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Or you could just hire a single person with domain expertise as a consultant for a given time to staff the group and end up with a presumably high-quality in-ho

Or you could just hire a single person with domain expertise as a consultant for a given time to staff the group and end up with a presumably high-quality in-house kitchen staff from the start. The consultant moves onto their next gig after making sure the pieces fit as intended. This is a pretty common use case for the better consultants out there.

nknighthb 12y ago
Or just buy a catering company. Annual profits in the billions leaves a company with no shortage of options.
- deleted 12y ago
  [deleted]
ubershmekel 12y ago
I have to assume certain companies want to stay focused. This has many ramifications. E.g. if you're unhappy with the guards/cooks/cleaning - replacing that entire part of the organization is as easy as the contract makes it. If that operation is in-house - replacing employees, reforming, finding the talent to do that is much harder than window shopping for a competing third party to take over. Should a water company have an in-house pipe factory? Should a game dev company have in-house hardware fabrication? Should a food factory have an in-house plastic packaging factory? These questions don't have a clear answer in my opinion.
- vanadium 12y ago
  It was a hypothetical and tangential case based on the parent comment, so let's get back to the original context where there is a more clear-cut conclusion. When it comes to security, the accountability dynamic between personal investment in outcomes and the inherent detachment as an employee of a third party is a bit different than kitchen work, and significantly more important. This arrangement works to the benefit of both Google and those responsible for securing the company.
  - walshemj 12y ago
    Agreed I worked for large Telco and we had an office in Manchester cleaned out of PC's twice in year - turns out it was an inside job on of the outsourced security guards let them in. I was involved in the replacement for the third time (we used all the old crap pc's we could dig up from across the company) And given the high profile espionage that goes on in sv and tech having direct control and vetting of security guards makes sense. Of course for the more secret squirrel side of the biz we always used different security - ask yourself when Bruce Scheier left BT note who he as very careful to be ltra nice to on the way out.
- A1kmm 12y ago
  In most of your examples, the answer is no because of economies of scale; hardware fabrication only makes sense because of economies of scale (and to a lesser extent pipe or packaging production - although you could ask the same question about vertical integration all the way up the petrochemical supply chain to operating oil rigs and refineries). Most game dev companies just aren't big enough to need enough hardware for vertical integration to make sense. Most water companies aren't big enough for a pipe factory to be economically viable, let alone building their own minerals division, oil rigs, oil refinery and chemical plants. I suspect that security and running cafeterias do have economies of scale (e.g. a business might only need a drive-by check a few times a night, and so it is more efficient to have one guard drive around different businesses than for each business to hire their own guard), but Google's demands for security and cafeteria services are probably high enough that they gain many of the same benefits of the economy of scale. Allowing management to focus on core competencies is also important for smaller businesses, but eventually most decision-making is delegated to middle managers or even subsidiary companies, so the top tier of management doesn't have to worry about it. For big companies like Google, it is likely that they have modelled it, and worked out it will cost them less to vertically integrate this function. Businesses generally have far more efficient control over employees than contractors, so if they are unhappy with something, they can just change it rather than needing to renegotiate a contract.
- xorcist 12y ago
  Over a certain size it starts to make sense to vertically integrate your business. If you are big, say Apple, creating your own hardware allows you to do better and differentiate against your competitors. It may also allow you to cut off resources for your competitors (see for example oil companies). A company such as Valve is probably on the fence on this. They dominate a small segment of the market, but is not really big enough to do something their competitors can't replicate.

nknighthb 12y ago

Or just buy a catering company. Annual profits in the billions leaves a company with no shortage of options.

deleted 12y ago
[deleted]

ubershmekel 12y ago

I have to assume certain companies want to stay focused. This has many ramifications. E.g. if you're unhappy with the guards/cooks/cleaning - replacing that entire part of the organization is as easy as the contract makes it. If that operation is in-house - replacing employees, reforming, finding the talent to do that is much harder than window shopping for a competing third party to take over. Should a water company have an in-house pipe factory? Should a game dev company have in-house hardware fabrication? Should a food factory have an in-house plastic packaging factory? These questions don't have a clear answer in my opinion.

vanadium 12y ago
It was a hypothetical and tangential case based on the parent comment, so let's get back to the original context where there is a more clear-cut conclusion. When it comes to security, the accountability dynamic between personal investment in outcomes and the inherent detachment as an employee of a third party is a bit different than kitchen work, and significantly more important. This arrangement works to the benefit of both Google and those responsible for securing the company.
- walshemj 12y ago
  Agreed I worked for large Telco and we had an office in Manchester cleaned out of PC's twice in year - turns out it was an inside job on of the outsourced security guards let them in. I was involved in the replacement for the third time (we used all the old crap pc's we could dig up from across the company) And given the high profile espionage that goes on in sv and tech having direct control and vetting of security guards makes sense. Of course for the more secret squirrel side of the biz we always used different security - ask yourself when Bruce Scheier left BT note who he as very careful to be ltra nice to on the way out.
A1kmm 12y ago
In most of your examples, the answer is no because of economies of scale; hardware fabrication only makes sense because of economies of scale (and to a lesser extent pipe or packaging production - although you could ask the same question about vertical integration all the way up the petrochemical supply chain to operating oil rigs and refineries). Most game dev companies just aren't big enough to need enough hardware for vertical integration to make sense. Most water companies aren't big enough for a pipe factory to be economically viable, let alone building their own minerals division, oil rigs, oil refinery and chemical plants. I suspect that security and running cafeterias do have economies of scale (e.g. a business might only need a drive-by check a few times a night, and so it is more efficient to have one guard drive around different businesses than for each business to hire their own guard), but Google's demands for security and cafeteria services are probably high enough that they gain many of the same benefits of the economy of scale. Allowing management to focus on core competencies is also important for smaller businesses, but eventually most decision-making is delegated to middle managers or even subsidiary companies, so the top tier of management doesn't have to worry about it. For big companies like Google, it is likely that they have modelled it, and worked out it will cost them less to vertically integrate this function. Businesses generally have far more efficient control over employees than contractors, so if they are unhappy with something, they can just change it rather than needing to renegotiate a contract.
xorcist 12y ago
Over a certain size it starts to make sense to vertically integrate your business. If you are big, say Apple, creating your own hardware allows you to do better and differentiate against your competitors. It may also allow you to cut off resources for your competitors (see for example oil companies). A company such as Valve is probably on the fence on this. They dominate a small segment of the market, but is not really big enough to do something their competitors can't replicate.