No, Eric Schmidt didn’t step down from being CEO of Google to take Steve Jobs’s position at Apple. I’m fairly certain Schmidt was demoted. Or if he wasn’t, then he should have been.
From a strict business perspective I suppose it’s ridiculous to criticize Schmidt’s performance at Google, but that won’t stop me. The guy has done a fabulous job of optimizing search and web advertising but nearly everything else he and Google have done has been a failure. What else does Google make money from other than search and ads?
Nothing.
Yeah, but YouTube is almost profitable, right?
Hardly. While YouTube may be operating at near break-even that completely ignores the minimum $5 billion sunk and lost in the video sharing venture over the last several years. YouTube is still years from breaking-even on a net-net basis.
But the real killer for Eric Schmidt — the bonehead move that would have gotten him fired had I been on the board — was that $6 billion offer for GroupOn.
Here’s what Google could have done — should have done. First, take four top engineers and set them up like a startup in a rented apartment, denying them any access to the Googleplex. No free massages and definitely no unlimited Froot Loops. Google has grown to the point where it is virtually impossible to get anything done. So just like IBM did with the PC, a GroupOn clone would have to be done as a completely separate renegade operation. Four engineers, two months, and GoogleOn would be ready to go.
Then simply pay every adult in America $10 to join.
That’s about 100 million members or $1 billion. See, I saved Google five billion dollars.
It’s actually even better than that since GroupOn has only 50 million members.
Buying companies yields far more instant advantage than building them, I know. In Groupon’s case Google would get effectively irrelevant, copyable technology along with their entire user base. But $6 billion? Really?
My plan is way better.
Trying stuff that “doesn’t work” until “something does” is awesome. But seriously, when will the “something does” part begin for Google? The company is so financially successful because of its one trick, but at some point even at Google there is ultimately someone to blame. In this case that’s Eric, not so much for offering GroupOn $6 billion, but for getting turned down. The offer stinks of desperation and impotence. And to be rejected makes it even worse.
We can definitely say Eric did not screw-up search, but can we say anything else? Remember when Microsoft “missed” the internet? Well Google “missed” the Facebook.
Now understand that for all my complaints Google is going nowhere but up, with the economy slowly recovering and with that Internet advertising. But I’d say Eric had his shot. Unfortunately Larry Page probably isn’t the hammer Google needs, either. Google has super people but a lot of them seem to be in a rut. If Larry could have changed that, wouldn’t he have already done so?
I don’t know who should be the next CEO of Google, but I know who I’d hire to be the next head of Google HR.
Yahoo’s Carol Bartz.
Carol Bartz? Explain.
She is doing a great job disassembling Yahoo. Not making enough money (they are still profitable), then fire more people.
Let’s not get started on Yahoo! What a disaster!
Why not the master of ‘slash and burn’ , Mark Hurd?
Oh , I forgot, you want the business
to continue to run…
Why not the master of ‘slash and burn’, Mark Hurd?
Oh, I forgot, you just want to cut staff, not destroy
Google
Hey Bob,
Here’s my take. For the last some odd years Google has been focused mainly on optimizing search and web advertising and Eric was the best guy for the job given his experience (at least of the 3). As you correctly state, now that those products are humming along Google now needs the vision and entrepreneurial spirit to find its next huge thing(s). That’s not necessarily Eric’s specialty but it definitely is Larry’s.
That *assumes* that lightening, having stricken his brain once with one good idea, will strike again with a completely unrelated good idea. I think Edison was the last one who did that. Even Steve has pretty much plowed the same row.
Excuse me.
You forgot James Dyson. Much more recent.
So what’s your solution if you want to come up with new innovative products? find a random person who has NEVER done it before?
Optimizing search – Ya but at the expense of quality results.
———-
Bob – Curious, was Erik successful at any of his previous jobs (Sun, Novel, etc)? Or, did he just fall into it at Google like Meg did at eBay?
“Optimizing search – Ya but at the expense of quality results.”
Yep. Google’s search results are seriously sick. I googled for “spindump remove”, as spindump on my Macbook drives me insane, and Google finds “Pork Chops With Spinach Dumplings Recipe” for me. Not what I was looking for, guys. No. Try harder.
Plus, I need to wade through knee-deep muck from other search machines, online advertising sites, and so on to find the rare gem of knowledge in Google.
Googling has become an EPIC FAIL.
Carol would trim all the fat from Google like a hired hedge trimmer on meth. She would make the company lean and mean … but then what? The vision thing … again.
That’s why I said HR, not CEO…
If Eric has done a good job on search at Google then why are search results consistently worse than they were a few years ago? I’d say Google has absolutely failed in search. If there was any credible competition in the search space, Google would have a real problem on their hands.
Ummm. It’s called Bing, and it is a problem.
Bing is not a successful competitor to Google, but a marketing ploy by Microsoft.
Bing is definitely not the competition that will topple Google, it’s just a desperate attempt from Microsoft in gaining some of the search market share.
Anyway, how on earth do you refuse a 6 billion $ offer. Does grupon make more then that in like the next 50 years?
It’s not important if they make $6 B in the next 50 years. Rumor is they are seeking to go public within the next year in which case their market cap will be north of $6 B in which case their decision to not sell to Google will be a smart one.
Bing appears to be just a mirror of google. Or at least the search results for the most part seem the same to me. However, has anyone noticed that AltaVista is dramatically different? In particular, when it comes to ‘sensitive’ data? Google tends to ignore email addresses, especially it’s own. Most of the time returning nothing with any mention of name(at)gmail.com. But AltaVista turns up all sorts of dirt.
Curious.
