
Google Makes So Much Money, It Never Had to Worry About Financial Discipline - kjhughes
https://www.bloomberg.com/news/features/2016-12-08/google-makes-so-much-money-it-never-had-to-worry-about-financial-discipline
======
Periodic
So many companies try to emulate how Google works. There are multiple books,
hundreds or thousands of articles. People speculate on the perks, the review
structure, the hierarchy, the autonomy.

However, when other companies try to imitate Google they always fail because
they're missing a crucial piece:

 _Billions of dollars in ad revenue_

Google doesn't work the way it does to be successful. It works that way
_because_ it is successful.

I found this no more evident than when I worked on Google Search itself.

~~~
ChuckMcM
This is exactly correct. If you have a printing press that is dumping a couple
of billon dollars into the basement every quarter in spite of what you're
spending, you have the luxury of trying all sorts of novel things from a
business perspective.

That said, the margins on the search advertising business are shrinking, and
have been for years now. You can cover for that by eliminating profligate
spending and then eventually you can't. I think Ruth is the right person to
handle that transition but its going to hurt in terms of people feeling that
"the magic is gone."

When that happens, Google is going to have to start rewarding operational
efficiency gains at least as strongly as they currently reward popular science
project type gains. And then it will be very interesting to see how they
change and if the era of "but Google offers its employees ..." will be over.

I hope the free sodas stay though.

~~~
rsync
""the magic is gone.""

Not only is the magic gone, but the boring, day to day fabric of functionality
is gone.

Have you tried to _really_ search for anything with google in the past five
years ?

I don't mean meandering, aimless, consumer-centric searches like "new fitness
watch" where any result tangentally related is useful ... I mean a specific,
meaningful, concise search with multiple keywords, all of which are _key
words_ ... and the resulting pages do not contain one or more of those words.

I know all about allinsite: and quotation marks and so on ... those are, as
far as I can tell, randomly interpreted by google. Who knows if they even
work, ever.

A front page item on HN a few days ago asked what people would pay $1000 per
month for ... I would pay that to have search with full control over search
results with logical operators that actually worked.

~~~
guycook
I know exactly what you mean. "Half" "of" "my" "searches" "look" "like" "this"
"these" "days". I can understand throwing out one of many keywords when I'm
down on page 6, but when I search with only 4 terms and the very first result
has 2 words s̶t̶r̶u̶c̶k̶ o̶u̶t̶ I start to wonder who exactly this search box
is for.

~~~
mojuba
True, and one other thing I've noticed is e.g. "Half of my searches" can bring
say 200,000 results, but "Half of my" yields 50,000. A few other weird things
that's been there for years and nobody seems to care. As long as consumer-
level searches work and ads are clickable, Google's clock is ticking.

~~~
gniv
I wouldn't put too much stock on those numbers. They are probably statistical
estimates, not actual counts.

------
GCA10
Big companies seem to step in the same puddle, every time they try to set up
one of these "breakthrough incubator" projects. They pick fascinating
projects. They hire lots of smart people and give them great autonomy. But
they inadvertently set up incentives that lead to the repeated creation of
LINS (lavishly impractical non-solutions). And then the plug gets pulled.

I think the key problem is that the research team starts optimizing for
periodic demo days with the boss. That's a sheltered environment in which
clever (and easy to demonstrate) technical features are rewarded, and real-
world annoyances involving customers, social norms, regulators, pricing, etc.
are put off for "later." Not only are ecosystem problems not addressed, they
aren't even vigorously considered.

The technology behind Google Glass was quite clever and some variant of that
idea may eventually work. But what arrived on the market was LINS to an
extreme. You can find similar failures in Detroit's concept cars, Paul Allen's
first go at Vulcan, Xerox Parc's grossly overpriced STAR, etc.

I'm not sure how to fix this. Within the big-company budgeting system, it
takes a daring CEO to allow super-innovative projects to break the usual rules
about desired five-year ROIs. Once such a CEO takes a stand, it's really hard
for him/her to get out of the way.

Suppose these CEOs do miraculously set up a system that approximates the
scrappy, minimum-viable experiments of a true startup, with the marketplace
being the true boss. That still is problematic. When a big company is pushing
MVPs into the marketplace, the public scrutiny and scorn makes it really hard
to recover from an awkward start -- and keep iterating in peace.

~~~
morgante
This is exactly what Alphabetization is meant to solve. A federation of
companies can more effectively allow individual divisions to operate like
startups. Additionally, it's a lot easier to push experiments when they're not
attached to the Google brand.

Personally, I think Google should just funnel all the profits into GV.

~~~
GCA10
Ah, but my point was that they don't operate like startups. They may adopt a
lot of startups' superficial trappings, but in their first three years, they
aren't sharpening their objective by being cash-constrained and exposed to the
evolving tastes and distastes of the outside ecosystem. They're semi-
generously funded while building whatever will amuse Sergey and Larry. That's
creates LINS problems, again and again.

