 3-5 years. Google had 10+ year projects but from the sounds of this article and what has been happening in the past year or so that leash is being shortened drastically. Sad day but I guess every company has to eventually grow up. Maybe another contender will emerge for long range innovation.
- espadrine 10y agoContrast Google's old way of managing bets with Tesla. When Google started working on self-driving cars, they went about it academically. They did not plan a sequence of stepping stones that they could sell. They meant to have a product in an indeterminate future which should be immediately perfect and better than a human, essentially not needing a wheel. Tesla went about it with an engineering perspective. First, cars that can send accumulated data over the Internet. Then, equipped with cameras. Then, with limited assistance, warning the user to take the wheel back in difficult situations. And sporadic updates adding support for more complex cases. The end goal is identical; but they make money along the way.
- ravitation 10y agoIt also helps when you're already making cars, which Tesla was.
- espadrine 10y agoTrue. That said, Apple's phone was successful against established manufacturers, and Android won without having to build a phone at all.
- ravitation 10y agoiPod to iPhone was certainly not 0 to 1.
- manarth 10y agoThe iPhone was released in June 2007. At that point, the iPod models were Classic (click-wheel), Mini (click-wheel), Nano (click-wheel), and Shuffle (screenless). The first iPod Touch wasn't until September 2007, 3 months after the first iPhone. When the iPhone 1 was released, the iPod range didn't have much on any other MP3 player. All the things that make an iPhone an iPhone - the touch-screen, multi-touch, iOS, didn't come from the iPod. Perhaps iPod to iPhone wasn't quite 0 to 1, but it wouldn't have been much more than 0.001 to 1.
- Afforess 10y agoGoogle has a fundamental problem with solving challenging issues, especially those in the realm of physical "meat-space". Really hard problems, problems that might reveal that Google is not omnipotent, where Google might not succeed, Google pulls back from. In areas where Google is, Google dominates the landscape. In all others, Google does not deign to participate. If Google can't dominate a market, it is not interested. > Former employees say Page became frustrated with Fiber’s lack of progress. “Larry just thought it wasn’t game-changing enough,” says a former Page adviser. “There’s no flying-saucer shit in laying fiber.” The issue with the physical world is that fundamentally, compared to a lot of software or hardware technology, it _is_ fairly boring. Boring work is also some of the most important work; the synchronization of traffic lights, the scheduling of flight paths, the minutiae of power line access, these are all boring, important things. A common reaction to boring problems by technologists is to throw computers at them. Build an algorithm to synchronize traffic lights. Build an AI to schedule flight paths more efficiently. I understand these reactions, the impulse to replace existing, less-optimal processes with stronger, more efficient, automated ones. Google does a really great job at automating things, its their core competency. However, automation can't solve all problems. You can't automate away political processes. You can't automate away property rights and fair access to power lines, and contracting construction work. Page clearly feels uncomfortable with this, and so he abandoned Fiber. Honestly I am not sure Page was wrong to abandon Fiber. Google's core competency is automation and if they can't automate a problem, maybe they shouldn't be involved in the space. Or maybe Google should get a new core competency and learn new things. Teaching an old company new tricks is hard though. Very hard. So hard that most companies fail before they can ever adapt. Without being able to solve problems in the physical space, Google is fundamentally "locked-in" to only being able to solve digital problems in the digital world. This is why Google has no physical stores, no physical products (which are not manufactured by someone else - Chromebooks, Pixel, etc do not count. Prototyping is easy. Selling to customers in a retail store is hard). Microsoft had the same problem as Google once. It was hard for Microsoft to learn how to run stores, build its own products; it took Microsoft over a decade. Let's hope Google can learn too.
- digi_owl 10y agoYou also see this behavior in FOSS, where all too often someone will decide to rewrite a piece of software from scratch essentially because they are bored of maintaining the existing implementation.
- VeejayRampay 10y agoThat Porat person is a serious contender for buzzkill of the year. Google makes tons of money with ads and spends it on geeky experiments to try to push a futuristic envelope (and create an environments where they can sell more ads, like a self-driving car) we'll all benefit from eventually and she gets to be the person that locks the toys away because "financial discipline".
