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It is interesting to see the low revenue, slow revenue growth (~20% YoY), and quickly growing expenses from "Other Bets". If the Alphabet model made sense, I'd

It is interesting to see the low revenue, slow revenue growth (~20% YoY), and quickly growing expenses from "Other Bets". If the Alphabet model made sense, I'd expect to see a company starting to clearly take off after 5 years. The data shows the opposite.

drcode 7y ago
I think part of the issue is that their "very long bets" (i.e. AI and self driving) have shown enough progress to now be merely "long bets" now which increases R&D expenses and means GOOG is essentially doubling down on the future via "other bets" in lieu of nearer-term revenue. Time will tell if that's a good strategy.
- sytelus 7y ago
  It's not very long bets but very few bets. The YC model has shown us that success is highly unpredictable and if you want to have big winners, make a lot of small bets. This is exactly the Nasim Taleb's philosophy and other well-known approaches to cultivating the long tail and outliers. Google actually had right model 15 years ago where they were churning out one product after another and today's big winners like Gmail and Maps are the survivors of that era. The story goes that Larry Page went to Steve Jobs and Jobs told him to cut down on all the random projects and do fewer things. Unfortunately what works for Apple apparently doesn't work for others.
riyadparvez 7y ago
People constantly criticizing companies not taking long-term bets. When some company does take long-term bets, then some internet expert come along and find some arbitrary timeline to succeed without any justification and start criticizing without offering anything any substantial. I wish we can have more thoughtful discussion, instead of Twitter style self aggrandizing comments.
- wsetchell 7y ago
  Google takes large long-term bets that are closely related to their core business / competency. Some of those seem to be clearly working (see Cloud, Deepmind). As a shareholder, I want to see more of those. Back when I was at Google, X (which many Other Bets came from) had a goal of all their projects having meaningful impact in 10 years. They've been working on Wing and Waymo for close to 10 years now. Those projects are not yet meaningfully impacting many people. As an armchair CEO, I have doubts about the compensation (more salary / less equity vs startups) and funding (fewer choices funding sources for the companies, weird incentives for the investors vs VC funds) model for "Other Bets". Based off of that and the lack of results, I think they should force the Other Bets to stand on their own vs handing them more cash to burn.
  - why_only_15 7y ago
    It's true they haven't had a lot of real world impact, but it seems to be widely recognized in self-driving spheres that Waymo is #1, and they're valued at $100B (https://www.bloomberg.com/news/articles/2019-09-27/waymo-valuation-slashed-on-autonomous-vehicle-tech-delays?sref=bhr1qOJe https://www.bloomberg.com/news/articles/2019-09-27/waymo-val...) which seems like a pretty good return. I think it's fair for them to continue plowing money into Waymo when the money they've put in so far people think could have returns.
    - wsetchell 7y ago
      Waymo has the best technology in self driving. They have not deployed their tech at scale, when competitors (Tesla) has widely deployed worse technology. Even if they deploy their tech widely, it isn't clear it will generate significant revenue/profit. It might not be that expensive (think less than 1B) to build a good enough self driving car in 10 years. That'd create competition and drive down prices. Someone else might figure out how to capture the value of self driving cars too. Maybe the profitable parts of self driving cars are the "apps" you can build once self driving cars are cheap. I wouldn't invest in Waymo at 100B until they have a real business with real revenue and a real moat to protect that business.
- scarface74 7y ago
  You don’t find it disconcerting that none of Google’s non advertising bets have been successful. Compare Google’s revenue and profit mix to Amazon, Apple and Microsoft.
  - webpaymentsguy 7y ago
    I have rejuvenated confidence in Google after seeing the push on Pixel phones and Nest devices, though that confidence still isn't very high.
    - scarface74 7y ago
      How long has Google been selling their own phones without making a dent in the market? It’s estimated that Google sold between 10-12 million Pixels last year (https://www.zdnet.com/article/pixel-3-by-the-numbers-googles-flagship-phone-was-a-flop/ https://www.zdnet.com/article/pixel-3-by-the-numbers-googles...) It’s estimated that Apple sold four times as many in one quarter (https://www.gartner.com/en/newsroom/press-releases/2019-11-26-gartner-says-global-smartphone-demand-was-weak-in-thi https://www.gartner.com/en/newsroom/press-releases/2019-11-2...) And Samsung sold twice as many as Apple.
      - sytelus 7y ago
        I want to get on the Pixel phones but every time I dig details of the latest models, I get turned off. They seem to be always one generation behind, For example, Pixel's highest memory model is always 2nd highest for iPhone and now Pixel can be expected to carry the camera system of iPhone 10 instead of 11 Pro. All these show off in their unveiling events. Google Android events are often held in venues that are ted better than the high school conference room as emergency meetings with amaturish audio/video system. It's as if they have determined that no one is watching this so why even bother. To me, iPhone always felt like they work hard to be a state of the art while Android is something that the rest of the world would have to buy anyway due to lower cost. Given the available cash and talent, they can do MUCH better.
      - ksec 7y ago
pfarnsworth 7y ago
20% YoY for a company this size is ridiculous. If anything it shows the power of their market share and position.
- wsetchell 7y ago
  Overall revenue going up 20% YoY is amazing. The other bets going up 20% YoY is disappointing.