I tried my own email@gmail.com address and got 45 results from Google, 2 results from AltaVista, and the same 2 results from Bing. What was that you were trying to say?
yes, it is a problem, but not for google.
It’s search engine may be worse, but still better than the others. I find myself unable to find better results from other engines…hence the phrase “google it”.
Isn’t the fact that there’s no credible competition an indicator that Google’s done alright at search? Seems almost tautological to me…
Looks like they had the same idea…
http://searchengineland.com/google-readies-groupon-clone-report-61930
I never understood the Groupon bid. Aside from whatever head start they had, there’s nothing proprietary enough about the idea that prevents it from being easily cloned. I’m in Los Angeles and I get at least 5 “coupons” a day that are just as good as Groupon’s. Angies list, LA Times and few I don’t even know how they got my email.
It will be interesting to see how scalable the idea is. When Groupon first arrived it was novel a novel approach and the accompanying Groupon text explaining the deal was entertaining in an irreverent, hip, kind of way. Now that I see 20+ coupons a week, the novelty has warn off and they’re all becoming candidates for my spam filter.
Google share holders should be thrilled that the bid was rejected.
I couldn’t agree with you more. There is nothing in the Groupon business model that creates barriers to entry. The software is simple and it is inevitable that there will be regional players that will eat into their most profitable markets.
Bob:
SPOT ON ! That was exactly what I was thinking (the Groupon misstep that is). As for Goolgle’s future, do you think their innovation and start up spirit could be captured if they reorganized themselves along the lines of the Goretex parent ? That is smaller single purpose entities which are directed to innovate and operate independently ?
Maybe, but the bigger question is whether they’d even try something like that, which I doubt.
I said the same thing about Yahoo’s $6.4bil deal for Geocities; give the users $50 to move over. At least Groupon unlike the pitiful Geocities is at least profitable.
One thing Google does really well, with one glaring exception (Buzz), is in integrating their other services seamlessly and getting you want to use those other services. Piscasa seemed like a strange purchase but it works great with Gmail. Maps is integrated into Calendar. Calender into Gmail. etc. And all of it works on your phone with Android. Not just works, but works very well.
With Buzz, Google went the old Microsoft route where they tried to force their users to use their crappy me-too product rather than delighting people with cool, new stuff.
I don’t think I can agree with that, actually.
Even to this day, there isn’t really a *simple* personal Google portal with easy links to mail (Gmail), blogs (blogger), photos (Picasa), calendar, etc. The reason this sticks out to me as not being particularly simple or elegant is that I do web design part-time, and one recent client of mine needed to aggregate those services within their non-profit organization. I ended up embedding a Google Calendar on their site, using a blogger page for their news page (flying in the content from blogger, not using a blogger template), flying in their photos from their Picasa albums, etc. This company is not particularly web savvy, but they already used Gmail and Google Calendars within the company, so it made sense for me to stay with Google as much as possible. Still, trying to explain to them how they would be updating their site themselves (a major request of theirs) was incredibly difficult. They didn’t understand needing to login multiple times. They didn’t understand why the blogger page didn’t use a Google address. They didn’t understand why the design of the blogger interface looked different than the Gmail interface.
It would be so, so much simpler if Google had an individual portal with easy one-clicks to get to mail, photos, blog creation, calendars, etc. Right now, if you want to go into your Gmail, you click “Gmail” at the top. If you want to look at yoru calendars, you click on “more” and then you click on “Calendar.” If you want to look at your Picasa photos, you have to go to “picasaweb.google.com” (NOT “picasa.google.com”), and you usually have to login again (why?). If you want to go to your blog, you have to go to “blogger.com” (NOT “blog.google.com”, or some other easy to remember address for clients), and once there, you usually have to login YET AGAIN.
It would be pretty easy for Google to aggregate all this stuff within your own personal Google ID, and have it all be accessible on one screen, with a consistent, simple, beautiful GUI, and only have to login one time. Yet they don’t do this. I think they have missed some things here that are actually pretty easy to get right. Not sure I understand their method. Or maybe it’s just a lack of one that’s the problem.
Actually, I think the bid for Groupon wasn’t for the 100 million customer base, but for the trust in the name to the corporations that put their discounts onto the site in the first place. Google doesn’t make money by our eyeballs as much as they make money by corporations trusting google to get them eyeballs, and better still the right eyeballs to actually click a link or two.
So when making a bid for Groupon, Google wasn’t going for our eyeballs but for the large national collection of corporations getting into the online sales business (many companies that went to Groupon did so as their very first form of internet advertising).
So the value in Groupon wasn’t the collection of 100 million eyeballs. It was the collection of contacts for the B-to-B sale of more advertising, contact information that Google would otherwise have to go hunt for themselves. THAT is what was worth a ton of money, because building THAT database is what would be expensive.
Expensive sure, but you could build a hell of a B2B sales force for a lot less than $6 billion, no? If the Google brand was seriously tarnished it might be worth paying a premium to have a separate trusted brand to run it under, but I can’t imagine that small business owners currently using GroupOn would recoil in horror if they were approached by Google…
All in good time…
Almost everything Google has done has been improving a previous technology. Search: Altavista, Yahoo & Co.; Maps: MapQuest & Co.; Mail: Hotmail, Yahoo, & Co.; Android: iPhone; Docs: Writely…Google’s in the business of making things other people have done, but trying to do it better. Unfortunately, their recent projects don’t offer much in market disrupting features that make people want to switch from something else. They’re currently depending on integration with the rest of their suite to be the compelling reason, which IMO is where they’ve lost…leadership, if it can be called that. They’ve never been strong on original ideas, but in the past they have been strong on making things better.
