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We know where the revenue comes from. The point is that google's tech is, in many important ways, AI. It's like McDonalds. A hamburger company? Not really. It

by RogerL 13y ago

We know where the revenue comes from. The point is that google's tech is, in many important ways, AI. It's like McDonalds. A hamburger company? Not really. It makes a lot more sense to consider them a real estate company. Hamburgers are just the way they create value for the real estate. This is not just my whacked interpretation, but is something the CEO said in an interview awhile ago, and a perspective taught in many MBA programs. Yes, companies make money from their revenue. It is often far more interesting and useful to look at how they create the value that generates that revenue. In the case of Google, Larry Page has been quite clear about his ambitions for Google, and selling ads is not the end of that ambition, it is merely the current income source.

toomuchtodo 13y ago
My grandfather was responsible for sourcing all of the real estate for Jewel-Osco's expansion in Northern Illinois from the early 70's until the mid 90's. He said the same thing: McDonalds is a real estate company that happens to sell burgers.
- canvia 13y ago
  I always heard it as McDonalds is a soda company that happens to sell burgers. They break even on the food but bank 90%+ profits on the beverages. The real estate angle makes sense on a longer timeline.
- wiremine 13y ago
  This confused me, so I did some quick googling, and found this: http://money.howstuffworks.com/mcdonalds2.htm http://money.howstuffworks.com/mcdonalds2.htm
programminggeek 13y ago
I totally agree that Google is a tech company, they are driven by tech, they build tons of hardware and software. There is no denying that, but the original parent comment was about how google is NOT an advertising company and is actually an AI tech company. I agree that McDonalds is actually in the real estate biz more than the hamburger biz. Where I think the comparison falls down is that McDonalds restaurant biz is in service to building their real estate holdings and it's not always clear if ads are in support of tech or vice versa at Google. In my business dealings with Google over the years, it's been very clear that Google skews pretty hard towards growing and supporting AdWords even at the expense of User Experience, customer desires, etc. Just look at how they are blending ads with organic results more and more or how they are forcing Google+ down everyone's throats or how they won't show keywords unless you are buying AdWords. In those cases, they aren't making tech decisions, they are making business decisions to support selling more ads. Google obviously does a lot of tech and sells a lot of ads, but like a hydra, it's not exactly clear which head controls the beast. I would certainly skew towards ads, but you could argue that it's about the tech. It might be both or something completely different and non obvious.
- dragonwriter 13y ago
  > Google obviously does a lot of tech and sells a lot of ads, but like a hydra, it's not exactly clear which head controls the beast. I see Google doing more things to add non-advertising means of monetizing technology than non-technology means of furthering advertising, which suggest, to me, that tech is the "head that controls the beast", and that advertising is just what has so far been the runaway success in how to monetize the technology.
gatehouse 13y ago
McDonald's corporate makes money leasing the stores to the franchisees, but the location owners make money the "regular" way, which is how they pay for the real estate back to the mothership, so from one extra step back they are a hamburger company as they appear to be. If Google is going to profit from something other than advertising, somebody somewhere has to take money from customers and give it to them.
gregpilling 13y ago
Ray Croc's book is interesting. http://www.amazon.com/Grinding-Out-McDonalds-Ray-Kroc/dp/0312929870 http://www.amazon.com/Grinding-Out-McDonalds-Ray-Kroc/dp/031... He is the guy that made McDonalds what it is, he was a milk shake machine salesman who bought the rights from the McDonalds brothers.

by RogerL 13y ago

toomuchtodo 13y ago

My grandfather was responsible for sourcing all of the real estate for Jewel-Osco's expansion in Northern Illinois from the early 70's until the mid 90's. He said the same thing: McDonalds is a real estate company that happens to sell burgers.

canvia 13y ago
I always heard it as McDonalds is a soda company that happens to sell burgers. They break even on the food but bank 90%+ profits on the beverages. The real estate angle makes sense on a longer timeline.
wiremine 13y ago
This confused me, so I did some quick googling, and found this: http://money.howstuffworks.com/mcdonalds2.htm http://money.howstuffworks.com/mcdonalds2.htm

programminggeek 13y ago

I totally agree that Google is a tech company, they are driven by tech, they build tons of hardware and software. There is no denying that, but the original parent comment was about how google is NOT an advertising company and is actually an AI tech company. I agree that McDonalds is actually in the real estate biz more than the hamburger biz. Where I think the comparison falls down is that McDonalds restaurant biz is in service to building their real estate holdings and it's not always clear if ads are in support of tech or vice versa at Google. In my business dealings with Google over the years, it's been very clear that Google skews pretty hard towards growing and supporting AdWords even at the expense of User Experience, customer desires, etc. Just look at how they are blending ads with organic results more and more or how they are forcing Google+ down everyone's throats or how they won't show keywords unless you are buying AdWords. In those cases, they aren't making tech decisions, they are making business decisions to support selling more ads. Google obviously does a lot of tech and sells a lot of ads, but like a hydra, it's not exactly clear which head controls the beast. I would certainly skew towards ads, but you could argue that it's about the tech. It might be both or something completely different and non obvious.

dragonwriter 13y ago
> Google obviously does a lot of tech and sells a lot of ads, but like a hydra, it's not exactly clear which head controls the beast. I see Google doing more things to add non-advertising means of monetizing technology than non-technology means of furthering advertising, which suggest, to me, that tech is the "head that controls the beast", and that advertising is just what has so far been the runaway success in how to monetize the technology.

gatehouse 13y ago

McDonald's corporate makes money leasing the stores to the franchisees, but the location owners make money the "regular" way, which is how they pay for the real estate back to the mothership, so from one extra step back they are a hamburger company as they appear to be. If Google is going to profit from something other than advertising, somebody somewhere has to take money from customers and give it to them.

gregpilling 13y ago

Ray Croc's book is interesting. http://www.amazon.com/Grinding-Out-McDonalds-Ray-Kroc/dp/0312929870 http://www.amazon.com/Grinding-Out-McDonalds-Ray-Kroc/dp/031... He is the guy that made McDonalds what it is, he was a milk shake machine salesman who bought the rights from the McDonalds brothers.