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I was at Intel for a while and there was one glaring problem - they have one product that spins off a huge amount of cash. This means a few things: First, that
by Traster 7mo ago
I was at Intel for a while and there was one glaring problem - they have one product that spins off a huge amount of cash. This means a few things: First, that one product is really where the things that matter happen. But second, they have all this money and they don't know what to do with it, they can't spend it all on their core product because that looks terrible - they're already throwing off money, investing more probably just makes your company look bad (you're spending more to get the same revenue). SO instead you have to take that money and make bets. But not just any bets. You need a bet that (a) matters if it pays off, and (b) looks favourable compared to the core business. So you buy Mcafee and Altera and MobilEye, 5G was the future once...
So to take the Meta example, they need something that is going to have revenue upside similar to Meta advertising revenue (one of the most profitable things in the universe), and that has better margins that the advertising business (basically impossible).So the only logical thing to do is to make grotesquely large bets on things that are extremely speculative. You can't bet on things that are well known - because nothing known has the properties from earlier that you're looking for, and you can't bet small because you've got to convince people you're the pay off is of a similar size to your existing business.
In Intel's case they lost focus on the core business and so that died and their other bets didn't matter because the core business was dead. With Meta the core business in't dead, but it's only a matter of time before it's seriously threatened and so they're going to attack that threat with everything they've got - and they have a tonne of resources.
- einsteinx2 7mo agoSounds a lot like Google as well
- FartyMcFarter 7mo agoBut Google actually knows how to do research and how to apply it to products. Meta's AI research hasn't produced anywhere near as many state of the art products /revolutionary achievements.
- einsteinx2 7mo agoI was thinking more of their primary revenue source / money printer being their ads business like Meta then they also spend billions from it on all kinds of other bets.
- seneca 7mo ago> But Google actually knows how to do research and how to apply it to products. I have seen basically no evidence of this. Google knows how to do research to create technology. Google is pretty terrible at creating product though.
- mosura 7mo agoWhich is almost word for word the state Microsoft have been in for over 20 years. To the point it was a running joke at MSR.
- seneca 7mo agoI'm not sure Microsoft is good at creating technology OR products. Microsoft is good at enterprise sales.
- FartyMcFarter 7mo agoSince we're comparing to Meta, you just have to look at the state of their publicly facing products that feature AI. Google has better AI models (Gemini, Nanobanana) and they've integrated them successfully into way more products than Meta has. Meta spends a lot of money on AI research with little to show for it. As imperfect as Google may be, they're still doing much better.
- nemothekid 7mo agoGoogle knows how to do research - and at the very least lets other people figure out the products, and then becomes the #3 or #4 player. Both GCP and Gemini are products of this. Modern cloud was arguably built by Google (think Chubby, GFS, Bigtable as building blocks) - they just spent 10 years ceding it to Amazon before competing.
- vineyardmike 7mo agoIn 2026 we need to update our mental model of Google. Google has been wildly successful at adding diversification. Around 40% of Google’s profit (depending on the quarter) comes from non-search income. They build a wildly successful cloud platform, they’re expanding their subscription services, they’ve got enterprise offerings, etc The trick is that Google accepted that none of their other business would likely have the margins and volume that search has, but they did it anyways.
- einsteinx2 6mo agoInteresting I didn’t realize they had become so diversified.
- pjc50 7mo agoMan, activist shareholders should really start demanding that companies return money to them rather than setting it on fire with vanity projects.
- YCpedohaven 7mo ago[dead]
- alex1138 7mo agoThey already attacked it with everything they've got lmao As in, in 2012. They outright replaced people's email addresses in their profile (makes it harder to reach people outside the walled garden, makes it harder to transfer your credentials to a competing service) and I've heard Google+ links got blocked Zuckerberg is many things, not everything he's accused of (Trump/Cambridge Analytica) might be entirely accurate but he is at least partly a bit of a scumbag
- TheOtherHobbes 7mo agoSpending tens of billions on something that was never going to work is certainly meta.
- ytoawwhra92 7mo agoOr you could just return the profits to shareholders.