4 ms·

Most probably agree that places like Google are bloated. There's a lot of people there that are highly paid that don't add much value. Even if you ignore produc

by bko 4y ago

Most probably agree that places like Google are bloated. There's a lot of people there that are highly paid that don't add much value. Even if you ignore products that are unprofitable, there are people that really don't do much and get paid a lot to do it, which is kind of odd in a competitive market. My (conspiracy?) theory is that payrolls are padded by design. Suppose Google gets out of the unprofitable aspects of their business and cuts back drastically. You can probably get rid of 50% of people while keeping 90% of revenue. You could say that its not forward looking as these "other bets" could pay off in the medium to long term, but this has been going on for a while and it's pretty obvious by now that other bets are almost always bad, definitely not worth the investment. Even if they are, a place like Google doesn't have the right structure to compete in these markets. Things aren't dire. I remember a portion of Chaos Monkeys where the author describes Google+ as an existential threat to Facebook, so he drives to the Google parking lot on a weekend and finds no one there. Obviously Google+ wasn't a serious enough concern to Google that would require weekend hours so the author concluded (correctly) that its not the existential threat that Facebook thought it was. So what would efficiency look like? Well, Google's gross profit margins are 55+% and their net profit margin is around 25%. It's hard to find those margins in other competitive industries. So what would their margin be if they cut expenses by 50%? They would have uncomfortably high margins that look bad to regulators. Similarly they would have a ton of excess cash that they would have to pay out in dividends or stock buybacks (also politically unpopular). To add to that, managers would reign over a smaller domain. You see the same behavior at utilties companies where they're allowed to charge cost + markup. They have no incentive to bring costs down if it just means they have to charge less. Obviously there are no price controls affecting Google, but if their margins shot up to 100%, it wouldn't look good. So a place like Google allows for inefficiencies and bloated payrole because it keeps everyone happy (other than shareholders) and it keeps them off the radar of more strict regulation. https://www.macrotrends.net/stocks/charts/GOOG/alphabet/profit-margins https://www.macrotrends.net/stocks/charts/GOOG/alphabet/prof...

wahnfrieden 4y ago
One reason is that google acquires to squash competition rather than always to obtain their talent for anything else
- bko 4y ago
  Do you mean competition in terms of employees (hire so they don't work elsewhere) or companies? The employee thing is silly IMO. It's just a losing game and the number of engineers is very high. And the hard part of creating a killer app isn't necessarily the engineering requirements. Sure some hard problems require a few dozen people out of maybe a few thousand, but most killer apps are relatively simple CRUD apps that require relatively basic engineering. Finding product market fit is the hardest part and that's not necessarily an engineering problem. There will always be people that want to leave FAANG for other opportunities even taking a huge paycut. And most apps don't require tens of thousands of engineers to create. In terms of acquiring successful products, maybe. I do think its weird when companies pay big money to buy a user base of a few hundred k to millions and shut it down. An example is Twitter buying Vine, but that didn't prevent TikTok from being invented. But there are counter examples of course like Meta buying WhatsApp and Instagram. Maybe FAANG does do that but its a bad strategy and is wasteful
- yborg 4y ago
  This is true of all the tech whales, it's actually smart business in a climate where antitrust enforcement doesn't exist. Paying a few million dollars a year for a team of engineers to do nothing for a few years to eliminate a startup that could have carved a couple of hundred million dollars a year out of Google's top line is actually a great return on investment.
xtracto 4y ago
The sad thing is that in the last 10 years I cannot name ONE new Google/Alphabet product that has turned into a "cash cow" for Google, or that has been a wide success. Chromecast, Pixel and Google Cloud are the most high profile, and I feel that only Google Cloud is the potential cash-cow (is the business unit profitable?) For a company as large as Google and full of so many clever people, why has this happened?
- deleted 4y ago
  [deleted]
- 10000truths 4y ago
  Just because you have money doesn’t mean you can consistently come out with bangers. Google’s claim to fame was its search - everything else was either acquired (e.g. YouTube), a reaction to trends (e.g. Google+), or a small side thing, made moderately popular by Google branding/marketing. Same with Facebook.
  - xtracto 4y ago
    Right, but even Facebook, Microsoft and Apple have had new products/business-units in the last 10 years like Oculus, Apple Watch, Minecraft, LinkedIn. Either through acquisitions or new product development.
    - xtracto 4y ago
      Forgot AirPods, which is being discussed in a separate post.
- safdahfslh23s 4y ago
  Maybe Google Pixel?
- UncleMeat 4y ago
  Photos has a billion users and was released in 2015.
plainnoodles 4y ago
> so he drives to the Google parking lot on a weekend and finds no one there. Obviously Google+ wasn't a serious enough concern to Google that would require weekend hours so the author concluded (correctly) that its not the existential threat that Facebook thought it was. This line of reasoning was viscerally distressing for me to read. Both for what it implies the FB guy thinks about what productivity/seriousness looks like, and for the brittleness of the reasoning used to draw his conclusion.
- UncleMeat 4y ago
  Especially with the benefit of hindsight, imagine thinking that the reason why Google+ failed was because the engineers weren't working enough hours.
  - md_ 4y ago
    Very much what you said. I'd love an explanation of what technical delivery failures--not the right functionality, or delivered too late--the author thinks led to G+ not beating Facebook.
    - bko 4y ago
      I think its a bit of a resources curse. Google+ goes live and instantly they have tens to hundreds of millions of users. If you bootstrapped a social media company and you have that many users, you'd likely read it as a signal that you're doing something right. But with Google that's baked in to their brand and connections with existing services. So it takes a lot of skill to tease out signal from noise. How many people actually find this valuable and how can we iterate? Again, its relatively straight forward for most companies by tracking a few key metrics, but with Google the dataset it just polluted. It also wasn't existential for their survival. If Facebook failed, it would have brought down everything, so they were very much invested in the product and geared all resources to ensure survival. With Google+ it was just a feather in the cap and not a priority
      - md_ 4y ago
AlbertCory 4y ago
> he drives to the Google parking lot on a weekend and finds no one there. Not true! People were there to use the free laundry machines and the Fitness Centers. And even eat at the one cafe that was open.

