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Thought experiment: A Google team develops a search algorithm improvement that increases the quality of results by an order of magnitude, but reduces Adwords re

Thought experiment: A Google team develops a search algorithm improvement that increases the quality of results by an order of magnitude, but reduces Adwords revenue by 50%. Would management allow that improvement to be deployed to production? Wherever you make your money, that's your business. Google's customers are advertisers rather than users, a fact that becomes readily apparent if you ever need customer support. The PR department can spin it however they like, but the accounts department see the truth in red and black.

rock_hard 9y ago
You are not gonna like this, but Google as any other healthy company would ship the improvement and take the short term revenue hit...they do so all the time! The incentives are well aligned here because it’s proven that if you improve the product people will use it more in the long term! Facebook just announced such thing a couple days ago...they are taking a huge hit in time spend (and therefore ad revenue) to increase meaningful interactions between friends and family’s.
- lovich 9y ago
  What you are suggesting is against so much of the current american business culture that I am going to have to request some evidence here. A consistent complaint about any publicly traded company is that they are incredibly short sighted and focused on quarterly results as that is all shareholders care about. What you have stated is that none of that is true and that everyone else is incorrect about corporate culture
  - rock_hard 9y ago
    Take it from the man himself then: https://www.facebook.com/zuck/posts/10104413015393571 https://www.facebook.com/zuck/posts/10104413015393571 I personally think there is a huge difference between the old economy and how the new players play the game...it’s really what gives the later a competitive edge in the first place, being more people focused instead of money. It just happens to be that when you do that as an outcome you end up building the most valuable companies in the world!
    - cpeterso 9y ago
      Facebook is just reacting to reports about fake news and Russian trolls. They don't want their users to be turned off of Facebook, so they're trying to mitigate that threat.
- oblio 9y ago
  > You are not gonna like this, but Google as any other healthy company would ship the improvement and take the short term revenue hit...they do so all the time! Only because they are sitting on a mountain of cash. Let’s see if a downturn has them losing a ton of money. The safe bet is on them doing what almost big company does: fight for their core market and avoid risks.
karprabbimiller 9y ago
Thought experiment flawed assumptions. Can't reduce Adwords revenue by 50% overnight (unless by a bug). Think advertisers set budgets, they just get spent on different searches. What could be reduced is the quality, and that could lead to gradually losing of revenue over time. So you have a trade-off between increase of quality here and decrease of quality there. So it really boils down to the ratio of these two quality changes.

rock_hard 9y ago

You are not gonna like this, but Google as any other healthy company would ship the improvement and take the short term revenue hit...they do so all the time! The incentives are well aligned here because it’s proven that if you improve the product people will use it more in the long term! Facebook just announced such thing a couple days ago...they are taking a huge hit in time spend (and therefore ad revenue) to increase meaningful interactions between friends and family’s.

lovich 9y ago
What you are suggesting is against so much of the current american business culture that I am going to have to request some evidence here. A consistent complaint about any publicly traded company is that they are incredibly short sighted and focused on quarterly results as that is all shareholders care about. What you have stated is that none of that is true and that everyone else is incorrect about corporate culture
- rock_hard 9y ago
  Take it from the man himself then: https://www.facebook.com/zuck/posts/10104413015393571 https://www.facebook.com/zuck/posts/10104413015393571 I personally think there is a huge difference between the old economy and how the new players play the game...it’s really what gives the later a competitive edge in the first place, being more people focused instead of money. It just happens to be that when you do that as an outcome you end up building the most valuable companies in the world!
  - cpeterso 9y ago
    Facebook is just reacting to reports about fake news and Russian trolls. They don't want their users to be turned off of Facebook, so they're trying to mitigate that threat.
oblio 9y ago
> You are not gonna like this, but Google as any other healthy company would ship the improvement and take the short term revenue hit...they do so all the time! Only because they are sitting on a mountain of cash. Let’s see if a downturn has them losing a ton of money. The safe bet is on them doing what almost big company does: fight for their core market and avoid risks.

karprabbimiller 9y ago

Thought experiment flawed assumptions. Can't reduce Adwords revenue by 50% overnight (unless by a bug). Think advertisers set budgets, they just get spent on different searches. What could be reduced is the quality, and that could lead to gradually losing of revenue over time. So you have a trade-off between increase of quality here and decrease of quality there. So it really boils down to the ratio of these two quality changes.