~~~
morgante
I agree that they don't operate like startups enough, but it is in fact the
goal of Alphabetization.

You're right that it's not working well enough. That's why I think they'd be
better off simply making GV the largest private equity/venture capital firm in
the world.

------
georgespencer
There's an interesting fiscal corollary of having unbridled ambition matched
by enormous firepower which brings the world's smartest engineers and hackers
together: a Xoogler who was early in the business once told me about how
engineers would hack/exploit the travel allowance policy.

Google allowed folks to book their own flight and accommodation, and had an
algorithm which determined rewards for folks travelling with financial
efficiency.

The measure of 'financial efficiency' was an invisible coefficient tied to
average hotel and flight prices in an area. So if the average cost of a trip
from Mountain View to Boston for three days was $1,500, and you managed to do
it for less, then you got back a cut of the difference either as a cash bonus
or in points to spend on upgrades for hotels and flights.

After a while someone realised that a group of engineers were consistently
booking shitty travel around the same time, and then travelling first class
the rest of the year.

They had worked out what the algorithm was doing, and started scraping hotel
prices themselves. They booked (spurious) cheap earlybird flights and hotels
during conference season in various cities, sometimes years in advance, and
took huge numbers of internal points from doing so.

The person describing the situation to me said there was a lot of discussion
as to whether they should be fired or rewarded.

~~~
caminante

      > After a while someone realised that a group of engineers 
      were consistently booking shitty travel around the same time,
      and then travelling first class the rest of the year.
    

How's that different than having an annual travel budget? Sounds like they
sacrificed to feast later instead of holding accommodations constant at "above
average."

I think you did a good job telling the story, but maybe I'm missing how gaming
travel expenses is unique to Google.

~~~
georgespencer
Crucial point which I didn't communicate properly: they were block booking
spurious/unnecessary travel well in advance (by years).

~~~
saryant
How can you even book flights years in advance when airlines only publish
schedules 330 days in advance?

~~~
georgespencer
You can book hotels years in advance and flights ~1 year in advance.

------
espadrine
Contrast Google's old way of managing bets with Tesla.

When Google started working on self-driving cars, they went about it
academically. They did not plan a sequence of stepping stones that they could
sell. They meant to have a product in an indeterminate future which should be
immediately perfect and better than a human, essentially not needing a wheel.

Tesla went about it with an engineering perspective. First, cars that can send
accumulated data over the Internet. Then, equipped with cameras. Then, with
limited assistance, warning the user to take the wheel back in difficult
situations. And sporadic updates adding support for more complex cases.

The end goal is identical; but they make money along the way.

~~~
MicroBerto
> but they make money along the way

Only killing a few people in the process, but hey who am I to judge?

~~~
photogrammetry
Are you implying that Tesla killed the (1 person, not people) who decided to
let his car slam into a tractor-trailer on cruise control?

It's not a problem to you that, say, Apple has "financed the suicides of
dozens of Foxconn workers," or that GM killed 140 people by suppressing
information on a defective ignition switch, or that Lockheed Martin and
Halliburton buoy their stock by selling weapons to kill hundreds of thousands
of people?

Evidently, you must find totally acceptable the gun-running, terrorist-
sponsoring activities of HSBC in the last few years. I bet Google's
permabanning of people from their own Google Apps accounts (because they were
reselling a couple Pixel phones) is ethically fine with you, as well.

Never mind the tens of thousands of preventable automobile deaths yearly
because car manufacturers refuse to implement even the most rudimentary of
Autopilot functions.

Yeah, totally reasonable to pick on the electric car / solar battery company
with $3b in revenue since one dope decided to drive into a truck and behead
himself. There's _nobody else_ deserving of criticism whatsoever.

Let's not even get started with how cocky their CEO has been with his fancy
sustainable business plans!

p.s. I won't even attempt an ad hominem at the guy selling homeopathics and
'nutritional supplements' in this thread.

~~~
legolas2412
I'm going to ignore the whataboutism you spew.

Also, Elon musk has done amazing work with electric cars, sustainable energy
and space travel. No doubt about that.

But this is about Autopilot, a collection of driver assistance program. Not
sure about OP, but my spite with Tesla is that they are pushing the above-
mentioned driver assistance programs as self-driving features. This over-
selling is going to kill people.

And for your information, lane keeping assist, lane driving assist, automated
cruise control (which is pretty much AP1.0) have been present in several cars.
Even self parking has been demoed by several cars. Add in automatic lane
changing (which doesn't sound difficult to me), it wraps up Enhanced AP1.0.

Does that sound like a completely autonomous self driving car? Because that's
what the public perception is like.

~~~
dang
Please don't call names ('you spew') in arguments. If someone is wrong,
explain so civilly.