I want to see more ideas out of Google like trying to scan every book in the world and making them searchable (Books project), or taking eternal panoramic photos of every street in the world (Maps project).
Additionally, while I’m ranting…why doesn’t Picasa Web Albums have more features and universal integration like Flickr! Why does Orkut look like it’s designed for Elementary kids! Why has Knol languished in the pits of despair!? My one piece of advice Google – don’t throw mediocre copies on the internet (meaning simple clones with no compelling features), sit and watch them suffer initial public apathy, and then abandon them to die. If your going to put a new project out there, have a team that treats it like its success is the only way their going to eat tomorrow.
Bring back the dreamers and the die-hard start-up spirit, not this rich kid play ground where you get bored with your projects that don’t blast off in 48 hours.
— in the business of making things other people have done, but trying to do it better.
Some have asserted (Bob, too?) that Apple does just that. Steve didn’t invent the GUI, he just borrowed it. He didn’t invent the MP3 player. He didn’t invent the tablet “computing device” (I know civilians think the iPad is really new, but tablets have been around for decades). He didn’t invent the smartphone.
So, who out there has actually “invented” cool stuff that also runs some company?
*Other* than Google’s founders? (They did invent the pagerank algorithm, I believe, and that was truly novel at the time.)
So it’s arguable that RIM’s founders effectively invented cellular data. I mean, the concept was obvious, and little portable computer terminals with radios (Motorola) were in use by the 1980s, but they used dedicated radio channels. Using and expanding the cellular paging channel for digital data (rather than putting modems into analogue cellphones) was an innovation, and going from standalone modems to the Blackberry can be seen as the obvious part.
But then what’s been invented in any field in the last ten years that jumps out as novel the way, say, the mouse did?
— They did invent the pagerank algorithm, I believe, and that was truly novel at the time.
I’ve read up the Wikipedia description. While the USPTO gave it’s blessing (it blesses variations of the PB&J sandwich for crying out loud), a motivated math stat or OR analyst could blow holes in it with ease.
Bell Labs invented “data”, i.e. information theory, in the 40’s and the cell system in the 60’s so sending stuff digitally instead of analogly is pretty obvious. Granted, the techniques for doing so have been and are continuously evolving.
When you look at Google’s reported revenues, they indicate that there is a HUGE amount of ad-clicking going on. I don’t click google’s ads, nor do the dozens of people I’ve asked.
I think that Google is simply an arm of the NSA – the perfect spying tool where millions of people happily give the agency their email, documents, phone calls and information search terms and clicks in exchange for “targeted advertising” that nobody click on anyway.
Too true. I don’t think I’ve ever clicked on a Google ad yet I use Google all the time. I’ve also learned to skim over the increasingly crappier results but I also usually don’t go much beyond the first page. But *somebody* must be clicking those ads to generate the $8 billion in revenue last quarter.
Google’s main threat isn’t Bing but a growing mistrust of the population on companies protecting their privacy. It may be aggregated data, but as the accuracy of tailored advertising increases, so does its creepiness factor. Google is cyber-cloning you – as Schmidt famously said:
“I actually think most people don’t want Google to answer their questions, they want Google to tell them what they should be doing next”
“We know where you are. We know where you’ve been. We can more or less know what you’re thinking about.”
that’s what AdBlock Plus is for.
The only thing rarer than stumbling upon the next big thing is for an incumbent to do so. Sure, Apple has made a something of a habit of doing so, but who else?
So, Google stays with selling ads, and that is not a bad little niche to be in. The key here, as I see it, is two-fold:
1) Following the customers wherever they go. Android (Google TV?) is a prime example of this.
2) Knowing the customers so as to better serve relevant ads. GMail and Reader (RSS) are prime examples of this; YouTube less so, but the logic still holds. Groupon and Facebook would have been greats ways of extending and deepening this knowledge. None of these extra adventures need made money per se, as long as each helps sell better ads AND helps Google stay dominant a decade hence. Who cares about splashing out for half a year of earnings ($6 billion) when the future is on the line?
The day Google stops chasing its customers down every little corner of the internet and instead starts focusing on the short-term bottom line, that is the day Google starts going downhill, in my opinion.
In terms of mojo, Google is long past its peak. Making money is something different. They can (and will) increase earnings steadily for he next decade even if it means eventually rendering fat. But that’s not mojo. We’re bitching abojut products here, aren’t we, yet what has been Larry Page’s title these many years? President of products. Not a good sign.
Fair enough, but how many companies have ever captured lightening in a bottle twice? I think Google has enough on its plate simply trying to sell every ad in the world. From here on out the best they can reasonably hope for is to be a modern-day (pre-web) Microsoft, playing their hand ruthlessly, being the rumbling freight train on the heels of the industry’s rabbits, and waking up some days to find that somehow overnight the next Facebook has carved away some big piece of the future. C’est la vie.
As soon as they start worrying about making money unrelated to ads, start wanting to be some other company, they will lose all momentum. Microsoft might have made the transition over to smart phones had they not lost their way chasing every market that looked interesting.
Ironically, if there was one company I’d expect to be able to come up with a viable alternative to Facebook, it would be Google.
Instead of copying or buying other social networks, they should build something original. The Diaspora approach springs to mind, for example. Make it a piece of software (the ‘seed’) that anybody can install on their own web server or host on Google’s, in exchange for displaying unobtrusive ads on the pages. The seeds would interact with each other and publish data in the world wide network, but let the seed members have the control over their own data, how much is shared, what is revoked, how much is archived and for how long etc.