by bko 4y ago

wahnfrieden 4y ago

One reason is that google acquires to squash competition rather than always to obtain their talent for anything else

bko 4y ago
Do you mean competition in terms of employees (hire so they don't work elsewhere) or companies? The employee thing is silly IMO. It's just a losing game and the number of engineers is very high. And the hard part of creating a killer app isn't necessarily the engineering requirements. Sure some hard problems require a few dozen people out of maybe a few thousand, but most killer apps are relatively simple CRUD apps that require relatively basic engineering. Finding product market fit is the hardest part and that's not necessarily an engineering problem. There will always be people that want to leave FAANG for other opportunities even taking a huge paycut. And most apps don't require tens of thousands of engineers to create. In terms of acquiring successful products, maybe. I do think its weird when companies pay big money to buy a user base of a few hundred k to millions and shut it down. An example is Twitter buying Vine, but that didn't prevent TikTok from being invented. But there are counter examples of course like Meta buying WhatsApp and Instagram. Maybe FAANG does do that but its a bad strategy and is wasteful
yborg 4y ago
This is true of all the tech whales, it's actually smart business in a climate where antitrust enforcement doesn't exist. Paying a few million dollars a year for a team of engineers to do nothing for a few years to eliminate a startup that could have carved a couple of hundred million dollars a year out of Google's top line is actually a great return on investment.

xtracto 4y ago

The sad thing is that in the last 10 years I cannot name ONE new Google/Alphabet product that has turned into a "cash cow" for Google, or that has been a wide success. Chromecast, Pixel and Google Cloud are the most high profile, and I feel that only Google Cloud is the potential cash-cow (is the business unit profitable?) For a company as large as Google and full of so many clever people, why has this happened?

deleted 4y ago
[deleted]
10000truths 4y ago
Just because you have money doesn’t mean you can consistently come out with bangers. Google’s claim to fame was its search - everything else was either acquired (e.g. YouTube), a reaction to trends (e.g. Google+), or a small side thing, made moderately popular by Google branding/marketing. Same with Facebook.
- xtracto 4y ago
  Right, but even Facebook, Microsoft and Apple have had new products/business-units in the last 10 years like Oculus, Apple Watch, Minecraft, LinkedIn. Either through acquisitions or new product development.
  - xtracto 4y ago
    Forgot AirPods, which is being discussed in a separate post.
safdahfslh23s 4y ago
Maybe Google Pixel?
UncleMeat 4y ago
Photos has a billion users and was released in 2015.

plainnoodles 4y ago

> so he drives to the Google parking lot on a weekend and finds no one there. Obviously Google+ wasn't a serious enough concern to Google that would require weekend hours so the author concluded (correctly) that its not the existential threat that Facebook thought it was. This line of reasoning was viscerally distressing for me to read. Both for what it implies the FB guy thinks about what productivity/seriousness looks like, and for the brittleness of the reasoning used to draw his conclusion.

UncleMeat 4y ago
Especially with the benefit of hindsight, imagine thinking that the reason why Google+ failed was because the engineers weren't working enough hours.
- md_ 4y ago
  Very much what you said. I'd love an explanation of what technical delivery failures--not the right functionality, or delivered too late--the author thinks led to G+ not beating Facebook.
  - bko 4y ago
    I think its a bit of a resources curse. Google+ goes live and instantly they have tens to hundreds of millions of users. If you bootstrapped a social media company and you have that many users, you'd likely read it as a signal that you're doing something right. But with Google that's baked in to their brand and connections with existing services. So it takes a lot of skill to tease out signal from noise. How many people actually find this valuable and how can we iterate? Again, its relatively straight forward for most companies by tracking a few key metrics, but with Google the dataset it just polluted. It also wasn't existential for their survival. If Facebook failed, it would have brought down everything, so they were very much invested in the product and geared all resources to ensure survival. With Google+ it was just a feather in the cap and not a priority
    - md_ 4y ago

AlbertCory 4y ago

> he drives to the Google parking lot on a weekend and finds no one there. Not true! People were there to use the free laundry machines and the Fitness Centers. And even eat at the one cafe that was open.