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

[https://news.ycombinator.com/newswelcome.html](https://news.ycombinator.com/newswelcome.html)

~~~
MicroBerto
How is _" you spew"_ namecalling?

 _I_ was the one personally attacked in this thread, not the other way around.
Just because my comment doesn't fit the Musk Worship narrative doesn't make me
wrong.

Was someone _not_ killed by a malfunctioning / underprepared Tesla? What am I
missing here????

~~~
dang
"You spew" is a pejorative. Examples:

[https://twitter.com/search?q="you%20spew"](https://twitter.com/search?q="you%20spew")

[https://www.google.com/webhp#q=site%3Atwitter.com%20%22you%2...](https://www.google.com/webhp#q=site%3Atwitter.com%20%22you%20spew%22)

What you're missing is that even though someone was uncivil to you on HN, you
needed to remain civil in return. That's the social contract here, and we need
it to prevent discourse from degenerating even further.

~~~
MicroBerto
Given that there is no report button or ability to downvote someone that
replies to you (at least not on mobile for me), it is only reasonable to
defend myself in that situation.

The ensuing attacker went to my profile, researched me and my business, and
personally attacked me because they disagreed with my sentiment.

What is my recourse for action in such a case? Take it on the chin like a
wimp? I don't think so.

If you don't provide appropriate tools to stop a tit attack, then you are
fostering an unfair and "unsafe" environment by banning tit-for-tat response.

You are turning this community into a one-way echo chamber.

~~~
dang
Your recourse is to email hn@ycombinator.com, as the site guidelines ask. Note
that I chided that person for what they did, which of course was wrong. Two
wrongs don't make a right, though, and you're continuing to break the rules
while they at least stopped.

For civil discussion we all need to hold ourselves to a higher standard than
the one we perceive other people to be keeping, because the only alternative
is a downward spiral, and an accelerating one. If you want to keep commenting
here, we need you to internalize that.

------
focusgroup0
Xoogler here.

About a week after joining, and having partaken of the food, massages,
meditation rooms, fitness centers, shuttle bus, sports facility, arcade, juice
bar, tech stops, shwag etc. - I remember thinking to myself "whatever we do
here must be ridiculously lucrative".

There weren't signs of obvious waste (at least in my org.), and coming from
other corporate gigs where you had to pay for coffee it really opened my eyes
to what a difference it makes for employee morale / productivity.

~~~
mahyarm
A lot of that stuff although is cheaper for the corporation to provide than
for the employee to pay for themselves in money and time. The corp has a tax
advantage and a bulk purchase advantage. Not having a payment infra probably
adds a little bit of efficiency too.

~~~
gph
Which does seem like sort of a loophole. Don't companies have to add perks
over a certain amount to the employees pay so that it gets taxed? Wouldn't
feeding an employee every day qualify?

It would be sort of weird if we turn back into having sort of 'company towns'
where your employer provides a lot of what you need except they pay for it.
It's not just Google this would be beneficial for, even if you run a factory
you could pay employees a tiny bit less, but provide food/services for them
that would make up for it. And because of the taxes/bulk situation it could be
economically beneficial for both sides.

~~~
Naritai
I one spoke with a woman from the Netherlands who was surprised that these
perks are not taxable. According to her, in the Netherlands perks like
shuttles to work or company-provide food are taxable.

~~~
pkaye
What if the company had a business meeting and lunch was provided?

~~~
xxs
If it involves clients, then you need the paperwork and may save on part of
the VAT + part of the money could be considered expense. Usually it can be
quite complex and it's not harmonized in the EU.

------
Animats
_“No one wants to face the reality that this is an advertising company with a
bunch of hobbies.”_

Remember Nokia. They produced mobile phones with excellent quality, extreme
ruggedness, good battery life, and good voice quality. Their manufacturing was
highly automated and their costs were low. They focused on their core
business. Recently, their CEO said "We did everything right, and we lost
anyway".

On the other hand, Google has repeatedly failed to develop a second big money-
making product. They failed at social. They failed at fiber-to-the-home.
Android is a loss leader to drive ad traffic. Automatic driving may pay off,
but that is being a component supplier to an car company, not a high-profit
business. Google's second venture into smartphones might be a success, but
that remains to be seen.

~~~
rospaya
> Remember Nokia. They produced mobile phones with excellent quality, extreme
> ruggedness, good battery life, and good voice quality. Their manufacturing
> was highly automated and their costs were low. They focused on their core
> business. Recently, their CEO said "We did everything right, and we lost
> anyway".

I don't agree that not developing a side-business is what cost Nokia their
throne.

Very simply put, it was because they rested on their laurels. A Nokia
executive told me the original iPhone is going to fail and used the Nokia N95
spec sheet as the only argument. It was the most impressive smartphone of the
time but he completely failed to look ahead, as Nokia had a huge market share,
large R&D budget, their own factories and no real competition.