Google has the money, the engineering talent, the infrastructure, the balls and a philosophy that seems to encourage taking risks and trying out new stuff. Such a gizmo seems right up their alley. I’m surprised they haven’t tried it yet.
This new type of social network would address key faults with Facebook: privacy issues and centralized nature. I say it’s at least worth a try.
But you know what, if you’re going to go, you may as well go out with style . . . I’m not a shareholder, so I’m perfectly ready to sit back and be entertained – what can the billions buy? youtube and google earth and satellite maps that show my car in my driveway . . . keep it coming.
Hey Bob,
years and years ago at least it feels that way. We got into a discussion on Microsoft, I was arguing that they hire the same “minds”, you were arguing Microsoft hires just the smartest and that’s a good thing.
I call it now “intellectual mono culture”. Seems the same is going on here. I don’t think mean and lean will do. The startup culture was supposed to be a diversified bunch able to adopt and thrive, but the current trend to startup mills starts worrying me. They a breeding the same ideas the same organization, same …
On an abstract level: Does Intelligence drive organization or does organization drive Intelligence?
I think it’s the later, easier to test different options from an evolutionary point of view. In other words, these companies build the wrong organizations. If adaptability/survival is the goal.
The people who read this blog, including me, tend to be fixated on technical risk, but John Doerr will tell you that’s actually of minor concern to him as a VC. You can nearly always throw money at a problem and find a solution. Finding the right problem in the first place is the real issue and that requires a mindset that rarely exists — and is definitely not encouraged — at companies operating on Google’s scale.
Maybe I need more coffee. But finding the right problem, isn’t that a problem of diversity. If you get into this “intellectual mono culture” everybody sees the same problem.
As to John Doerr, looks to me like they have become the Microsoft of VCs.
The only thing I don’t get is Apple, how do they do what they do. Is Steve such a strong counter balance to “significance testing”[1] . Or think different?
[1] https://www.nytimes.com/2011/01/11/science/11esp.html?_r=1&ref=science (coin experiment)
Because the vision springs from one mind . . . Steve’s. That’s why he is kind of indespensible.
That is 100 percent correct. Apple functions on an auteur model with many minds implementing a single highly-refined sense of taste and style. Steve IS indispensable, which is why Cook can’t replace him. The bigger question is whether Steve is REPLACEABLE?
A few years ago Robert X made an observation that has really stuck with me (I forget the column or even the context). He talked about the evolution of management in large companies and what I have come to recognize as the “end stage.” That is the stage where the executive ranks are populated with “sharp operators,” people who know more about protecting assets and making piles of money in general rather who know or care much about the nature of the business itself.
It seems to me that Google is more susceptible to a quick evolution in this direction than most companies: It is a “one trick pony” with a whole lot less mojo than generally thought. Will Schmidt’s reassignment stave this off or hasten it? A couple of “meh” quarters and I imagine we’ll see soon enough.
As I said in earlier posts on this thread, and many other times and places, neither Google nor Apple has “invented” or “found” interesting problems. Both have improved on existing solutions to existing problems. Unless you’ve got lists of such for either company?
I think of invention or specially innovation as a fork in a given trajectory of current thoughts. Most people follow the trajectory of current thought, it’s much harder to come up with a way to fork and knowing when is the right time.
So there is always a history, otherwise it would be pretty random. Are you looking for random events?
Just looking for the lists, and a CEO who has actually “invented” something “new”.
I certainly would agree that Apple (and Steve) have not “invented” anything new, but I DO think Apple has “found” several interesting problems over the years and has proposed some (mostly) successful solutions to them.
Someone brought up the iPad a few posts above this, saying that the tablet computer had been around for a number of years, so Apple didn’t invent it. Obviously, this is true. But I do think Apple (and Steve) found an interesting problem with the entire tablet range of computers: my mother could never have figured out how the hell or WHY the hell to use one of them. My mother bought a nice iPad for herself several months ago. Steve found a solution to that problem. The whole iOS thing is something that really seems to make sense to my mother, in fact. There’s no way Microsoft or Google could have solved this problem.
Another problem Apple helped “solve”: I am a professional music/audio producer by trade, so my entire world has been shaken (in both positive and negative ways) by the iPod. Yes, there were dozens and dozens of mp3 players on the market before the iPod. And yet even in my world as a professional musician, I never knew *anyone* who really wanted to use one of them. I knew an opera singer once who preferred his Creative Zen player over an iPod. He was the only one I ever knew who felt that way. Apple solved the problem of why no one was really buying and using mp3 players. They were too esoteric and too difficult to operate for most people.
Most tech companies ask the question: “How can we do X, technically?”
Apple asks: “How can we do X, elegantly and simply?”
I would tend to argue from my vantage point that the question Apple asks is much harder to answer than the question asked by most tech companies. It may seem like they’re not doing anything new, but they ARE doing something new, just by asking a different question.
— Apple asks: “How can we do X, elegantly and simply?”
And I agree completely. What I don’t know, and may be Bob or some of the Usual Suspect Pundits do, is how Steve functions in that effort.
1) Steve actually devises the elegant and simple part, which the lemming engineers implement.
2) Steve tells the lemming engineers to make something simple and elegant, then does the Royal “We are not amused” serially to the engineers’ efforts until, by trial and error, the lemming engineers amuse Steve.
The former Steve would be difficult to replace, the latter not so much.
It’s hard to scale intelligence, because most minds can’t share thoughts. It all has to be marshalled out into words (inherently poor) and back into the other mind (also inherently poor). I say most, because rarely some minds do intuit with specific others: Lennon and McCartney for example (great article on slate about this collaboration). Otherwise more bodies does not mean more mind.
