4 ms·

I've pondered that very question off and on for several years. I don't know what the "worst" thing would be but some places where I think there are clouds (pun

by dasht 17y ago

I've pondered that very question off and on for several years. I don't know what the "worst" thing would be but some places where I think there are clouds (pun intentionality uncertain) on their horizon - in no particular order: 1) Culture fail: leading to dithering and waste that swamps the ship. Until a recent few years, Google hired and operated like Larry and Sergey's late night bull session dream: hiring "people like them", creating outrageously extravagant perks (like grad school life on steroids with high pay), using the "20% free time" rule to implement a kind of AI search for business ops, etc. They over-hired. They lacked coherent focus. They became a perpetual ego-stroke for the boys at the top. They built an arrogant and self-validating culture. They developed a culture that is often snobbish beyond accomplishment. On and on. They even had a "uniquely theirs" house style for interior decorating. Historically those elements are a recipe for a company that at some point seizes up and becomes incapable of fighting in the markets (c.f., e.g., the collapse of SGI whose former campus, ironically, is mostly occupied by GOOG). Under Schmidt, et al. in recent years this appears to be starting to be reined in but I'm not convinced yet the professional management is making advances beyond shoring up results quarter by quarter - I don't see the new, customer-centric culture yet. 2) Collapse of advertising. Advertising can collapse out from under Google in at least three, plausible ways. First, some other content delivery medium comes to dominate as the place where effective advertising goes. Google can't be everywhere at once (not even Google) and, frankly, I think the big market for Internet advertising is going to look a lot more cable TV than web surfing. Second: a new market maker. As technological opportunities to place ads change, ad placement will drift away from what you can build on a search engine to more targeted placement. Right now it's cheap and easy to put some space in your content in Google's market - Google is a market maker taking a cut. As mass consumption of content condenses to a smaller number of content providers - providers better equipped to make sophisticated sales of their ad properties will emerege (e.g., e.g., content providers who do more than add links and declare a few keywords). New market makers will enter and take Google's margin on ads to $0 (in the limit). Third, on-line advertising as a paradigm may get severely shaken by its poor performance (for most advertisers) in bad economic times along with alternatives. An alternative I think likely to work, for someone, is the request-driven marketing paradigm. If I need to or want to buy X, typing search terms into a search engine seems a painfully indirect and horrible way to go about it. Instead, in any large market, I want domain-specific heuristics to connect me to the general search thing of "what consumers are saying" and connect me to the ad placement thing in the sense of domain-specific searching through ads. Ads on such a "decision engine" (!) should ultimately be based purely on actual sales commission, not CPMs (though even commissions will be a pretty small slice - perhaps bundled with on-line transaction handling service). 3) Misplaced capital investment. On the one hand, Google makes a plausible play to build their massive manufacturing plants for commodity computing (their newest generation "data centers"). On the other hand, if their closed, arrogant culture and over-reliance on ads causes them to fail to monetize those centers well they may wind up being left holding the bag where they have to sell of to someone who knows how to make money off of them. They seem well on their way to failing hard on those data centers by trying to monopolize what system software runs on them. In general, you pretty much know that something is going to take them down, at least if history is any evidence. They wound up, a few years back, outrageously overcapitalized. Not just over-valued but actually over-capitalized. History shows that no management team in that situation - the extreme outlier in capitalization - is ever competent to invest the money flows wisely enough to keep it up.

nl 17y ago
22 points for this? Really? 1) Google hired and operated like Larry and Sergey's late night bull session.. Under Schmidt, et al. in recent years this appears to be starting to be reined in.. You do realize that Schmidt has been there since before they went public, right? ie, he was there for the hiring. They currently have slightly less headcount than at their peak, but they say (in their last earning call no less) that their main limiting factor is their ability to hire good engineering talent. 2) "Collapse of advertising.... New market makers will enter and take Google's margin on ads to $0 (in the limit)" Any evidence to support this? Given how effective AdWords is, it seem unlikely that people will stop paying for it? "Ads on such a "decision engine" (!) should ultimately be based purely on actual sales commission, not CPMs" You mean kind of like the "Action based commissions" that Google is trialing with selected vendors now? 3) "They seem well on their way to failing hard on those data centers by trying to monopolize what system software runs on them." What does this even mean? You mean they haven't open sourced their BigTable implementation? They did publish the BigTable paper - that hardly seemed "closed, arrogant" to me. "They wound up, a few years back, outrageously overcapitalized." Do you mean how they left money on the table when they floated using their dutch auction style of stock allocation? Or do you mean their stock price peak of $700? That is around 20% above it's current price, and given that the US is on the tail end of a recession it would seem to me there is a fair chance that peak will be beaten within 2 years. GOOG's current P/E ratio is around 34. That's fairly comparable to APPL (29), and Goldman Sach (36) - all seem fairly reasonable for companies showing strong growth in earnings.
- dasht 17y ago
  1) (Google as Page and Brin's bull session fantasy): Schmidt has been there for a long time, sure, but it's only in recent years that they've so clearly polarized between the "the guys" and Schmidt, the former representing vague hype and themselves and Schmidt being the voice that calms investors and analysts. As a small example, in the business press, Schmidt is being portrayed as the guy who spins cut-backs on employee perks as prudent business while Page and Brin are being portrayed as guys who own a love-shack jet, invest in eccentric and nepotistic genomics projects, and treat reporters rudely. 2) (Collapse of advertising): Yeah, the on-line ad market ain't growing like it did for a while and in some sectors is contracting. Meanwhile, the "fat middle" of the long tail of the blogosphere is undergoing contraction and professionalization which suggests it is going to evolve into an industry that has far greater leverage in brokering its ads and is not so reliant upon Google. Don't get me started on the coming collapse of the (remaining) major "social networking" sites (which, to a first approximation, have yet to generate a return for most investors other than insiders). By "decision engine" I mean we'll see ad delivery based less on what a person happens to be reading or searching for, and more on what they explicitly declare to some service that they want to shop for. We've already seen that to some degree in some of the most easily commoditized markets like air travel between A and B, or car insurance, or cars, or electronics parts (http://octopart.com/ http://octopart.com/). That trend is accelerating. Check out a page like: http://octopart.com/parts/category--interface+ics--ethernet/search?c=5491 http://octopart.com/parts/category--interface+ics--ethernet/... Aren't the Google ads down the right column of that page just a bit ironic? 3a) (Google's data center potential to fail because of their impulse to monopolize what apps run on them): Ok, well, I have an app that uses (let's say) Oracle Berkeley DB/XML and newLisp atop a GNU/Linux distro of my choice. I'm willing to tweak it for their particular network and storage topology. What's the price? 3b) (overcapitalized): I simply mean that they have to spend more money per quarter than they are competent to spend (or than any other organization with that executive structure could be competent to spend). The same investment dollars would likely perform better if invested with a more diversified set of controls on how they are spent. If you're skeptical of big government, you oughta also be skeptical of big corp.