Of course the new platforms crushed Nokia while they had several half-hearted
attempts to follow them. They were completely setup to be crushed by any
disrupter with money and a vision.

~~~
pritambarhate
One more reason because of which Nokia failed, I think, is because they had a
platform which was somewhat successful. Symbian. They stuck with it too long
rather than jumping the Android ship. If they had embraced Android whole
heartedly, I think they could have competed with Samsung for the Android
supremacy. Their hardware was good and they had loyal customers, at least in
India.

------
throwaway40483
This is the killer quote:

“No one wants to face the reality that this is an advertising company with a
bunch of hobbies.”

It's so brutal but (IMHO) sums up Alphabet in one sentence.

~~~
dx034
However, many of these "hobbies" actively support ad traffic. Chrome and
Android ensured Google's high market share for search & maps while delivering
additional ad revenue channels.

By the number of projects most are side projects that make a loss, but the
really big ones have a big contribution to Google's success (via ads).

------
Afforess
Google has a fundamental problem with solving challenging issues, especially
those in the realm of physical "meat-space". Really hard problems, problems
that might reveal that Google is not omnipotent, where Google might not
succeed, Google pulls back from. In areas where Google is, Google dominates
the landscape. In all others, Google does not deign to participate. If Google
can't _dominate_ a market, it is not interested.

> _Former employees say Page became frustrated with Fiber’s lack of progress.
> “Larry just thought it wasn’t game-changing enough,” says a former Page
> adviser. “There’s no flying-saucer shit in laying fiber.”_

The issue with the physical world is that fundamentally, compared to a lot of
software or hardware technology, it __is__ fairly boring. Boring work is also
some of the most important work; the synchronization of traffic lights, the
scheduling of flight paths, the minutiae of power line access, these are all
boring, _important_ things. A common reaction to boring problems by
technologists is to throw computers at them. Build an algorithm to synchronize
traffic lights. Build an AI to schedule flight paths more efficiently. I
understand these reactions, the impulse to replace existing, less-optimal
processes with stronger, more efficient, automated ones. Google does a really
great job at automating things, its their core competency. However, automation
can't solve all problems. You can't automate away political processes. You
can't automate away property rights and fair access to power lines, and
contracting construction work. Page clearly feels uncomfortable with this, and
so he abandoned Fiber.

Honestly I am not sure Page was wrong to abandon Fiber. Google's core
competency is automation and if they can't automate a problem, maybe they
_shouldn 't_ be involved in the space. Or maybe Google should get a new core
competency and learn new things. Teaching an old company new tricks is hard
though. Very hard. So hard that most companies fail before they can ever
adapt. Without being able to solve problems in the physical space, Google is
fundamentally "locked-in" to only being able to solve digital problems in the
digital world. This is why Google has no physical stores, no physical products
(which are not manufactured by someone else - Chromebooks, Pixel, etc do not
count. Prototyping is easy. Selling to customers in a retail store is hard).
Microsoft had the same problem as Google once. It was hard for Microsoft to
learn how to run stores, build its own products; it took Microsoft over a
decade. Let's hope Google can learn too.

~~~
ForHackernews
> Really hard problems, problems that might reveal that Google is not
> omnipotent, where Google might not succeed, Google pulls back from.

I've heard this phrased as "Google has the good fortune to be operating in a
field where being 90% right 90% of the time is more than good enough"

If the search result you want is number 3 instead of number 1, that's totally
acceptable. If your ad-targeting is good but not perfect, you can still make
enormous amounts of money.

There are other domains where 90%/90% is absolutely unacceptable: avionics,
medical life support, rocket propulsion, etc.

~~~
user5994461
> "Google has the good fortune to be operating in a field where being 90%
> right 90% of the time is more than good enough"

I don't think it's an accurate view.

It was good enough when they started. Now they are doing a lot better than
that. The results are moved dynamically per user over hundreds of criteria.

It really is not a dumb search/ad engine that anyone could replicate easy.
They have evolved to be damn efficient at what they do.

~~~
ForHackernews
> It really is not a dumb search/ad engine that anyone could replicate easy.

I'm not saying it's simple or could be replicated easily. I'm saying that the
marginal improvements they've made don't really matter that much to users.

I mostly use DuckDuckGo these days, and its native search results are markedly
inferior to Google's, but it basically doesn't matter because I still almost
always get what I want on the first page of results.

~~~
zardeh
But it does matter to a lot of people, which I think is the thing.

