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Depends solely on the focus. If the focus is 'push limits of human knowledge', then Google is going to be fine. If the focus is 'Increase marketshare in industr

by chime 14y ago

Depends solely on the focus. If the focus is 'push limits of human knowledge', then Google is going to be fine. If the focus is 'Increase marketshare in industries [X] by [Y%]', then it is too short-sighted and sooner or later, will catch up.

jonnathanson 14y ago
More than 97% of Google's revenues have always come from advertising (give or take a few percentage points). This goes back to the pre-IPO days. It's all well and good to say that Google is about "pushing the limits of human knowledge," but when you're a public company with a responsibility to generate return on capital, you need to protect and grow the golden goose. Now, it's perfectly valid -- maybe even necessary -- to look at Google's situation and declare it highly vulnerable. Any company that relies to such a singular extent on one product is in a precarious situation, because any fundamental disruption of that one product's market will sink the entire ship. Historically, Google had attempted to future-proof itself by functioning like an AdWords-subsidized R&D lab: using its massive and easy profits to pay for all sorts of cool, out-there, innovative technologies. But over the years, none of these technologies was proving itself commercially viable in a meaningful way. So Google could be forgiven for shifting to address the threat of social in general, and Facebook in particular, to its core advertising business. To put it another way: when Google had no meaningful competitors, it could afford to play around with its money. When a serious competitor finally emerged, Google decided to put the toys away and focus. It's easy to apply 20/20 hindsight and say that Google+ was never going to be the answer. But that wasn't always obvious. In fact, I remember when Google+ was first running its invite-only beta, and the HN community was singing its praises. And to this day, social integration with search seems like a good idea. Google may (or may not) be too late to own social search, but it wasn't fundamentally wrong about realizing that social was a paradigm-shift in web behavior, and not simply a passing fad. Now, I can't speak to the author's complaints about the company culture. I have never worked at Google. If, as the author says, the company has stifled its atmosphere of innovation and creativity, that is a damned shame. (But I'd like to see more evidence to support this theory). The idea of forward-thinking R&D (20% time, etc.) seems like it should still be a core part of Google's culture -- especially for the sake of fostering a highly productive and innovative environment. But it seems too easy to look back at Google+ and say that Google had fundamentally lost its way. From the standpoint of Google in 2010-11, Facebook was the first serious, potentially existential threat the company had ever faced. In a way, it would have been irresponsible for Google not to have put a lot of eggs in the social basket.
- Joeri 14y ago
  Companies that focus on the thing that makes them money eventually start losing money. You have to focus on the next thing to make you money, not the current one. I'm willing to cut google some slack here though, with the self-driving cars and google glass. Innovation at google isn't dead, it's just not in web app form anymore.
  - jonnathanson 14y ago
    Agreed, and I didn't say that they should have kept focusing on one thing. Rather, I said that they suddenly found themselves having to defend that one thing, for the first time in their history. And they thought that diversifying into social was the best way to do so. So much so that they doubled down on it and tried to make a concerted, unified strategy around it. Totally agree that a company should never be in that situation to begin with (hence, my comments about the vulnerability of depending for 97+% of revenues on a single product). But they made a bet on social to be their "next thing" and, in retrospect, many smart people probably would have made the same bet. The bet didn't pay off, per se, but that may have been a function of lateness to market more than a function of strategic unsoundness. (And let's give them at least some credit: Google+ had a unique thesis about social w/r/t groups, and it came to market with a differentiating factor from Facebook. It was not simply the me-too product everyone retrospectively labels it as). I'm not writing an apology for Google's strategy; I'm just saying that hindsight is 20/20 in this case, and we shouldn't lose sight of that.
- dgreensp 14y ago
  I disagree. I worked at Google for a year in 2010, around the time of the first reorgs around social. They were decimating teams like Calendar, Sites, and other products with millions of users that were stagnating, as far as they were concerned, and building a team 200-strong to take on "social" -- whatever that means. We joked that no one at Google knew what it meant. We felt Google was deeply clueless about the nature of social networking products. The restructuring was very top-down and heavy-handed, and it was apparently just the beginning. In fact, if you're looking for hindsight vs reality, I don't think Google and Facebook really were competitors -- until Google decided to build a copy of Facebook's product. So what if both sites were monetized with ads, whoop-dee-doo. The overlap in their product functionality and expertise was basically zero. There's a very abstract connection that comes out of Google's central dogma: We are how people find things on the Internet. We are how they discover links. We're their homepage. What if Facebook takes all of that away? We have to eat their lunch. Google acted out of some combination of fear, insecurity, and pressure from Wall Street, along with some grandiose thinking about their role in the universe and the threat of Facebook. I believe the changes inside Google are significant, and also not inevitable or "what anyone would have done at the time." We'll see how the effects play out.