- drewmate 10y agoTo be fair, though, Google is a company that exists in a country where shareholders have the legal right to say how a company is run. Google (for better or worse) does not belong to the world, it belongs to its shareholders who _paid_ for the right to own a piece of the company. Even with Google's unique ownership structure mentioned in the article, Larry and Sergey are not immune from pressure from shareholders who might want to crack down a bit on corporate costs. There will always have to be a balance, and it doesn't look like Google is completely killing off its innovative culture, just trying to find a happy medium where it can do its thing and shareholders will still be happy.
- MrZongle2 10y agoBuzzkill? Sure. But she also sounds like one of the few responsible adults in the place with a hand on the purse-strings, whose job is to ensure that there is an Alphabet and Google in 10 years, shiny toys be damned.
- tzakrajs 10y agoThere will be an Alphabet or a Google in 10 years but it will look eerily similar to the aging behemoths of Silicon Valley today that take paltry swipes at different markets while their main revenue source slowly dwindles (up until the point they are bought by a holding company).
- johan_larson 10y agoMore control was pretty much a given as the company grew. When an operation is small and doesn't do anything particularly important, you can be casual about a lot of things. It just doesn't make sense to formalize everything. But once the operation is big and doing important things, control and visibility and process become increasingly important. Something like this was going to happen. Hurray for Google for doing it before rather than after some major disaster or embarrassment.
- GCA10 10y agoBig companies seem to step in the same puddle, every time they try to set up one of these "breakthrough incubator" projects. They pick fascinating projects. They hire lots of smart people and give them great autonomy. But they inadvertently set up incentives that lead to the repeated creation of LINS (lavishly impractical non-solutions). And then the plug gets pulled. I think the key problem is that the research team starts optimizing for periodic demo days with the boss. That's a sheltered environment in which clever (and easy to demonstrate) technical features are rewarded, and real-world annoyances involving customers, social norms, regulators, pricing, etc. are put off for "later." Not only are ecosystem problems not addressed, they aren't even vigorously considered. The technology behind Google Glass was quite clever and some variant of that idea may eventually work. But what arrived on the market was LINS to an extreme. You can find similar failures in Detroit's concept cars, Paul Allen's first go at Vulcan, Xerox Parc's grossly overpriced STAR, etc. I'm not sure how to fix this. Within the big-company budgeting system, it takes a daring CEO to allow super-innovative projects to break the usual rules about desired five-year ROIs. Once such a CEO takes a stand, it's really hard for him/her to get out of the way. Suppose these CEOs do miraculously set up a system that approximates the scrappy, minimum-viable experiments of a true startup, with the marketplace being the true boss. That still is problematic. When a big company is pushing MVPs into the marketplace, the public scrutiny and scorn makes it really hard to recover from an awkward start -- and keep iterating in peace.
- jackcosgrove 10y ago"I'm not sure how to fix this." I'd say it's an unsolvable problem, and that's good! What breakthrough projects are good at is pushing the envelope and inventing whole new technologies. These technologies are then experimented with by smaller firms a few years later, and the winners of this scramble bring the technology to market. This is a spaghetti against the wall kind of market research; I think it's impossible to solve the problem of how to identify a new market and win it over. You can definitely have an informed approach that reduces risk, but it's not a technical problem that can be systematically solved. There will always be risk where there is reward. If it was possible to systematically identify new business opportunities, there would be many more players in the entrepreneurship business, and commensurately lower profits. In fact, an "informed approach" can sometimes lead you to discount real opportunities as too pie-in-the-sky. We need different risk propositions to make an economy with more niches for different kinds of people. I don't think the difficulty of identifying new breakthrough businesses (presumably with breakthrough profits) is a problem at all.
- draw_down 10y agoIt's funny to me that investors and biz press are surprised that Brin & Page meant what they said in the 2004 letter.
- adrenalinelol 10y agoIn fairness, it looks like they've somewhat compromised by hiring Ruth.