There will absolutely be people who are willing to sacrifice some ease-of-use
in the name of additional privacy, but it seems that those people are in the
minority, and that means that Google (or whomever) needs to provide 99/99 when
everyone else is only 90/90, if they want to continue being market leaders.

~~~
ForHackernews
"But it does matter to a lot of people"

Does it?

Imagine some alternate reality where Bing were the dominant search engine (or
look at real world cases like Russia, where Yandex dominates), do you think
that Google's marginally superior results would be enough to make users
switch?

I propose that Google reached a market-leading position early on by being
pretty good when other search engines were pretty bad. Since then, they've
become the "default" option, and people will keep using what they're
accustomed to.

------
nunez
Yup. There was SOOOOOOOOO much bullshit work being done there that could ONLY
be done because Google can afford so much top-notch talent to work on
research, even if it reinvents the wheel. It was a big part of the reason why
I left.

That being said, at least they didn't invest their dollars on loads of red
tape, though to be fair it isn't like all of Google is incredibly regulated
unlike many other multi-billion dollar companies

~~~
baccheion
If you actually have a worthwhile idea or something you're working on starts
going somewhere, the masses will descend trying to stall it out. They'll also
magically try to slap their face/name on it, while trying to push you out.

Also, it's funny how many random things are being worked on, as it seemed
impossible to get time or support to work on anything. I wonder what
process/reasoning goes into deciding who gets to work on their own thing.

This company is so typical regarding many things that most of their
PR/marketing sound like outright lies.

------
zigzigzag
The robotics effort sounds like an absolute disaster. How shareholders haven't
been demanding answers there is beyond me. Acquiring 11 companies to,
apparently, satisfy Rubin's obsession with robots (it's named Android for a
reason) and then trying to shut them all down or flog them off ... but nobody
wants them? Yikes. How did they get so starry-eyed about Rubin that keeping
him (also failed) was apparently worth such a huge effort? Yes, he ran a
successful operating systems project and fully demands enormous praise for
Android's wild success. But where are the limits to retention efforts?

~~~
compiler-guy
Shareholders can demand answers, but it won't get them anywhere. For better or
for worse, Larry, Sergey and Eric own Google and can do whatever they want.

~~~
dx034
Shareholders can sell and thus lower the stock price (and the owners' wealth).
The fact they don't do it means that many people seem to believe in
management's ability to earn future profits.

------
paulddraper
Really? "Never"

What about 18 months ago?

> Google Earnings: Profits Soar As The Company Reins In Cost

[http://www.forbes.com/sites/greatspeculations/2015/07/20/goo...](http://www.forbes.com/sites/greatspeculations/2015/07/20/google-
earnings-profits-soar-as-the-company-reins-in-cost)

> Google shares surge on talk of cost discipline

[http://www.usatoday.com/story/tech/2015/07/16/google-
earning...](http://www.usatoday.com/story/tech/2015/07/16/google-earnings-
second-quarter/30246847/)

Whatever, keep the narrative.

------
cooper12
I'm no businessman, but does anyone else feel this will kill a lot of
potential innovation? Not every project pays dividends immediately, and some
are worth pursuing even at a long-term loss. (imagine if we all had fiber
today and bandwidth was ridiculously abundant. Just how different would the
internet be, just as when electricity became abundant?) Also I understand that
Google is a business, but the need for a business model for research might
stymy forays into interesting tangents. (I can't currently list any, but
history is full of examples of things that were invented while looking for a
solution to a different problem) Sure a company shouldn't be hemorrhaging
money or throwing it at anything that moves, but it also shouldn't be
completely beholden to (my generalization of) investors who can be quite
short-term-thinking and risk-averse.

~~~
digi_owl
Very much so.

Michael Dell effectively rescued his company from board room rampant
shorttermism some years back because of just such a problem.

And we basically witnessed Nokia and HP effectively crash and burn because of
boardroom demands for short term profits while the execs were trying to pull
of long term "pivots".

------
pritambarhate
I think this article is trying to unnecessarily create issue out of something
very obvious. It's very clear that Google's main source of revenue is ads. But
that is backed by very strong products which are an integral part of billions
of people's daily lives. Search, You Tube, Android, Gmail, Maps and a few
others. As long as they maintain their lead in these products, their ad
revenue is not going to go anywhere.

What's even more encouraging is that most of these products are improving with
great speed every year. They are fighting the Cloud Battle very hard. So I
think it is OK that some of the big dreams they have tried like Google glass
and autonomous cars have failed. One needs to take big risks to get big wins.
I think if they stopped these moon shot projects then it will be a thing of
big concern, then they would have stopped innovating. Innovation is what give
the Google "brand" it's aura, which makes people believe that whatever Google
produces must be good. It gives them the edge.

------
__derek__
I was surprised to see no mention of Bell Labs or Xerox PARC in the article.

------
throwawaygooglr
This thread being here today is rather ironically timed, given that Google
announced internally today it isn't giving its employees any Christmas gift
for the first time in its corporate history, presumably because of the
financial impact.

------
CM30
To some degree, this is like anything else in life, isn't it? The more
successful/skilled/good you are at anything, the less you have to worry about
whether you're doing things the 'right' way.

See for example, sports. A gifted athlete could quite easily defeat a far less
gifted one with more 'technical knowhow' because they're simply more skilled
by default and can hence make up for their inefficiencies or mistakes.

Or maybe any RPG game ever made. Come across a super powerful character or
grind your party 100 levels higher than everything else, and it doesn't matter
what tactics you use; you're simply too powerful to lose.

[http://tvtropes.org/pmwiki/pmwiki.php/Main/ScissorsCutsRock](http://tvtropes.org/pmwiki/pmwiki.php/Main/ScissorsCutsRock)

And the same obviously with companies, individuals and money. Enough money
means even a lot of stupid decisions will work out well, whereas a competitor
with much less will simply falter in the same situation.