by chime 14y ago

jonnathanson 14y ago

More than 97% of Google's revenues have always come from advertising (give or take a few percentage points). This goes back to the pre-IPO days. It's all well and good to say that Google is about "pushing the limits of human knowledge," but when you're a public company with a responsibility to generate return on capital, you need to protect and grow the golden goose. Now, it's perfectly valid -- maybe even necessary -- to look at Google's situation and declare it highly vulnerable. Any company that relies to such a singular extent on one product is in a precarious situation, because any fundamental disruption of that one product's market will sink the entire ship. Historically, Google had attempted to future-proof itself by functioning like an AdWords-subsidized R&D lab: using its massive and easy profits to pay for all sorts of cool, out-there, innovative technologies. But over the years, none of these technologies was proving itself commercially viable in a meaningful way. So Google could be forgiven for shifting to address the threat of social in general, and Facebook in particular, to its core advertising business. To put it another way: when Google had no meaningful competitors, it could afford to play around with its money. When a serious competitor finally emerged, Google decided to put the toys away and focus. It's easy to apply 20/20 hindsight and say that Google+ was never going to be the answer. But that wasn't always obvious. In fact, I remember when Google+ was first running its invite-only beta, and the HN community was singing its praises. And to this day, social integration with search seems like a good idea. Google may (or may not) be too late to own social search, but it wasn't fundamentally wrong about realizing that social was a paradigm-shift in web behavior, and not simply a passing fad. Now, I can't speak to the author's complaints about the company culture. I have never worked at Google. If, as the author says, the company has stifled its atmosphere of innovation and creativity, that is a damned shame. (But I'd like to see more evidence to support this theory). The idea of forward-thinking R&D (20% time, etc.) seems like it should still be a core part of Google's culture -- especially for the sake of fostering a highly productive and innovative environment. But it seems too easy to look back at Google+ and say that Google had fundamentally lost its way. From the standpoint of Google in 2010-11, Facebook was the first serious, potentially existential threat the company had ever faced. In a way, it would have been irresponsible for Google not to have put a lot of eggs in the social basket.

Joeri 14y ago
Companies that focus on the thing that makes them money eventually start losing money. You have to focus on the next thing to make you money, not the current one. I'm willing to cut google some slack here though, with the self-driving cars and google glass. Innovation at google isn't dead, it's just not in web app form anymore.
- jonnathanson 14y ago
  Agreed, and I didn't say that they should have kept focusing on one thing. Rather, I said that they suddenly found themselves having to defend that one thing, for the first time in their history. And they thought that diversifying into social was the best way to do so. So much so that they doubled down on it and tried to make a concerted, unified strategy around it. Totally agree that a company should never be in that situation to begin with (hence, my comments about the vulnerability of depending for 97+% of revenues on a single product). But they made a bet on social to be their "next thing" and, in retrospect, many smart people probably would have made the same bet. The bet didn't pay off, per se, but that may have been a function of lateness to market more than a function of strategic unsoundness. (And let's give them at least some credit: Google+ had a unique thesis about social w/r/t groups, and it came to market with a differentiating factor from Facebook. It was not simply the me-too product everyone retrospectively labels it as). I'm not writing an apology for Google's strategy; I'm just saying that hindsight is 20/20 in this case, and we shouldn't lose sight of that.
dgreensp 14y ago
I disagree. I worked at Google for a year in 2010, around the time of the first reorgs around social. They were decimating teams like Calendar, Sites, and other products with millions of users that were stagnating, as far as they were concerned, and building a team 200-strong to take on "social" -- whatever that means. We joked that no one at Google knew what it meant. We felt Google was deeply clueless about the nature of social networking products. The restructuring was very top-down and heavy-handed, and it was apparently just the beginning. In fact, if you're looking for hindsight vs reality, I don't think Google and Facebook really were competitors -- until Google decided to build a copy of Facebook's product. So what if both sites were monetized with ads, whoop-dee-doo. The overlap in their product functionality and expertise was basically zero. There's a very abstract connection that comes out of Google's central dogma: We are how people find things on the Internet. We are how they discover links. We're their homepage. What if Facebook takes all of that away? We have to eat their lunch. Google acted out of some combination of fear, insecurity, and pressure from Wall Street, along with some grandiose thinking about their role in the universe and the threat of Facebook. I believe the changes inside Google are significant, and also not inevitable or "what anyone would have done at the time." We'll see how the effects play out.