- forgottenpass 10y agoIdeals like that are the sort of thing you expect companies to abandon after a few years. And the idealism has been draining from google for years. It barely exists anymore beyond internal-facing perks and their cult-ish belief that their shit doesn't stink. That letter also included the famous "don't be evil." Does anyone really think that in a few hundred years time, people aren't going to look back and laugh at the feeble rationalizations that have currently taken hold to convince otherwise clued-in people that the most pervasive surveillance apparatus in the world isn't at least a little bit evil?
- brilliantcode 10y agoI feel like Google is still stuck in 2005. Not much has changed from top of my head. All of their products are still based on their end-user being the product since everything is free and people expect it to be that way. I don't see anything changing because they are literally printing money from their monopoly on online advertising. They have no serious competition and no, Facebook is not really great for targeted advertising unless you are a big brand. Without any real external pressure as a result of their own success, it's beginning to look a lot like Microsoft of 2005. Even from a developer's point of view, Amazon has usurped the cloud space with Azure now playing catchup and winning. Much as Satella realized that Microsoft needs to stop being like Google and more B2B like Oracle, Google needs to find it's new place. Vast majority of the public is unlikely to give a shit about their privacy in return for free productivity and entertainment but demographics change.
- mattmcknight 10y ago"All of their products are still based on their end-user being the product since everything is free" Counterexamples: GSuite (fka Google Apps) Google Pixel Google Home Google Wifi Google Cloud Platform
- baccheion 10y agoWhat's funny about Google's Cloud initiative is that even as recently as a few years ago, they didn't have enough servers to scale their own products and "were lacking the capacity to expand to meet the needs of X-product-being-pitched." Or maybe this is just another example of them being full of it. If I remember correctly, they had to take a significant amount of server resources from other teams in order to launch Google Instant.
- skizm 10y agoI always wondered if Google just fired all their engineers except a few top guys, and focused on their core money making products like search / ads / etc. and tried to stay as lean as possible (lean being a relative term), how much profit they could make.
- rabidrat 10y agoThere's an old analogy that running a business is like taking a road trip, with money as the gasoline: you need to get gas along the way, but that's not the point of the trip. So effectively you're wondering how much fuel you'd have left over if you only had a few bicycles towing a fuel truck. What's the point?
- skizm 10y agoThere is no point. It is a thought experiment. I'm wondering how much value the different parts of their company actually add to the bottom line. I'm thinking that despite "losing money" on a lot of their stuff, it does keep them in the news and their brand relevant. Like if Google had only done search and ads would Android have taken off like it did? Or was it because everyone knows Google does cool stuff and hopefully their cool stuff would make its way to Android?
- tajen 10y agoI concur. But then I tried to classify Google projects in 3 categories and find for "obviously useless things that only exist so engineers can have fun", and I didn't find so many obvious things: - Obviously productive ones: Gmail, Google Analytics, Android, Android TV, Maps, Youtube, OpenSocial, Chrome, because they all participate to "universally trackable users", - Skeptical projects: Fiber, Flights, Google Scholar, TensorFlow, Chrome OS, GDrive, GApps for Business, - Pet projects that may be fun but don't seem to serve as leverage: GCE (yes, their cloud solution), Google+, Go, Google Earth, Google Play/Music, Google Wallet, Google Glass, GGroups, GFinance, GTranslate, Google Fonts, Google Classroom, Inbox, Wave, Hangouts, Google News, Google Currents, Google Keep, Google Now, Wave... Therefore... If they wanted to stay as lean as possible, would they have come up with the right list straight away? What makes products "obviously" part of the first list? [1] https://en.wikipedia.org/wiki/List_of_Google_products https://en.wikipedia.org/wiki/List_of_Google_products
- ftio 10y agoAs the saying goes, Revenue Solves Everything.
- throwaway40483 10y agoThis is the killer quote: “No one wants to face the reality that this is an advertising company with a bunch of hobbies.” It's so brutal but (IMHO) sums up Alphabet in one sentence.