~~~
iamatworknow
>See for example, sports. A gifted athlete could quite easily defeat a far
less gifted one with more 'technical knowhow' because they're simply more
skilled by default and can hence make up for their inefficiencies or mistakes.

This is a surprisingly good analogy. Look at Steph Curry in the NBA. He takes
a ton of awful long range 3-point shots, but he also makes a ton of them
(45.4% in 2015-2016 compared to league average 35.4%). But some people are
arguing that he's actually a detriment to the future of basketball because
kids are emulating him instead of learning fundamentals:

>"Even watching this weekend, everyone is trying to hit the three and there
are a number of big guys that are pretty good that aren't seeing the ball at
all," Johnson said at an EYBL stop in Indianapolis in April. "It's like guards
feel like they have to shoot the three to reach their goals, but it comes at
the sacrifice of actually playing a team game. There's a lot of guys chucking
a lot of bad shots without actually knowing how to get their teammates
involved and create for other people."

[http://www.sbnation.com/nba/2016/6/13/11876304/stephen-
curry...](http://www.sbnation.com/nba/2016/6/13/11876304/stephen-curry-youth-
basketball-aa-mark-jackson-warriors)

------
bane
One of the problems with companies that have cash cow revenue streams is that
it sometimes doesn't matter what kinds of decisions the executives make, poor
or good, the money will keep rolling in...until one day it doesn't and nobody
has a clue how to actually manage the rapidly sinking ship.

I've been studying Atari for quite a while, there's so many interesting pieces
to the company and their success and failure, and it's all been so well
documented and autopsied that it makes for a marvelous case study that still
has amazing applicability today.

~~~
dgacmu
I think you can look back and see some things that Google has done
successfully. Youtube turns out to have been a good buy. Google successfully
managed the transition to mobile, which many questioned whether Google would
be able to do ("Mobile first"). Most recently, Google has made a huge bet that
their future is intrinsically tied in with machine intelligence ("AI first").
We'll get to watch over the next 5-10 years how that plays out.

(It's probably already clear that there's a lot of power in an AI-first
approach, but it's worth noting that this change didn't just happen with
Sundar's blog post last month. A better way to look at it is to realize that
if Google has been running their custom machine learning ASICs for over a year
now, they must have started designing them well before that, which, to me, was
amazingly early. Google acquired DeepMind in 2014.)

Not all those bets will, or have to, work, as long as some of them work out
really well. I'm curious to see what happens with VR, for example. But I think
AI is the most obvious central bet, in the same that that mobile was
beforehand.

~~~
VladimirGolovin
I'd bet that "AI first" will play out well for them, because AI is beneficial
to both search and ads - while self-driving cars, fiber and balloons are not.

------
wrice314
Plenty of companies make so much money. Google didn't have to worry about
financial discipline, not because it had so much money, but because it has an
unassailable competitive position that is not aligned with its cost structure.
Put simply, if you had the mandate to bankrupt a company through competition
and had an infinite amount of money, I believe it would cost more to bankrupt
Google than any other business.

------
digi_owl
Best i recall, the Glass problem was more Brin over-hyping than the tech
itself.

