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"The lesson may be that a broad focus on innovation and solving big problems leads to resiliency." That would be an interesting conclusion if there was a good

"The lesson may be that a broad focus on innovation and solving big problems leads to resiliency." That would be an interesting conclusion if there was a good reason to believe it, but the article didn't make much of a case. How many of Google's off-the-wall projects are contributing to their 30% year-over-year quarterly revenue growth? Most of the projects mentioned were either market failures or haven't been released yet. Android was clearly a success, but it wasn't a great example of innovation: it was basically a clone of a successful existing product. There's probably a more prosaic explanation for Google's success relative to Facebook. Both companies make most of their revenue from advertising, but Google developed AdWords, which leveraged Google's search infrastructure to became an essential piece of infrastructure for the buying and selling of ads. It's hard to name any other company that got rich off of web ads besides Google. Google is entrenched in the fabric of the internet, while Facebook is an upstart that's primarily just a website, like Yahoo was 15 years ago. At that time, Microsoft was the giant that owned the critical infrastructure, and they were doing very similar things as Google is now: Microsoft created MSN to compete with AOL and Yahoo; Microsoft leveraged its infrastructure to crush a threat from an upstart competitor -- Netscape. Building out, as much and as fast as you can, seems to be the winning strategy when you are in a position of overwhelming dominance as a result of owning essential infrastructure. The "Luxury of Failure" is the actual lesson here. You get the luxury of failure when you own a revenue stream that's big and entrenched enough that you have the luxury to do essentially anything you want, even lose money. It's hard to compete against that.

timedoctor 13y ago
Microsoft has the luxury of failure also, but when they tried to compete with Google they failed. Microsoft are in the same markets that Google makes a huge amount of money from and yet they failed on most fronts. I think the safest way for Google to make money would be to not innovate or create any off the wall projects, and then just return the money the money to shareholders through dividends or share buybacks. Just looking at the current stock price of Google $909 and Earnings per share of $33, this means that IF Google returned the entire earnings to shareholders it would take 27 years for the shareholders to get their money back and THEN after this 27 years they would start to get a return on their investment. This assumes no growth, and Google has grown significantly but there is no guarantee they will grow in the future. Even if they do grow significantly it will still take a very long time to get your investment back. There are unknowns that could completely disrupt Google's business models for example what if all search became voice based (siri-like) with better AI. Or what if a competitor develops much better AI capabilities into their search.
- deleted 13y ago
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- mtdewcmu 13y ago
  >> Microsoft has the luxury of failure also, but when they tried to compete with Google they failed. Microsoft are in the same markets that Google makes a huge amount of money from and yet they failed on most fronts. You figure, basic economics says that if the cost of failure is low, you should expect lots of failures. It's not the "luxury of always succeeding." >> There are unknowns that could completely disrupt Google's business models for example what if all search became voice based (siri-like) with better AI. Or what if a competitor develops much better AI capabilities into their search. Google has fended off serious competition before, and if a start-up came out with a better search idea, Google would acquire them.

timedoctor 13y ago

Microsoft has the luxury of failure also, but when they tried to compete with Google they failed. Microsoft are in the same markets that Google makes a huge amount of money from and yet they failed on most fronts. I think the safest way for Google to make money would be to not innovate or create any off the wall projects, and then just return the money the money to shareholders through dividends or share buybacks. Just looking at the current stock price of Google $909 and Earnings per share of $33, this means that IF Google returned the entire earnings to shareholders it would take 27 years for the shareholders to get their money back and THEN after this 27 years they would start to get a return on their investment. This assumes no growth, and Google has grown significantly but there is no guarantee they will grow in the future. Even if they do grow significantly it will still take a very long time to get your investment back. There are unknowns that could completely disrupt Google's business models for example what if all search became voice based (siri-like) with better AI. Or what if a competitor develops much better AI capabilities into their search.

deleted 13y ago
[deleted]
mtdewcmu 13y ago
>> Microsoft has the luxury of failure also, but when they tried to compete with Google they failed. Microsoft are in the same markets that Google makes a huge amount of money from and yet they failed on most fronts. You figure, basic economics says that if the cost of failure is low, you should expect lots of failures. It's not the "luxury of always succeeding." >> There are unknowns that could completely disrupt Google's business models for example what if all search became voice based (siri-like) with better AI. Or what if a competitor develops much better AI capabilities into their search. Google has fended off serious competition before, and if a start-up came out with a better search idea, Google would acquire them.