- return0 10y agoI remember Thiel repeatedly made that point.
- CptJamesCook 10y agoI would say that it's a search company that monetizes via advertising. The adwords product is so bad that you'd have a hard time arguing that they care that much about ads.
- dx034 10y agoHowever, many of these "hobbies" actively support ad traffic. Chrome and Android ensured Google's high market share for search & maps while delivering additional ad revenue channels. By the number of projects most are side projects that make a loss, but the really big ones have a big contribution to Google's success (via ads).
- spitfire 10y agoSuccess is a very cruel mistress. Without some sort of feed back cycle - usually given by the market, things grow in strange and perverse ways fast. The trick is to develop a feedback cycle that isn't as harsh as the open market (manage by quarters!) without giving absolute free hand.
- wrice314 10y agoPlenty of companies make so much money. Google didn't have to worry about financial discipline, not because it had so much money, but because it has an unassailable competitive position that is not aligned with its cost structure. Put simply, if you had the mandate to bankrupt a company through competition and had an infinite amount of money, I believe it would cost more to bankrupt Google than any other business.
- georgespencer 10y agoThere's an interesting fiscal corollary of having unbridled ambition matched by enormous firepower which brings the world's smartest engineers and hackers together: a Xoogler who was early in the business once told me about how engineers would hack/exploit the travel allowance policy. Google allowed folks to book their own flight and accommodation, and had an algorithm which determined rewards for folks travelling with financial efficiency. The measure of 'financial efficiency' was an invisible coefficient tied to average hotel and flight prices in an area. So if the average cost of a trip from Mountain View to Boston for three days was $1,500, and you managed to do it for less, then you got back a cut of the difference either as a cash bonus or in points to spend on upgrades for hotels and flights. After a while someone realised that a group of engineers were consistently booking shitty travel around the same time, and then travelling first class the rest of the year. They had worked out what the algorithm was doing, and started scraping hotel prices themselves. They booked (spurious) cheap earlybird flights and hotels during conference season in various cities, sometimes years in advance, and took huge numbers of internal points from doing so. The person describing the situation to me said there was a lot of discussion as to whether they should be fired or rewarded.
- caminante 10y ago> After a while someone realised that a group of engineers were consistently booking shitty travel around the same time, and then travelling first class the rest of the year. How's that different than having an annual travel budget? Sounds like they sacrificed to feast later instead of holding accommodations constant at "above average." I think you did a good job telling the story, but maybe I'm missing how gaming travel expenses is unique to Google.
- georgespencer 10y agoCrucial point which I didn't communicate properly: they were block booking spurious/unnecessary travel well in advance (by years).
- euyyn 10y ago
- LiweiZ 10y agoI think Google has been trying to somewhat imitate how life under nature selection works. Bring basic-but-extensiable-happy-route-scoped projects to life to test markets and wait and see which one would have the DNA for the next boom. From this perspective, I think they actually allocate their resources very carefully and intelligently. But the next emerging DNA perhaps needs more than just luck. Maybe more persistent and focused effort. I guess W. Brian Arthur's work has not small influence on its strategy. In fact, if I recall correctly, he is/was some kind of advisor to Google. Just my personal speculation.
- serge2k 10y ago> Bill Maris, the CEO of its venture capital arm, GV isn't google ventures doing pretty well though?
- jiaweihli 10y agoYou might find this an interesting read: http://www.recode.net/2016/12/5/13842608/former-google-ventures-ceo-raising-new-230-million-fund-focus-health-care http://www.recode.net/2016/12/5/13842608/former-google-ventu...
- Animats 10y ago“No one wants to face the reality that this is an advertising company with a bunch of hobbies.” Remember Nokia. They produced mobile phones with excellent quality, extreme ruggedness, good battery life, and good voice quality. Their manufacturing was highly automated and their costs were low. They focused on their core business. Recently, their CEO said "We did everything right, and we lost anyway". On the other hand, Google has repeatedly failed to develop a second big money-making product. They failed at social. They failed at fiber-to-the-home. Android is a loss leader to drive ad traffic. Automatic driving may pay off, but that is being a component supplier to an car company, not a high-profit business. Google's second venture into smartphones might be a success, but that remains to be seen.