And i do not recall reading about the car getting into trouble while under
computer control. Either someone ran into it or it ran into something while
human operated.

~~~
pageld
The car actually did hit a bus while in autonomous mode. To me, it was an odd
situation though. The lane the car was in was for parked cars as well as
traffic and it was ending at a turn lane or something.
[http://www.latimes.com/local/lanow/la-me-ln-video-google-
car...](http://www.latimes.com/local/lanow/la-me-ln-video-google-
car-20160309-story.html)

------
ftio
As the saying goes, Revenue Solves Everything.

------
spitfire
Success is a very cruel mistress.

Without some sort of feed back cycle - usually given by the market, things
grow in strange and perverse ways fast.

The trick is to develop a feedback cycle that isn't as harsh as the open
market (manage by quarters!) without giving absolute free hand.

------
LiweiZ
I think Google has been trying to somewhat imitate how life under nature
selection works. Bring basic-but-extensiable-happy-route-scoped projects to
life to test markets and wait and see which one would have the DNA for the
next boom. From this perspective, I think they actually allocate their
resources very carefully and intelligently. But the next emerging DNA perhaps
needs more than just luck. Maybe more persistent and focused effort. I guess
W. Brian Arthur's work has not small influence on its strategy. In fact, if I
recall correctly, he is/was some kind of advisor to Google. Just my personal
speculation.

------
kwijibob
Google has some killer products that aren't just about adsense for the web:

Youtube - incredible future for revenue Google Docs/Spreadsheet/Slides - the
future of productivity suites - easily monetisable when needed Android -
dominating this space bodes very well

They are gently providing an entire computing stack that covers all a simple
user might need: android/chrome OS/chrome browser/cloud

Yes they have a bunch of crazy hobbies. But they are dominating in a number of
key spaces.

------
baccheion
The problem with it's lack of financial discipline is that the money isn't
going to anything worthwhile. Everything they've advertised they're investing
in that seems to be worth something either fails to go anywhere, or was just
outright BS.

They essentially have a bunch of people doing nothing much in particular,
going nowhere in particular, while acting on their whim and whatever their
hand position happens to be on that day. It's even worse as they constantly
try to claim they are about-- something greater.

It's hilarious. It's not that they are wasting money (ie, doing something
worth something but that may not provide any returns, or something big and
unconventional but that doesn't seem relevant at the time), it's that they are
wasting money (ie, wasting money).

They are either doing what they're doing to make more money or to protect
their revenue stream, or to be once again doing the dumbest thing.

Nothing really gets funding unless it's going to make more money, or serve as
good PR to distract from how full of it they are or to try to brush aside
failure.

These days, when their products fail, all I see is failure. That is, it
probably took 2 years to develop whatever crap was released, rather than it
being "early days" and them "trying many different things." They picked one
thing, spent an eternity on it, pushed out absolute garbage, then failed.

Everything else that went somewhere or that could go somewhere gets caught in
political gridlock, as the idiots descend to try to claim credit, while really
trying to be the cliche they've always been: stomp out anything that's going
anywhere, because... <insert whiny bitching here>.

------
nemo44x
Google is an oil state. They setup shop and pretty much hit a cash gusher.

------
nobrains
Innovation usually happens when there is scarcity of resources.

~~~
omarchowdhury
Ain't that the truth.

------
skizm
I always wondered if Google just fired all their engineers except a few top
guys, and focused on their core money making products like search / ads / etc.
and tried to stay as lean as possible (lean being a relative term), how much
profit they could make.

~~~
tajen
I concur. But then I tried to classify Google projects in 3 categories and
find for "obviously useless things that only exist so engineers can have fun",
and I didn't find so many obvious things:

\- Obviously productive ones: Gmail, Google Analytics, Android, Android TV,
Maps, Youtube, OpenSocial, Chrome, because they all participate to
"universally trackable users",

\- Skeptical projects: Fiber, Flights, Google Scholar, TensorFlow, Chrome OS,
GDrive, GApps for Business,

\- Pet projects that may be fun but don't seem to serve as leverage: GCE (yes,
their cloud solution), Google+, Go, Google Earth, Google Play/Music, Google
Wallet, Google Glass, GGroups, GFinance, GTranslate, Google Fonts, Google
Classroom, Inbox, Wave, Hangouts, Google News, Google Currents, Google Keep,
Google Now, Wave...

Therefore... If they wanted to stay as lean as possible, would they have come
up with the right list straight away? What makes products "obviously" part of
the first list?

[1]
[https://en.wikipedia.org/wiki/List_of_Google_products](https://en.wikipedia.org/wiki/List_of_Google_products)

~~~
dx034
Even the skeptical ones are probably productive:

\- Flights will likely make money, it operates on a comission basis. It's just
not big compared to other projects

\- TensorFlow is part of the machine learning programme that is used heavily
to make more money in other areas. Sharing knowledge helps to get talent in
that area

\- Chrome OS is like Android for laptops. It ensures that you use Chrome and
Google. The adaption rate is not huge, but I could imagine that it still pays
off

------
randpeck
Brilliant article. Larry Page isn't impressed with Fiber because "it wasn’t
game-changing enough,” and that “There’s no flying-saucer shit in laying
fiber.” Definitely gives you a peak into the thought process of this giant.

------
mwexler
Funny, Microsoft used to talk this way in the 90s when IE and Windows ruled
the roost. While they are still strong, they do now appear to worry more about
financial discipline. Worrisome predictor for today's darlings?

------
return0
And it's not only ad revenue, it's also tax-avoided profits.

------
VeejayRampay
That Porat person is a serious contender for buzzkill of the year. Google
makes tons of money with ads and spends it on geeky experiments to try to push
a futuristic envelope (and create an environments where they can sell more
ads, like a self-driving car) we'll all benefit from eventually and she gets
to be the person that locks the toys away because "financial discipline".

~~~
MrZongle2
Buzzkill? Sure.

But she also sounds like one of the few responsible adults in the place with a
hand on the purse-strings, whose job is to ensure that there _is_ an Alphabet
and Google in 10 years, shiny toys be damned.

