

Google’s Greatest Strength May Be the Luxury of Failure  - yarapavan
http://blogs.wsj.com/cio/2013/05/17/googles-greatest-strength-may-be-the-luxury-of-failure/

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mtdewcmu
"The lesson may be that a broad focus on innovation and solving big problems
leads to resiliency."

That would be an interesting conclusion if there was a good reason to believe
it, but the article didn't make much of a case. How many of Google's off-the-
wall projects are contributing to their 30% year-over-year quarterly revenue
growth? Most of the projects mentioned were either market failures or haven't
been released yet. Android was clearly a success, but it wasn't a great
example of innovation: it was basically a clone of a successful existing
product.

There's probably a more prosaic explanation for Google's success relative to
Facebook. Both companies make most of their revenue from advertising, but
Google developed AdWords, which leveraged Google's search infrastructure to
became an essential piece of infrastructure for the buying and selling of ads.
It's hard to name any other company that got rich off of web ads besides
Google. Google is entrenched in the fabric of the internet, while Facebook is
an upstart that's primarily just a website, like Yahoo was 15 years ago. At
that time, Microsoft was the giant that owned the critical infrastructure, and
they were doing very similar things as Google is now: Microsoft created MSN to
compete with AOL and Yahoo; Microsoft leveraged its infrastructure to crush a
threat from an upstart competitor -- Netscape. Building out, as much and as
fast as you can, seems to be the winning strategy when you are in a position
of overwhelming dominance as a result of owning essential infrastructure.

The "Luxury of Failure" is the actual lesson here. You get the luxury of
failure when you own a revenue stream that's big and entrenched enough that
you have the luxury to do essentially anything you want, even lose money. It's
hard to compete against that.

~~~
timedoctor
Microsoft has the luxury of failure also, but when they tried to compete with
Google they failed. Microsoft are in the same markets that Google makes a huge
amount of money from and yet they failed on most fronts.

I think the safest way for Google to make money would be to not innovate or
create any off the wall projects, and then just return the money the money to
shareholders through dividends or share buybacks.

Just looking at the current stock price of Google $909 and Earnings per share
of $33, this means that IF Google returned the entire earnings to shareholders
it would take 27 years for the shareholders to get their money back and THEN
after this 27 years they would start to get a return on their investment. This
assumes no growth, and Google has grown significantly but there is no
guarantee they will grow in the future. Even if they do grow significantly it
will still take a very long time to get your investment back.

There are unknowns that could completely disrupt Google's business models for
example what if all search became voice based (siri-like) with better AI. Or
what if a competitor develops much better AI capabilities into their search.

~~~
mtdewcmu
>> Microsoft has the luxury of failure also, but when they tried to compete
with Google they failed. Microsoft are in the same markets that Google makes a
huge amount of money from and yet they failed on most fronts.

You figure, basic economics says that if the cost of failure is low, you
should expect lots of failures. It's not the "luxury of always succeeding."

>> There are unknowns that could completely disrupt Google's business models
for example what if all search became voice based (siri-like) with better AI.
Or what if a competitor develops much better AI capabilities into their
search.

Google has fended off serious competition before, and if a start-up came out
with a better search idea, Google would acquire them.

------
morgante
Not exactly sure how this article defends its headline at all.

Considering that the author points to Motorola and Facebook Home as wins, his
grasp of the tech scene seems rather weak.

~~~
hkmurakami
I figure we should just flag the article off of the front page then?

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markkat
I was lead to believe that Larry Page was Google's CEO. How does this get sent
to print?

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abhinavsharma
"CEO Eric Schmidt" lol

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d0gsbody
This article barely talks about its title topic.

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SpikeDad
Google's greatest strength is that the tech press don't give a rat's ass about
how they behave as a company as long as folks get free stuff.

------
michaelochurch
Technological experiments often call for risk-seeking and adventure, but when
it comes to things that affect other people, a more conservative and level-
headed approach is necessary.

For example, the utter recklessness involved in deploying calibration scores
and shuttering 20% time is deplorable. That's an extreme lapse of professional
responsibility.

(Sorry if this irritating, but as a matter of principle, I must keep doing
this until Google does the right thing and one of the two founders issues a
formal apology, and not only to me but to thousands of other affected people.)

~~~
apalmer
Are you for real? I am trying to figure if you are a troll or whether you are
truly psychologically damaged by your time at google?

Dude google is not going to change or issue an apology because a former
employee rags on them on the internet... you do realize this right?

~~~
verbin217
I think it's fascinating. If you read his other comments he's obviously
brilliant. That said, he seems to be somewhat detached from reality over his
episode at Google. Not that perf isn't shitty just that he seems to think he
alone can do anything about it. It's like the endearing megalomania of a child
who honestly believes he'll grow up to single handedly end world hunger or
cure cancer. You just hope that after he realizes his limitations he isn't so
distraught that it keeps him from accomplishing what he's clearly capable of.

~~~
agent00f
Is the alternative implied here to acquiesce instead?

~~~
verbin217
If you mean michaelochurch then no not at all.

"I must keep doing this until Google does the right thing and one of the two
founders issues a formal apology, and not only to me but to thousands of other
affected people."

I don't mind his Google bashing all that much. I just hope that he's accepted
the futility of it. He can't really do any more damage to his reputation so he
may as well keep going. This is a good place to broadcast to
prospective/current Google employees. There could be people reading here
who've already been slotted and don't even realize it. Whether Google
accelerates your career or uses you as a disposable code monkey is determined
entirely by their incentives. How would it benefit them to tell an under-
performer that they're not going anywhere? Using the ambiguity of an eventual
promotion as an implied carrot would generate better returns on their
investment. It sounds like it'd work pretty well actually... Use Google's
reputation to bring on a flurry of the most desirable new graduates and use
them to do grunt work while they're motivated to prove themselves. Promote the
top performers to "Real Googlers". Keep the middle around until they run out
of steam or quit in frustration. Google gets cost effective grunt work and a
larger share of the very best talent as a long-term strategic advantage
against Apple/Microsoft/Facebook. If michaelochurch is as abnormally
dauntless/foolhardy as he appears to be this could be a really big problem.
Most people negatively affected probably go the "professional" route and
quietly move on.