Can any problem be solved by throwing more cash at it? No, I think not, or the US would have prevailed in Iraq and Afghanistan by now. So the VCs are actually dead wrong. I think, according to urban legend, Howard Hughes offered Elizabeth Taylor’s mother $1M for her hand in marriage. When she turned him down, he asked “does she realize that’s tax free?” Another refutation that money can buy anything.
This makes no sense to me, sorry, are you just trying to pick a fight by spouting nonsense?
When Doerr talked about throwing money at technical risk he wasn’t speaking about Iraq, governments, the military, or even relations between different cultures and people. He was talking about a clearly-defined technical problem that needs solving in order to create a business. Iraq is not a business.
The “technical problem” in Iraq was the arbitrary partitioning of the Middle East by the UK after World War I. The only attempts to address this problem have been coups, revolutions, and sectarian violence. The U.S. presence in Iraq has never attempted to address it because this isn’t essentially a military problem but a diplomatic one. It’s a problem of entrenched and intransigent interests fighting for power and our little problem in Iraq is just a pimple on the butt of that.
So please stick to the REAL discussion here.
Well I have been know to pick fights . . . a problem is a problem I’m not sure a “technical problem” is fundamentally different than any other problem at the level we are talking about, and solutions are rarely unidimensional. But let’s stick to the “technical domain”. Have we got a breakeven nuclear fusion reactor yet? How much money has been expended on that problem?
For interesting read on this see:
https://www.amazon.com/Sun-Bottle-Strange-History-Thinking/dp/0670020338
Let’s not be too hard on francis. All he said was that throwing money at a problem doesn’t always work. Sometimes it does and sometimes it doesn’t. Depends on the problem and the amout of money I suppose.
“My plan is way better.”
Yeah, until the patent lawsuit lands on your desk…how much of that other $5 Billion do you expect that will eat up?
A $5 billion legal fund is a substantial deterrent to legal action, particularly since business method patents are legally problematic and perhaps unenforceable.
As some of the commentators on Leo LaPorte’s weekly TWiT show recently pointed out, the GroupOn deal was more about acquiring their local salesforce than it was about the product itself. Google has virtually zero real sales contact with local businesses. GroupOn’s salesforce would allow Google to sell the entire Google advertising portfolio–Yelp, AdWords, Places, etc. Yes, I know that not all of those products currently generate revenue, but you know darn well that Google’s going to find a way to monetize those products eventually.
And if you think about it that way, Google’s bid for GroupOn actually makes sense. Sure, they could easily roll their own competing product for much less money, but they’d still have to build a salesforce to sell it to businesses.
Let’s do some numbers. Google employees each generate about $1.5 million in revenue and $250,000 in profit per year. GroupOn has a salesforce of 3300. If all Google would be doing was buying those salespeople and those salespeople are worth as much to Google on average as any other employees, then the deal was worth $4.95 billion. That’s pretty close to $6 billion if you throw-in brand value, IP, existing contracts, etc. So I am not saying the offer made no sense, I’m just saying it was too expensive when the analysis is expanded to consider alternatives.
I presented one such alternative scaled out to 100 million subscribers. Note that GroupOn has only 50 million subscribers so Google was offering $120 per subscriber.
If the goal is getting a local sales force, what other companies have similar — or better — presence than GroupOn? What about the Yellow Pages? To avoid anti-trust problems Google could buy the Yellow Pages then GIVE yp.com to Yahoo. Or Google could buy the billboard division of CBS, selling the actual billboards to a competitor. There are lots of ways to get an salesforce.
I’ve worked in sales and I know that–for the most part–sales is sales is sales. But that said, sales people do have to know the products they’re selling, and they have to know how to get their customer base interested in those products.
Billboard and yellow pages salespeople aren’t necessarily familiar with the advantages of online advertising. Hell, most of them have probably built up a huge arsenal of reasons why their customers should spend money on billboards or yellow pages ads and not on Google ads. And their customer base is likely to be the kind of customers who are either better served by billboards or yellow pages ads, or predisposed to such kinds of advertising. A yellow pages sales force is likely to have a far larger customer base than a billboard sales force, so that would definitely be a point in favor of a yellow pages sales force.
This gives me a great idea. Google recently discontinued the free 1-800-GOOG-411 service, which they’d operated primarily in order to improve their speech-recognition algorithms. What if, whenever you called 1-800-GOOG-411 and asked for the phone number of the Domino’s Pizza on the corner of Foo and Bar, you got an offer to connect you to a nearby Papa John’s, Pizza Hut, Little Caesar’s, or La Cosa Nostra Pizza? Think pizza places would be willing to buy ad space on GOOG-411?
Don’t forget Herr Schmidt’s policy disasters showing China who was boss.
According to The New Yorker it was the “boys” who over rode Schmidt and brought down the wrath of the celestial empire on Google.
https://www.newyorker.com/online/blogs/newsdesk/2011/01/eric-schmidt-google.html?mbid=social_twitter
I don’t think it was his idea. He’s selling quite a bit of his google stock now . . .
Hey look google is launching a groupon competitor called Google Offers. I doubt they’ll pay you $10 to join though.
http://arstechnica.com/web/news/2011/01/if-you-cant-buy-it-build-it-google-offers-to-counter-groupon.ars
LivingSocial, a Groupon competitor, had a deal yesterday for $20 Amazon gift certificates for $10. They were subsidizing the coupon difference, in effect buying customers for $10 a pop…
Now wait a minute. For years I’ve seen a theme in I,Cringely about Google laying the foundation to take over the world by becoming ubiquitous. Think big initiatives like Android, Gmail and YouTube, little ones like Picasa and Earth and stealth ones like big infrastructure and consumer data. They didn’t make much money for the company but they became successfully entrenched in a huge way under Schmidt. Google is kind of like the football team that is everywhere on the field and ready to pounce on fumbles. Some new CEO with “vision” is going to come in, pounce on the coming fumbles and get the all the credit. I kind of feel sorry for Schmidt.