by dasht 17y ago

nl 17y ago

22 points for this? Really? 1) Google hired and operated like Larry and Sergey's late night bull session.. Under Schmidt, et al. in recent years this appears to be starting to be reined in.. You do realize that Schmidt has been there since before they went public, right? ie, he was there for the hiring. They currently have slightly less headcount than at their peak, but they say (in their last earning call no less) that their main limiting factor is their ability to hire good engineering talent. 2) "Collapse of advertising.... New market makers will enter and take Google's margin on ads to $0 (in the limit)" Any evidence to support this? Given how effective AdWords is, it seem unlikely that people will stop paying for it? "Ads on such a "decision engine" (!) should ultimately be based purely on actual sales commission, not CPMs" You mean kind of like the "Action based commissions" that Google is trialing with selected vendors now? 3) "They seem well on their way to failing hard on those data centers by trying to monopolize what system software runs on them." What does this even mean? You mean they haven't open sourced their BigTable implementation? They did publish the BigTable paper - that hardly seemed "closed, arrogant" to me. "They wound up, a few years back, outrageously overcapitalized." Do you mean how they left money on the table when they floated using their dutch auction style of stock allocation? Or do you mean their stock price peak of $700? That is around 20% above it's current price, and given that the US is on the tail end of a recession it would seem to me there is a fair chance that peak will be beaten within 2 years. GOOG's current P/E ratio is around 34. That's fairly comparable to APPL (29), and Goldman Sach (36) - all seem fairly reasonable for companies showing strong growth in earnings.

dasht 17y ago
1) (Google as Page and Brin's bull session fantasy): Schmidt has been there for a long time, sure, but it's only in recent years that they've so clearly polarized between the "the guys" and Schmidt, the former representing vague hype and themselves and Schmidt being the voice that calms investors and analysts. As a small example, in the business press, Schmidt is being portrayed as the guy who spins cut-backs on employee perks as prudent business while Page and Brin are being portrayed as guys who own a love-shack jet, invest in eccentric and nepotistic genomics projects, and treat reporters rudely. 2) (Collapse of advertising): Yeah, the on-line ad market ain't growing like it did for a while and in some sectors is contracting. Meanwhile, the "fat middle" of the long tail of the blogosphere is undergoing contraction and professionalization which suggests it is going to evolve into an industry that has far greater leverage in brokering its ads and is not so reliant upon Google. Don't get me started on the coming collapse of the (remaining) major "social networking" sites (which, to a first approximation, have yet to generate a return for most investors other than insiders). By "decision engine" I mean we'll see ad delivery based less on what a person happens to be reading or searching for, and more on what they explicitly declare to some service that they want to shop for. We've already seen that to some degree in some of the most easily commoditized markets like air travel between A and B, or car insurance, or cars, or electronics parts (http://octopart.com/ http://octopart.com/). That trend is accelerating. Check out a page like: http://octopart.com/parts/category--interface+ics--ethernet/search?c=5491 http://octopart.com/parts/category--interface+ics--ethernet/... Aren't the Google ads down the right column of that page just a bit ironic? 3a) (Google's data center potential to fail because of their impulse to monopolize what apps run on them): Ok, well, I have an app that uses (let's say) Oracle Berkeley DB/XML and newLisp atop a GNU/Linux distro of my choice. I'm willing to tweak it for their particular network and storage topology. What's the price? 3b) (overcapitalized): I simply mean that they have to spend more money per quarter than they are competent to spend (or than any other organization with that executive structure could be competent to spend). The same investment dollars would likely perform better if invested with a more diversified set of controls on how they are spent. If you're skeptical of big government, you oughta also be skeptical of big corp.