4 min read · Jan 13, 2018
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Lets be honest here. Google built a search engine 20 years back and have made advancements in making that search engine incrementally better every year. Google’s assumption is that no-one will ever create or make a better version of search. So by definition, if you’re betting against technological innovation, buy Google stock!
One of the pleasures in Silicon Valley is eating lunch at Google’s headquarters in Mountain View. Last time I was there, there was widespread gossip that one of Google’s head chef was poached by LinkedIn and so Google was forced to bring in a Michelin star chef as a replacement. I’v also heard that a large proportion of Google’s employees come to office early for the breakfast.
For a Google employee, food is just the tip of the iceberg. So what is Google’s agenda? Why make life so easy?
Like most people, I cannot live without google. Its pretty much as important as electricity today and I’m pretty sure the world would cease to exist normally without google. Its a company that jumpstarted the internet revolution and today it dominates advertising budgets in all big corporations all over the world.
For the world, Google is the ultimate technology Company, the best of the best, the Company you think of when you think of Silicon Valley. The Company is now one of the five biggest corporations in the world with a market capitalization of over $750 Billion.
Despite having all the conventional characteristics of a innovative technology company, why do i think otherwise?
Lets look at revenue numbers. Till today, almost 90% of Google’s revenues come from search, a business they built 20 years back. Google Maps, Gmail etc are all initiatives that optimize the search business.
I remember Google being one of the first companies that pride itself from diversification of business verticals. At one time Google’s businesses outside search/advertising were in the hundreds (remember astroid mining?).
Despite the progress made made in WayMo (self driving) and Android (two of the most successful initiatives outside search), these businesses fail to appease shareholders.
I’m not saying Google is not an innovative Company. They are innovative in bits and pieces but have failed to achieve scale in any innovation outside search.
Google’s cash pile is confusing. Here is a Company that’s prides on being of the best technology companies of the generation. However, they have been earning 0% returns for over a decade now.
Its a clear indication that they have no idea what to do with the money and is okay with earning 0% returns instead of creating future revenue streams.
I can think of countless problems in the world that need fixing but Google does not seem to be interested.
Amazon in contrast has been aggressively investing every single penny (sometimes more than it can afford) to create future revenue streams (AWS, Alexa, Whole Foods etc).
Funnily, at the balance sheet level, there seem to be two type of technology companies today — 1) Tesla and Amazon seem to invest more than their earn and 2) Apple, Google and Microsoft who have no idea what to do with their money.
Google built Android to compete with iOS/Windows, google home products to compete with Alexa, Gmail to compete with Yahoo Mail, Google+ to compete with Facebook, Chrome to compete with Firefox etc.
I have yet to experience something truly revolutionary by Google (apart from search).
I used to be a huge fan of Google X (Google’s moonshot projects division) — but don’t know which of the moonshots have created significant value.
I strongly believe Google’s never-ending cashflows from its search business is resulting in a lack of paranoia in the workplace, something I believe is critical for innovation. This off-course is a generic statement (Im sure there are parts of Google that thrive on paranoia).
Google’s benefits and perks definitely manages to attract some of the smartest minds in the world, but I’m not sure if it incentivizes innovation and risk-taking.
I’m a fan of Marissa Mayer (ex-CEO of Yahoo) who was also one of Google’s first employees. On graduation, she had over 12 offers from some of the most prestigious companies in the world.
Why did she decide to join the small team at Google? She thought she met some of the smartest and brightest people at Google at the time and that was the basis of her decision. She went where the smartest people were.
Today, it’s hard to tell if its the people or the perks.
Lets be honest here. Google built a search engine 20 years back and have made advancements in making that search engine incrementally better every year. Google’s assumption is that no-one will ever create or make a better version of search.
So by definition, if you’re betting against technological innovation, buy Google stock!
Any thoughts?