drcode 7y ago

I think part of the issue is that their "very long bets" (i.e. AI and self driving) have shown enough progress to now be merely "long bets" now which increases R&D expenses and means GOOG is essentially doubling down on the future via "other bets" in lieu of nearer-term revenue. Time will tell if that's a good strategy.

sytelus 7y ago
It's not very long bets but very few bets. The YC model has shown us that success is highly unpredictable and if you want to have big winners, make a lot of small bets. This is exactly the Nasim Taleb's philosophy and other well-known approaches to cultivating the long tail and outliers. Google actually had right model 15 years ago where they were churning out one product after another and today's big winners like Gmail and Maps are the survivors of that era. The story goes that Larry Page went to Steve Jobs and Jobs told him to cut down on all the random projects and do fewer things. Unfortunately what works for Apple apparently doesn't work for others.

riyadparvez 7y ago

People constantly criticizing companies not taking long-term bets. When some company does take long-term bets, then some internet expert come along and find some arbitrary timeline to succeed without any justification and start criticizing without offering anything any substantial. I wish we can have more thoughtful discussion, instead of Twitter style self aggrandizing comments.

wsetchell 7y ago
Google takes large long-term bets that are closely related to their core business / competency. Some of those seem to be clearly working (see Cloud, Deepmind). As a shareholder, I want to see more of those. Back when I was at Google, X (which many Other Bets came from) had a goal of all their projects having meaningful impact in 10 years. They've been working on Wing and Waymo for close to 10 years now. Those projects are not yet meaningfully impacting many people. As an armchair CEO, I have doubts about the compensation (more salary / less equity vs startups) and funding (fewer choices funding sources for the companies, weird incentives for the investors vs VC funds) model for "Other Bets". Based off of that and the lack of results, I think they should force the Other Bets to stand on their own vs handing them more cash to burn.
- why_only_15 7y ago
  It's true they haven't had a lot of real world impact, but it seems to be widely recognized in self-driving spheres that Waymo is #1, and they're valued at $100B (https://www.bloomberg.com/news/articles/2019-09-27/waymo-valuation-slashed-on-autonomous-vehicle-tech-delays?sref=bhr1qOJe https://www.bloomberg.com/news/articles/2019-09-27/waymo-val...) which seems like a pretty good return. I think it's fair for them to continue plowing money into Waymo when the money they've put in so far people think could have returns.
  - wsetchell 7y ago
    Waymo has the best technology in self driving. They have not deployed their tech at scale, when competitors (Tesla) has widely deployed worse technology. Even if they deploy their tech widely, it isn't clear it will generate significant revenue/profit. It might not be that expensive (think less than 1B) to build a good enough self driving car in 10 years. That'd create competition and drive down prices. Someone else might figure out how to capture the value of self driving cars too. Maybe the profitable parts of self driving cars are the "apps" you can build once self driving cars are cheap. I wouldn't invest in Waymo at 100B until they have a real business with real revenue and a real moat to protect that business.
scarface74 7y ago
You don’t find it disconcerting that none of Google’s non advertising bets have been successful. Compare Google’s revenue and profit mix to Amazon, Apple and Microsoft.
- webpaymentsguy 7y ago
  I have rejuvenated confidence in Google after seeing the push on Pixel phones and Nest devices, though that confidence still isn't very high.
  - scarface74 7y ago
    How long has Google been selling their own phones without making a dent in the market? It’s estimated that Google sold between 10-12 million Pixels last year (https://www.zdnet.com/article/pixel-3-by-the-numbers-googles-flagship-phone-was-a-flop/ https://www.zdnet.com/article/pixel-3-by-the-numbers-googles...) It’s estimated that Apple sold four times as many in one quarter (https://www.gartner.com/en/newsroom/press-releases/2019-11-26-gartner-says-global-smartphone-demand-was-weak-in-thi https://www.gartner.com/en/newsroom/press-releases/2019-11-2...) And Samsung sold twice as many as Apple.
    - sytelus 7y ago
      I want to get on the Pixel phones but every time I dig details of the latest models, I get turned off. They seem to be always one generation behind, For example, Pixel's highest memory model is always 2nd highest for iPhone and now Pixel can be expected to carry the camera system of iPhone 10 instead of 11 Pro. All these show off in their unveiling events. Google Android events are often held in venues that are ted better than the high school conference room as emergency meetings with amaturish audio/video system. It's as if they have determined that no one is watching this so why even bother. To me, iPhone always felt like they work hard to be a state of the art while Android is something that the rest of the world would have to buy anyway due to lower cost. Given the available cash and talent, they can do MUCH better.
    - ksec 7y ago

pfarnsworth 7y ago

20% YoY for a company this size is ridiculous. If anything it shows the power of their market share and position.

wsetchell 7y ago
Overall revenue going up 20% YoY is amazing. The other bets going up 20% YoY is disappointing.