Personally, I find it hard to feel sorry for any billionaires, except possibly for being disproportionately taxed.
Warren Buffet says they’re taxed proportionally much less than ordinary folk.
And… he provided the numbers when he said it. Payroll tax is, nominally, progressive. Since the Rich get to take much of their income as capital gain (I’ll leave to a full post somewhere else whether such “capital” allocation has any economic benefit), their actual tax as percent of income received is a minuscule fraction. The lower and middle classes carry the burden. One of the evil artefacts of the Great Recession is that the destruction of these classes is what’s led to the cratering of revenue. Revolution is a few years away.
spoken like a true upward redistributionist. well done!
Actually, I think Google’s primary money making business, search, is in serious trouble. Sure, they make a bundle, and they’re highly profitable, but there has been a lot of grumbling in the Intertubes about the poor search results you get. Search for cameras, household appliances, news items, and you get lots of spam in your results.
Let’s go back in the Wayback machine to 1998. Yahoo was the search giant and AltaVista was almost as big. However, these two Internet behemoths search results were getting pretty bad. Instead of working on improving their results, They tried to become Internet Portals in order to increase their ad revenue.
Meanwhile tiny startup called Google, instead of being an Internet portal, concentrated on superior search results. A mere two years later, both AltaVista and Yahoo were in declined and Google was the new Internet champion.
Now it is Google search results that are being gamed. Meanwhile, Google is intent of becoming a Internet empire to improve its advertising revenue instead of trying to fix the problem. What would happen if a new search engine found a way to produce better results than Google? How long would it take for Google to fall.
YouTube, Android, GroupOn, Blogger, Picassa, and the rest are distracting Google from what it needs to do. If Google can’t get its search act together, they’ll quickly fall from the top the say Friendster did to MySpace and MySpace did to Facebook.
I agree. Bob has said in the past all search engines give comparable results these days . . . I guess he hasn’t tired Bing instead of google, because it should have been named bong ! . . .
Again, the issue for Google, and all advert driven web applications, is that *any* other application/service which generates more/better clicks will instantly siphon off the advert buyers. That’s what’s happen to TV and newspapers and magazines and… . Selling something by indirection is inherently unstable and dangerous.
Interesting feedback loop here . . . google is the dominant search engine, and people who want stuff found put effort into getting good search rankings . . .
I don’t see the same feedback loop with groupon, but maybe I just don’t know groupon that well. I haven’t used any of their coupons yet. I’m waiting for the downhill skiing coupons.
It’s ‘Froot Loops’
Fixed, thanks.
These were very interesting points regarding Google. Namely because we have seen the parallels drawn for some time in the current Google/Apple scenario and the Microsoft/Apple scenario from the 80s. Apple is using the same approach in terms of working on the OS and hardware itself, whereas the other company (Microsoft in the 80s and Google today) works on the OS for multiple hardware products in an effort to increase its base.
The points you make in this article only reinforce the similarities, since Microsoft has continued to rely on Windows and Office to drive its earnings while it continues to pour money into a number of failed efforts to expand (with the exception of the XBox franchise), just as Google continues to rely on search for its earnings while throwing money at a number of seemingly disparate would-be new ventures. Unless something finally clicks, Google will remain dominant in search and nothing else, and the parallels will simply continue.
Agreed on the GroupOn bid as well. I always found it perplexing. The only thing that bid accomplished was making GroupOn and its advisers bold enough to pursue an overpriced IPO at a time when, as many have pointed out, competitors seem to be surfacing on a daily basis.
GroupOn apparently takes 50% of the coupon value, and the merchants are already taking a loss on the coupon in the first place. The only think GroupOn has going for it is the bad economy and the desperation of flailing businesses. Once a competitor comes along with a better deal for the merchants, they will all jump ship and without the merchants, GroupOn is nothing.
Remember my 2011 prediction that Google will become the new Microsoft?
Some of us predicted that years ago.
You realize how haughty that sounds?
No.
https://www.theregister.co.uk/2005/08/26/google_as_microsoft/
That’s 2005, and the us is not me.
I agree that Google has not done a good job diversifying their revenue away from search ads, but you’re really going to bash them about Facebook? $2 billion revenues and not much of a margin, with a great likelihood of going bust like Myspace, that’s the big miss?! I think Goog thinks mobile might be the next big stream, so they’re subsidizing Android development with no real plan how to monetize it, hoping that they can cash in on mobile ads or NFC payments someday. But Google’s real problem is that search ads are such a gusher right now that they can afford to throw money at a bunch of dumb ideas and not pay the price for it. As with Microsoft, that only lasts till the gusher ends and search could certainly end a lot faster than an entrenched OS platform like Windows.
For example, we are increasingly moving away from the page metaphor to more interactive, dynamic websites, Google is even helping move this shift by pushing html5 forward. It’s tough to imagine a search engine index making sense of these dynamic streams of information: at best they might have to go back to the old yahoo website directory model, which takes away their strengths at deep search and would be easy for others to build also. They seem to have zero appreciation of any of this however, which is why they will get hit hard when the next big thing comes up.