- cobookman 10y agowhat about cloud & gsuite? Hardly a failure.
- bduerst 10y agoOr Play store. I think Alphabet's other revenues is up to 11% now, it's just not growing as fast as ad rev is.
- bgilroy26 10y agoMaps was certainly advertising driven, but it also changed many, many people's lives
- petra 10y ago>> Android is a loss leader to drive ad traffic. If one gathers all of their businesses which sell ads under "ads" , well, sure they have one business, the same as microsoft has only one business: "software". But i'm sure their different ad businesses might have different risk factors, so in totality, they're stable. And BTW, Android made $33B (probably mostly indirectly) according to the oracle trial. Also youtube is a $9B business growing at 20%(probably waiting for the shift of brand ads from tv). >> Automatic driving may pay off, but that is being a component supplier to an car company, not a high-profit business. Having control on Android, Google Maps, and Waze puts them in right place for people ordering transportation. Couple that with possible network and data effects, and brand of the self driving business and Google's possible big advantage on self driving cars could put them in a good place in the future self driving ecosystem, not just a component supplier.
- return0 10y agoAnd it's not only ad revenue, it's also tax-avoided profits.
- nemo44x 10y agoGoogle is an oil state. They setup shop and pretty much hit a cash gusher.
- nobrains 10y agoInnovation usually happens when there is scarcity of resources.
- omarchowdhury 10y agoAin't that the truth.
- mikebay 10y agoThey violate everyone's privacy, selling your information to anyone, spying you and hiding search results... Haha, go home Google. Your business is censorship and fake news. Pay your taxes to countries! Did I forgot to mention also that they are regulars in Bilderberg meetings. Lol!
- serge2k 10y ago> “No one wants to face the reality that this is an advertising company with a bunch of hobbies.” great line. > Many former X employees blame overexuberance on the part of Google’s marketing division for the hostile reception that greeted Google Glass it was $3000, hard to get, and what were people really going to do with it? Sure. Marketing. > He notes that although Glass was marketed to the public as the Explorer Edition, many people assumed it was a finished product. Fair point, but how many years are people supposed to eagerly wait? > The effort, known internally as Tableau and championed by Brin, had been a plan to create gigantic TV screens. what? lol.
- vidarh 10y agoWhen I worked at Yahoo (2003-2005) the talk was the same: Engineering, which dominated the company, largely thought Yahoo was a tech company. But Yahoo was an advertising and media company. Yahoo never quite managed to resolve that conflict, which rose straight to the top, and it kept causing stupid things like the massive amount of money that was poured into their own search engine instead of focusing on the content and services that actually had users continue to come back and stay within the network (e.g. Mail never made much money, but a large portion of users went to the Yahoo homepages to log into their e-mail, and a good portion would end up clicking on various news articles etc.) Lots and loss of engineering effort went into project that'd never have been greenlit if Yahoo had accepted earlier what it was. But Yahoo had a great deal of Google-envy at the point I was there, and it coloured a lot of decisions. At the same time, Yahoo didn't have the cash to operate like Google. E.g. where Google engineers could order servers by the dozens without justifying it, I had to present my arguments to a harware review group in Sunnyvale (I ran a team in Europe) to get a single new server to run the European billing system that processed millions of dollars worths of payments. So on one hand they wanted to be more like Google, on the other hand they didn't want to pay or it, and meanwhile what made Yahoo money was first and foremost the content side.
- mwexler 10y agoFunny, Microsoft used to talk this way in the 90s when IE and Windows ruled the roost. While they are still strong, they do now appear to worry more about financial discipline. Worrisome predictor for today's darlings?
- nojvek 10y ago> The flying saucers will have to pay for themselves. “If you work for me, you better understand that,” he says. While I'm all for commercialization. I think a lot of game changing technology takes a while to develop before they can be commercialized. But google having too much money can be a curse as well. Best innovation comes when you think like a cockroach to survive.