~~~
tzakrajs
There will be an Alphabet or a Google in 10 years but it will look eerily
similar to the aging behemoths of Silicon Valley today that take paltry swipes
at different markets while their main revenue source slowly dwindles (up until
the point they are bought by a holding company).

------
nojvek
> The flying saucers will have to pay for themselves. “If you work for me, you
> better understand that,” he says.

While I'm all for commercialization. I think a lot of game changing technology
takes a while to develop before they can be commercialized.

But google having too much money can be a curse as well. Best innovation comes
when you think like a cockroach to survive.

------
serge2k
> “No one wants to face the reality that this is an advertising company with a
> bunch of hobbies.”

great line.

> Many former X employees blame overexuberance on the part of Google’s
> marketing division for the hostile reception that greeted Google Glass

it was $3000, hard to get, and what were people really going to do with it?

Sure. Marketing.

> He notes that although Glass was marketed to the public as the Explorer
> Edition, many people assumed it was a finished product.

Fair point, but how many years are people supposed to eagerly wait?

> The effort, known internally as Tableau and championed by Brin, had been a
> plan to create gigantic TV screens.

what? lol.

~~~
vidarh
When I worked at Yahoo (2003-2005) the talk was the same: Engineering, which
dominated the company, largely thought Yahoo was a tech company.

But Yahoo was an advertising and media company.

Yahoo never quite managed to resolve that conflict, which rose straight to the
top, and it kept causing stupid things like the massive amount of money that
was poured into their own search engine instead of focusing on the content and
services that actually had users continue to come back and stay within the
network (e.g. Mail never made much money, but a large portion of users went to
the Yahoo homepages to log into their e-mail, and a good portion would end up
clicking on various news articles etc.)

Lots and loss of engineering effort went into project that'd never have been
greenlit if Yahoo had accepted earlier what it was.

But Yahoo had a great deal of Google-envy at the point I was there, and it
coloured a lot of decisions. At the same time, Yahoo _didn 't_ have the cash
to operate like Google. E.g. where Google engineers could order servers by the
dozens without justifying it, I had to present my arguments to a harware
review group in Sunnyvale (I ran a team in Europe) to get a single new server
to run the European billing system that processed millions of dollars worths
of payments. So on one hand they wanted to be more like Google, on the other
hand they didn't want to pay or it, and meanwhile what made Yahoo money was
first and foremost the content side.

------
brilliantcode
I feel like Google is still stuck in 2005. Not much has changed from top of my
head.

All of their products are still based on their end-user being the product
since everything is free and people expect it to be that way.

I don't see anything changing because they are literally printing money from
their monopoly on online advertising. They have no serious competition and no,
Facebook is not really great for targeted advertising unless you are a big
brand.

Without any real external pressure as a result of their own success, it's
beginning to look a lot like Microsoft of 2005.

Even from a developer's point of view, Amazon has usurped the cloud space with
Azure now playing catchup and winning.

Much as Satella realized that Microsoft needs to stop being like Google and
more B2B like Oracle, Google needs to find it's new place.

Vast majority of the public is unlikely to give a shit about their privacy in
return for free productivity and entertainment but demographics change.

~~~
mattmcknight
"All of their products are still based on their end-user being the product
since everything is free" Counterexamples: GSuite (fka Google Apps) Google
Pixel Google Home Google Wifi Google Cloud Platform

------
draw_down
It's funny to me that investors and biz press are surprised that Brin & Page
meant what they said in the 2004 letter.

~~~
forgottenpass
Ideals like that are the sort of thing you expect companies to abandon after a
few years. And the idealism has been draining from google for years. It barely
exists anymore beyond internal-facing perks and their cult-ish belief that
their shit doesn't stink.

That letter also included the famous "don't be evil." Does anyone really think
that in a few hundred years time, people aren't going to look back and laugh
at the feeble rationalizations that have currently taken hold to convince
otherwise clued-in people that the most pervasive surveillance apparatus in
the world isn't at least a little bit evil?

------
serge2k
> Bill Maris, the CEO of its venture capital arm, GV

isn't google ventures doing pretty well though?

~~~
jiaweihli
You might find this an interesting read:
[http://www.recode.net/2016/12/5/13842608/former-google-
ventu...](http://www.recode.net/2016/12/5/13842608/former-google-ventures-ceo-
raising-new-230-million-fund-focus-health-care)

------
puzzle
Except in 2008, during a developing worldwide financial crisis, when the new
CFO Patrick Pichette started figuring how much was actually getting spent on
things such as cafeterias and childcare subsidies (for the onsite service).

So, yeah, never.

------
stevage
Huh. Is "Alphabet" a pun? The "other bets" lose money, while the "alpha bet"
(Google) makes lots.