You are looking at MySpace the wrong way, for one thing. MySpace was a huge success, selling itself to News Corp for $600 million. The analogy to Facebook isn’t good because MySpace’s current problems aren’t the work of its founders. for that matter, if New Corp sells MySpace you can bet they’ll get more than $600 million, even now.
So forget the MySpace analogy. Your point is that Facebook could still fail. Sure, ANY startup can fail at almost any point in its development for any number of reasons. But I find it very hard to see that happening to Facebook simply because there are too many intrenched interests there.
Take Microsoft, for example. Buying FaceBook would be smarter than buying Yahoo ever was. They already own a minority piece of the company, And it could solve some of Microsoft’s identity issues while getting through anti-trust precisely because of those issues.
I’m not predicting a Microsoft/Facebook merger, by the way, just pointing out that Zuckerberg has multiple ripcords he can pull if the company starts to turn on him.
Your reply exemplifies the Silly Valley mentality, ie Facebook can alway sell to the greater fool. What does it matter what valuation MySpace or Facebook can fetch today when their combined revenues are a tenth of Google’s? And it’s not just that Facebook will fail but that their revenues are still less than a tenth of Google’s, with little prospect of ever edging much higher. Facebook and social networking would be another distraction for Google- remember the company we were talking about before you changed the subject to whether Facebook could offload itself to some fool- which is the last thing they need. btw, there’s little chance News Corp recovers its original price when they spin off MySpace.
Let’s all keep our eye on the ball.
First, IBM set a paradigm. That paradigm was making a machine which was unique among its competitors; there was no unix. They then sold that machine into the Fortune X00, had their lockin and bled the Fortune X00. Services and all that. The client paid the profit.
Second, MicroSoft took the IBM paradigm (thanks in no small part to IBM’s stupidity), but applied to an OS and an application (OK, the Wintel monopoly does include a cpu). They, too, targeted the Fortune X00. The client paid the profit.
Third, Someone (not Google, the patient zero is murky; Bob?) invented the notion of advert based web applications; the client (web surfer) doesn’t pay the profit. Google certainly has done better at it than others. The nominal “user” is John Doe-Public; certainly not Fortune X00 CIOs. Who pays the profit? The advert buyers. Who is the client? The nominal “users” or the buyers? There has been acres of digital ink spilled arguing the question. The client isn’t the user.
The point being: Google offers nothing to secure it to those who pay the profit. The profit comes not from the nominal “users”. All it will take to topple Google is some other “service” which attracts nominal “users” who will click adverts. Neither the nominal “users” nor the actual clients are lockedin. Eric may just be gettin’ while the gettin’ is good. Ever think of that?
Though I agree that News Corp. will probably not get back their purchase price if they were to sell MySpace, everyone acts as if they didn’t make a killing off of advertising revenue while they owned it during it’s heyday.
I’m sure the MySpace deal has worked out well enough for News Corp., even if it never recovers.
Carol Bartz? Only if she’s willing to show her claws.
Marissa Mayer has made it known that she is the big swinging… wait, that doesn’t work… or does it?
Mayer will not give up her Queen Bee status without a fight.
Interesting thought…
Retirement is proving boring. I’ll take the job. Anybody can do slash & burn (like anybody can do cost-no-object projects).
Well said, Bob X. Loved the Carol Bartz comment!
However the only thing I disagree with you on is your statement that the economy is on a clear trajectory towards improvement.You know that with the MERS, CDS and CDO mess the can has only been kicked down the road just a little farther and it’s now loaded with economic dynamite, ready to explode, Double plunge, here we come!
Bob, I think another reason IMHO Eric was dead meat is that in his tenure as CEO he appears to have personally been responsible for the expensive problem he created for Google with the Oracle monster. It’s becoming obvious that the evidence is leaning against Google. If they rule against Google, then 6B$ may be not enough to satisfy the Oracle hunger for world domination and they may have possibly wounded Android so as to lose its chance to win against iOS and Windows 7. Ironically, Apple, Microsoft and Oracle all owe Eric big time for this screw up in one way or another!
Some references:
“Google copied Java in Android, expert says”
https://www.networkworld.com/news/2011/012111-google-copied-java-in-android.html?source=NWWNLE_nlt_daily_pm_2011-01-21
“New Evidence supports Oracle’s case against Google”
http://fosspatents.blogspot.com/2011/01/new-evidence-supports-oracles-case.html
Interesting. I think Eric was canned because of Android.
I see it as the ultimate strategic misstep (Maginot Line category), which will lead to Google’s demise. I’m looking at:
– Verizon defaults to Bing search!
– Samsung forks to Bada!
– Android botnets, viri, configuration confusion, and tojan horse apps are here now.
– By 2013, after hundreds of crapola Asian plastic Android phones and tablets flood the market, Android becomes Yugo. And Asia goes wild with worthless knockoffs which will NOT run Google’s ad service or anything to do with Google.
Google has Android cancer.
Eric’s responsible for this disaster…
—————
Bob, what do you think? Can Google be a survivor?
Rich, the Mongoose mentions the Java infringement.
Google absolutely will get its head handed to it by Oracle. How can such a massively threatening company leave itself so exposed? There may be forgiveness for small fry, but I think Larry will want Google’s head.
In the vein of motivation, I don’t know why Larry’s so gleefully going after Google, but here’s my guess, in order of strength.
– No one rips off Steve’s 6 years and multibillion dollar iPhone design initiative.
– Free and Open sucks when they steal intellectual property, both patented and copyrighted.
– Google’s too evil for a company as large as it is!