- paulddraper 10y agoReally? "Never" What about 18 months ago? > Google Earnings: Profits Soar As The Company Reins In Cost http://www.forbes.com/sites/greatspeculations/2015/07/20/google-earnings-profits-soar-as-the-company-reins-in-cost http://www.forbes.com/sites/greatspeculations/2015/07/20/goo... > Google shares surge on talk of cost discipline http://www.usatoday.com/story/tech/2015/07/16/google-earnings-second-quarter/30246847/ http://www.usatoday.com/story/tech/2015/07/16/google-earning... Whatever, keep the narrative.
- deleted 10y ago[deleted]
- jensakrom 10y agoAmazing...
- bane 10y agoOne of the problems with companies that have cash cow revenue streams is that it sometimes doesn't matter what kinds of decisions the executives make, poor or good, the money will keep rolling in...until one day it doesn't and nobody has a clue how to actually manage the rapidly sinking ship. I've been studying Atari for quite a while, there's so many interesting pieces to the company and their success and failure, and it's all been so well documented and autopsied that it makes for a marvelous case study that still has amazing applicability today.
- nkkar 10y agoAny reading recommendations?
- bane 10y agoBusiness is Fun (Vendel, Goldberg) is part one of hopefully a multipart, incredibly researched, history of the company. https://www.amazon.com/Atari-Inc-Business-Curt-Vendel/dp/0985597402 https://www.amazon.com/Atari-Inc-Business-Curt-Vendel/dp/098... The ANTIC podcast also has some absolutely incredible interviews with folks form the era: https://ataripodcast.libsyn.com/ https://ataripodcast.libsyn.com/ "Racing the Beam" is a more technical analysis of some of the early Atari platform development for the VCS/2600. This platform was Atari's cash cow and they failed to really pivot away from it. https://www.amazon.com/Racing-Beam-Computer-Platform-Studies/dp/026201257X/ref=sr_1_7?s=books&ie=UTF8&qid=1481255638&sr=1-7&keywords=atari https://www.amazon.com/Racing-Beam-Computer-Platform-Studies... These are probably good starting points.
- dgacmu 10y agoI think you can look back and see some things that Google has done successfully. Youtube turns out to have been a good buy. Google successfully managed the transition to mobile, which many questioned whether Google would be able to do ("Mobile first"). Most recently, Google has made a huge bet that their future is intrinsically tied in with machine intelligence ("AI first"). We'll get to watch over the next 5-10 years how that plays out. (It's probably already clear that there's a lot of power in an AI-first approach, but it's worth noting that this change didn't just happen with Sundar's blog post last month. A better way to look at it is to realize that if Google has been running their custom machine learning ASICs for over a year now, they must have started designing them well before that, which, to me, was amazingly early. Google acquired DeepMind in 2014.) Not all those bets will, or have to, work, as long as some of them work out really well. I'm curious to see what happens with VR, for example. But I think AI is the most obvious central bet, in the same that that mobile was beforehand.
- baccheion 10y agoThe problem with it's lack of financial discipline is that the money isn't going to anything worthwhile. Everything they've advertised they're investing in that seems to be worth something either fails to go anywhere, or was just outright BS. They essentially have a bunch of people doing nothing much in particular, going nowhere in particular, while acting on their whim and whatever their hand position happens to be on that day. It's even worse as they constantly try to claim they are about-- something greater. It's hilarious. It's not that they are wasting money (ie, doing something worth something but that may not provide any returns, or something big and unconventional but that doesn't seem relevant at the time), it's that they are wasting money (ie, wasting money). They are either doing what they're doing to make more money or to protect their revenue stream, or to be once again doing the dumbest thing. Nothing really gets funding unless it's going to make more money, or serve as good PR to distract from how full of it they are or to try to brush aside failure. These days, when their products fail, all I see is failure. That is, it probably took 2 years to develop whatever crap was released, rather than it being "early days" and them "trying many different things." They picked one thing, spent an eternity on it, pushed out absolute garbage, then failed. Everything else that went somewhere or that could go somewhere gets caught in political gridlock, as the idiots descend to try to claim credit, while really trying to be the cliche they've always been: stomp out anything that's going anywhere, because... <insert whiny bitching here>.
