Google is actually a very fragile company

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Google is actually a very fragile company

All of Google is kept afloat by one thing only. Adwords. More than 90% of Google's revenue comes from search ads and related services. They have no other significant source of income after a decade or more of trying to diversify. Every other business is borderline trivial when compared to AdWords. All the moonshots have failed. All the R&D has failed. It's. All. AdWords.

They are ripe for disruption from a new player, or alternatively, to be drained from a few deep pocketed rivals. The entire bubble of online advertising stems from a belief that is often irrational that online advertising is effective at certain definitions of cost effectiveness.

If the company does not alter its business model then the future potential of the business could be measured as a function of Internet (ex. China) population growth. Essentially the argument is that Google’s growth is ultimately limited by the population of users and that itself is a predictable number.

Google will have a very difficult time maintaining their per-user profit figures as companies realize they don't need to run their ads through Google search, and Google has to adjust pricing to account for those alternatives.

With apologies to the innovation fans in the crowd, it's very difficult to show any meaningful impact from (say) self-driving cars in the next five years against a $60B revenue base. Total sales of new cars and trucks in the US is only about $300B annually, and if we use Tesla sales as proxy for autonomous vehicles, the near-term market is less than 1% of that.

(For example, a Lidar system of the type used by Google in a "low cost" configuration presently costs $25,000. Just for the Lidar system.

Interesting enough too Google is doing an in house study to learn how people work and kind of astounding that after so many years of hiring "people" they don't have a clue how we work:)

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Google has barely innovated

Google has barely innovated anything for the real world since search over a decade ago. The reality is Google hasn’t really been recruiting the type of people who disrupt thinking too much. Googlers are not rule-breakers, nor disruptive people. They are screened out (intentionally) by Google’s interview process. Even the more “creative” questions are still left-brain oriented – analytical, problem solving, breaking things down into steps, etc. All of the people who have the disruptive attitude who you meet at Google were hired before 2004. Now engineering talent is devoted to improving search algorithms, and its business talent is devoted to how to improve performance on those little text ads which are slapped everywhere.

Their corporate culture is implementation focused rather than theoretical or conceptual research focused. Those that branch out usually do so due to greed or frustration (sick of being unable to do anything or of being unable to.. boss everyone around), and don’t really have an idea worth building a business around, just some minor efficiency gain, some minor optimization, or some minor pain point not really worth addressing.

Also, most don’t really have that strong a business sense, even if they were on the business side while at Google, and can’t operate unless they have the leverage of a big company name behind them. Most, not all. Also, I mean, look at the companies Google has acquired. Most of them weren’t that special, and their founders usually move on to create something else that isn’t that special, or, more likely, “retire.”

Sure there may be a few superstars, but by and large the employees there are average, at best, and, more than that, are risk-averse and wired to be told what to do. That is, if you give them something to do that’s worth doing or that’s difficult (and they are one of the talented ones), then they will rise to the challenge and probably nail the design/implementation, but leave them to fend for themselves and they’ll have problems.

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