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No, Google would easily survive if they focused on maintaing existing services and making the headcount stable instead of increasing. Most businesses in the wo

• emsy 5y ago
  According to Peter Thiel, Google is a de-facto monopoly in search-engines and online advertising (apart from social media). I think that's an accurate take. They are in this position because of their "winner takes it all" attitude. So to say they would "easily survive" is short sighted as well as ignoring where Google came from.
• mehrdada 5y ago
  Sure, but the stock price would tank (note that the current multiple assumes growth), employees would leave due to poor compensation, and starts a downward spiral. I am not sure if that is called survival. And no, most businesses in the world do not survive that long. Lifetime of businesses are often much shorter than lifetime of humans. Even many of them that look like have survived may share the name only and are effectively new businesses.
  • 8note 5y ago
    You could compensate the employees with things other than stock
  • abdabab 5y ago
    > employees would leave due to poor compensation With a gross profit of 100 billion dollars a year [1] they can easily outbid the market compensation if they want to and stay with current revenue. But again how many Jeff Deans can one company need before it calls itself The Man? [1] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/gross-profit https://www.macrotrends.net/stocks/charts/GOOG/alphabet/gros...
    • deleted 5y ago
      [deleted]
    • lotsofpulp 5y ago
      Why would gross profit be the relevant metric here and not net profit?
      • abdabab 5y ago
        You’re right. 63 billion dollars of net profit per year is a better metric.
  • hadlock 5y ago
    If the stock price went down, they would just pay employees in cash, which is a slightly less tax-advantaged solution.
    • superdude12 5y ago
      How are RSUs tax advantaged?
      • SOLAR_FIELDS 5y ago
        The award is taxed at the same rate, but theoretically (in the States, at least) you can hold them for a year after they vest and only pay the much lower long term tax on the appreciation of their value. In order to easily compare apples to apples this assumes that in the alternative to getting RSU's that you would actually get compensated more income instead in proportion to the value increase of the company. An equivalent would probably be to compare a cash bonus that is directly tied to the value of the stock vs the equivalent gain in RSU. All else being equal, the RSU gain is more tax advantageous if you have held the RSU for a year or longer before liquidating the position.
        • lotsofpulp 5y ago
          That is not a tax advantage. It is simply paying long term capital gains tax rate on long term capital gains. Companies are not paying with RSUs because of a tax advantage, they are paying because it is cheaper than paying with cash.
          • SOLAR_FIELDS 5y ago
            While it's unclear whether grandparent was referring to tax advantages for the company vs. the individual, I'm not sure I understand your comment about lack of tax advantage in the context of individual awards. Scenario A: Company X gives me a sign-on bonus of $10,000 and an agreement to bonus me $100 * y%, where y is the increase in value of the company. Scenario B: Company X awards me $10,000 of RSU that vests after 1 year. Let's say I'm in the highest bracket, $523,601 or more in income. The tax rate for that bracket for 2021 is 37%. After 1 year, the stock price goes up 100%. In Scenario A, I have vested RSU's worth $20,000. If I sell $10,000 of that (the gains only), I pay short term capital gains equivalent to my tax bracket, or $3700. If I hold that stock for 1 year after vesting and the stock price stays exact same for the next year, I pay the long term rate of the highest bracket which is currently 20%, or $2,000. In Scenario B, I get a bonus of $10,000 just the same, but there is no situation where I'm not stuck with paying $3,700 on that $10,000 gain. In Scenario A, I can save almost 50% of the tax bill by holding it for a year.
  • nuerow 5y ago
    > Sure, but the stock price would tank (note that the current multiple assumes growth), employees would leave due to poor compensation, and starts a downward spiral. This assertion presumes that it is impossible to propose any form of compensation that's enticing without involving stock. This is not only baseless but also flies in the face of reality, as other tech companies, including other FAANGs, barely offer any stock and still manage to attract top talent.
    • gregorygoc 5y ago
      > This is not only baseless but also flies in the face of reality, as other tech companies, including other FAANGs, barely offer any stock and still manage to attract top talent. Which one?
      • jw_mc 5y ago
        Netflix is known for having all-cash offers.
        • saagarjha 5y ago
          Netflix is pretty much the only FAANG that does that. Every other large tech company has generous stock grants, and as you pass a couple years of experience your stock will generally be larger than your cash compensation.
          • Sebb767 5y ago
            > Netflix is pretty much the only FAANG that does that. Netflix is also 20% of FAANG companies, so that's not as lonely as it sounds.
            • saagarjha 5y ago
              Right, but they're a strange company that just happens to be in FAANG. Pretty much every other large company, in the FAANG acronym or not, will give you equity.
  • caoilte 5y ago
    They could achieve good multiples by paying dividends. The question is whether they're wasting as much money trying to grow as they are saving by keeping their profits offshore (and not paying tax on them). I don't know, but at some point the answer may become obvious.