- randpeck 10y agoBrilliant article. Larry Page isn't impressed with Fiber because "it wasn’t game-changing enough,” and that “There’s no flying-saucer shit in laying fiber.” Definitely gives you a peak into the thought process of this giant.
- deleted 10y ago[deleted]
- kwijibob 10y agoGoogle has some killer products that aren't just about adsense for the web: Youtube - incredible future for revenue Google Docs/Spreadsheet/Slides - the future of productivity suites - easily monetisable when needed Android - dominating this space bodes very well They are gently providing an entire computing stack that covers all a simple user might need: android/chrome OS/chrome browser/cloud Yes they have a bunch of crazy hobbies. But they are dominating in a number of key spaces.
- throwawaygooglr 10y agoThis thread being here today is rather ironically timed, given that Google announced internally today it isn't giving its employees any Christmas gift for the first time in its corporate history, presumably because of the financial impact.
- pritambarhate 10y agoI think this article is trying to unnecessarily create issue out of something very obvious. It's very clear that Google's main source of revenue is ads. But that is backed by very strong products which are an integral part of billions of people's daily lives. Search, You Tube, Android, Gmail, Maps and a few others. As long as they maintain their lead in these products, their ad revenue is not going to go anywhere. What's even more encouraging is that most of these products are improving with great speed every year. They are fighting the Cloud Battle very hard. So I think it is OK that some of the big dreams they have tried like Google glass and autonomous cars have failed. One needs to take big risks to get big wins. I think if they stopped these moon shot projects then it will be a thing of big concern, then they would have stopped innovating. Innovation is what give the Google "brand" it's aura, which makes people believe that whatever Google produces must be good. It gives them the edge.
- stevage 10y agoHuh. Is "Alphabet" a pun? The "other bets" lose money, while the "alpha bet" (Google) makes lots.
- CM30 10y agoTo some degree, this is like anything else in life, isn't it? The more successful/skilled/good you are at anything, the less you have to worry about whether you're doing things the 'right' way. See for example, sports. A gifted athlete could quite easily defeat a far less gifted one with more 'technical knowhow' because they're simply more skilled by default and can hence make up for their inefficiencies or mistakes. Or maybe any RPG game ever made. Come across a super powerful character or grind your party 100 levels higher than everything else, and it doesn't matter what tactics you use; you're simply too powerful to lose. http://tvtropes.org/pmwiki/pmwiki.php/Main/ScissorsCutsRock http://tvtropes.org/pmwiki/pmwiki.php/Main/ScissorsCutsRock And the same obviously with companies, individuals and money. Enough money means even a lot of stupid decisions will work out well, whereas a competitor with much less will simply falter in the same situation.
- iamatworknow 10y ago>See for example, sports. A gifted athlete could quite easily defeat a far less gifted one with more 'technical knowhow' because they're simply more skilled by default and can hence make up for their inefficiencies or mistakes. This is a surprisingly good analogy. Look at Steph Curry in the NBA. He takes a ton of awful long range 3-point shots, but he also makes a ton of them (45.4% in 2015-2016 compared to league average 35.4%). But some people are arguing that he's actually a detriment to the future of basketball because kids are emulating him instead of learning fundamentals: >"Even watching this weekend, everyone is trying to hit the three and there are a number of big guys that are pretty good that aren't seeing the ball at all," Johnson said at an EYBL stop in Indianapolis in April. "It's like guards feel like they have to shoot the three to reach their goals, but it comes at the sacrifice of actually playing a team game. There's a lot of guys chucking a lot of bad shots without actually knowing how to get their teammates involved and create for other people." http://www.sbnation.com/nba/2016/6/13/11876304/stephen-curry-youth-basketball-aa-mark-jackson-warriors http://www.sbnation.com/nba/2016/6/13/11876304/stephen-curry...