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Google did over $100B in revenue last year. A $100M revenue product would move the needle 0.1%. And that's just revenue - it's pretty unlikely the net margins
by mdorazio 8y ago
Google did over $100B in revenue last year. A $100M revenue product would move the needle 0.1%. And that's just revenue - it's pretty unlikely the net margins would beat Google's existing business lines. Meanwhile, it would require a significant amount of manpower, marketing, and support that would otherwise be spent on much larger profit centers. At a high level it just doesn't make sense - you'd need to be running dozens of such products to get any kind of return investors would care about, gumming up the org in the process.
- AnthonyMouse 8y agoThat is what spin offs are for. Let it be an independent company that you still own 49% of. If it fails, at least you got to sell the 51% stake first. If it succeeds, you still own 49% of it.
- mdorazio 8y agoThat doesn't solve the underlying problems of profitability and minimal bottom line impact. A $100M company is unlikely to be profitable for several years, during which time Google has to spend money to get it off the ground and suffer a brain drain from existing profitable products to an unproven subsidiary. Meanwhile, "success" here would still mean < 1% impact to anything shareholders care about... years down the line. It makes more sense to just add some funding to Google Ventures.