    • lotsofpulp 5y ago
      Owners do not want dividends. I do not want dividends from my tech stocks if I’m simply going to turn around and reinvest in them. That is just paying extra short term capital gains taxes when you do not have to.
      • sokoloff 5y ago
        Qualified dividends (which represent the vast majority of them) are taxed as long-term capital gains to avoid this concern.
        • deleted 5y ago
          [deleted]
        • lotsofpulp 5y ago
          True, but it does not seem like investors are clamoring for dividends either way. Personally, I would just take the dividend money and reinvest it so it’s all the same to me.
  • mbesto 5y ago
    This is what people seem to forget. A company that doesn't grow for all intents and purposes is a dead company. Or in the M&A world we call it "distressed". It doesn't matter how profitable you are if you don't get grow there are serious implications - employee motivation, loss of talent, erosion of customer services, etc.
    • discordance 5y ago
      I don't see how employee motivation, loss of talent, erosion of customer services are related to the need for unyielding year on year growth. There are companies out there, private ones, where their customers are happy, their employees are happy (most of the time) and their retention is high.
      • Lamad123 5y ago
        I hate how hn top threads usually degenerate into something totally unrelated to the original posts.
      • burntoutfire 5y ago
        Without growth, the only way to get promoted is to get a spot of some higher-up who left the company (or retired/died). Whereas, in growing companies, there are new senior/management positions created all the time, to account for the growth - so, getting promoted is easier. Ambitious, hard working people like promotions, so they gravitate towards growing companies and not stale companies.
        • crgwbr 5y ago
          Ambition and hard work are hardly the same thing. Many people work hard at their job, are paid a good wage, and are satisfied with their job, rather than constantly seeking a promotion. Constant promotion seeking isn’t admirable, it’s just greed.
        • DubiousPusher 5y ago
          > Ambitious, hard working people like promotions Ambitious maybe (though that's nearly the definition of ambitious). Hardworking, not necessarily. I know a cement guy that you have never in your life worked a harder day than who has never received a promotion nor even sought one.
• sockpuppet_12 5y ago
  > Maintaining existing services Everything a capitalist market teaches us is against this, if they don't obsolete themselves before somebody else can then they will fall into obscurity and ultimately lose what they've built, just like other companies before it who didn't. FAANGS companies aren't at fault for when they're winning a game which is rigged from the start.
  • kcartlidge 5y ago
    > if they don't obsolete themselves before somebody else can then they will fall into obscurity and ultimately lose what they've built, just like other companies before it who didn't And if they do fall into obscurity and ultimately lose what they've built? - The companies who take their place service the customers/clients they used to have - The workforce either coast along or move to the (presumably growing) new big boys - The investors should spot the decline and trade away The only downside is the company - the brand - slowly dies off. For most of us that is fine; the only parties to all this who will actually lose out are the ultimate beneficiaries/owners, and I can live with that. And presumably they've extracted masses from the company by then anyway. Its both cultural and economics, but the economics only affect the masters and not the minions (who find alternatives) and the cultural aspect is misguided - individual companies/brands are ephemeral and irrelevant so we the minions should not be invested in protecting them at the destructive (to society) costs of scale.
• gotmedium 5y ago
  >most business in the world survive While this may be the case for capital-intensive businesses (oil, consumer goods, energy), this is usually not the case for intangible-asset businesses (media, tech). In the former, the assets will generate cashflow, whereas in the latter it's a people-centric model What was the last time you chose yahoo over google or altavista over google? Google was always greedy, but when it was small it was cool to be the disruptor. Now it's perceived as only greedy. This is typically the case for any successful company (from HP, IBM, to the new 'big tech'). Good (related) book recommendation btw: capitalism without capital
• burntoutfire 5y ago
  > and no market is really a "winner takes it all" Market for OSes for PCs (not Macs) is a great example. Windows has what, 98% market share there? It got there thanks to the dynamics of this particular market, which is totally a "winner takes all" one. In particular, if Microsoft were more relaxed in 80ties and 90ties, there likely would not be Microsoft or Windows at all today, and everybody'd be using Os/2 Warp or BeOS or something else on our PCs.
  • im3w1l 5y ago
    > OSes for PCs (not Macs) If you slice the market thin enough anything can be a monopoly. This particular distinction seems pretty arbitrary to me.
    • ghaff 5y ago
      I agree but even if you throw Macs in there, the Windows marketshare is probably still over 90%. Maybe a bit lower if you include Chromebooks too.
    • erik_seaberg 5y ago
      You could buy a computer with MacOS installed. You almost couldn’t buy a computer with OS/2 or BeOS installed, because Microsoft would threaten your OEM with a punitive price hike for Windows licenses the majority expect.
    • burntoutfire 5y ago
      There are billions of PCs in the world, it's hardly a thin slice.
• drclau 5y ago
  > No, Google would easily survive if they focused on maintaing existing services and making the headcount stable instead of increasing. No such thing. In capitalism you are either growing or dying. Stagnation means others will grow around you, and relative to them you are shrinking in the same market. Thus, stagnating == dying.