Don’t overestimate Oracle’s case. They used a “standard” java from Apache to build nothing that constitutes Android. Android *is not* a java application. java language is used as intermediate construct, but Android is a dalvik application; which VM shares nothing with the jvm. Other languages, other than java that is, have been, and will be, used for that intermediate construct. No java code runs on an Android phone, and Oracle has no basis for claiming dollars from Android.
Since I wrote, this came to my attention:
http://m.zdnet.com/blog/burnette/oops-no-copied-java-code-or-weapons-of-mass-destruction-found-in-android/2162
This is pretty intresting point of view about infringing code:
https://www.groklaw.net/article.php?story=20110122054409107
Pk,
Good thoughts. What has me thinking is that this “Google-Gate” mess, together with Steve Jobs’ probable career ending disease might signal a surprise total chaos in the mobile OS and hardware market. We may have just found that there may be a crisis in OS market leadership a year or two from now.
Let see:
Android is on the loose without controls or proper IP and depends on the benevolence of Larry Ellison for its Java development environment.
iOS, without the creative marketeering genius of Jobs goes directionless and falls into the hands of a greedy CEO.
Windows 7 Mobile is like SOS, the term we used for chipped beef on toast.
Symbian is too alien and European for us Americans. There is also very little developer support here in the US for the Symbian OS based smart phone.
All four options appear to be ready prey for hackers, especially when money starts changing hands via smart phones. So is there a dark horse smart phone OS that will come in and take over?
Schmidt did not successfully go after/get sun (Java & other REAL IP) while considered 6Billion for groupon. That should be a stake through the heart, not just a nail in the coffin.
You know I’m not a google shareholder, nor a microsoft shareholder . . . but when you are as big as these companies, and growth opportunities are low, the main reason for holding the stock would be dividends, not capital gains. All that money that is being frittered away on pie-in-the-sky projects could / should be paid to the shareholders in dividends. The shareholders should start demanding it.
With a team of four in a rental house, with enough coffee, and some beer, I could do it in half that time (assuming that outside processes are kept to a minimum). There’s seriously nothing all that complicated about implementing a social networking web site. Even a big one. Especially if you use the myspace model (or something similar).
All this speculation about why Schmidt is switching place is kind of farcical. Being the CEO of a major company is a long time when you are not even the founder. May be the major reason is simply his time to go, not any one mess up. Most of us get tired of a job, any job, especially ones not as exciting as writing for cringely.com.
Your last point is closer to the truth I think. From all reports Eric has not singly made every major decision there, and Page and Brin have been steep in all the developments, including missing the Faceboat. If anything bringing up Larry is no more than changing a bands frontman from the singer to the guitarist. We will have to see if Google actually have any new ideas left or can buy from.
Well, Groupon recently bought an Israeli copy of itself called grouper.co.il for what is assumed by Israeli financial publications to be $8m. The site essentially operates identically to Groupon. So seems to me that if Google had better intelligence they could have purchased a ready made technology for what amounts to pennies, then they could have spent that $1b on acquiring customers any way they wanted.
So… Given that Google has essentially become a failed Venture Capitalist who is good at developing IP, financed by Search. The failure being in their lack of ability to spin off products and bring them to market to pull in further $$$.
Then what they really need is to poach a CEO from a successful VC operation? The Apple, Microsoft, Android argument is really a side show if they can’t sort out their product delivery their demise is just a matter of time a bit like Microsoft and the demise of desktop computing.
So you think Google could mobilize a sales force for GoogleOn like Groupon has? I don’t think that’s Google’s specialty. They would also be buying the structure Groupon had already in place. Engineers can build anything, who’s going to run it?
OMG… Bob… I am so sure that the Eric Schmidt promote-to-oblivion is all about the movie “Social Network”. I can see it in my mind: “Why wasn’t there a movie about me? Google is as good as Facebook.”
When you are selling simple commodities like search and social-network that anyone can do… it’s all about amorphous mind-share that can change in a very short time frame.
In school I took a course where one of the areas was a study problem finding and problem solving. The idea was that the western world is very good at problem solving but the results don’t match the skill level because we frequently very successfully solve the wrong problem. Problem solving and problem finding require different skills. Problem finding requires an open framework while problem solving requires a close focus.
The same thing applies to new products or ideas. The two sides would be product concept and product development. These require two completely different personalities. Steve jobs is unusual in that he is good at both sides of the equation.
까소봉의 생각…
제목 때문에 이 영화 생각이 저절로 난다. 기회가 있다면 꼭 다시 보고 싶은 순도 100%의 마초(?) 영화. 제아무리 타란티노라 하더라도 샘 페킨파에 비하면 발 밑에 엎드려야 할 판이지….
Bob,
The effort to purchase GroupOn is tactically connected to advertising because it strikes at the core of what Google covets as its next big pool of advertising revenue: local advertisers.
Cringely,
Google has tried https://www.google.com/hotpot which like Yelp could try to turn itself into a groupon. Groupon really isn’t sustainable as this great Biznik parable shows: http://biznik.com/articles/a-groupon-tale-the-parable-of-the-cobbler
Unless your margins are very high (groupon customers only see 25% of the revenue) this will definitely hurt you.
Google has a lot of amazing products, but they’re giving them away for free (Android, Google Voice, Gmail, etc)
My 2 cents,
Bob:
Larry Page needs to have a “Billy Joel” episode as when the latter made the River of Dreams album. The producer took Joel away from his band-mates, gave him all new muscians, and then they worked on the new songs. The episode forced Joel out of his rut and explore new avenues. Once the song arrangements were settled, the band was brought back to learn the new music.
So who is going to take Page “out of his environment” and where will they take him so he can get that “start-up” drive and vision again?
> A third-world country?
> Live with a micro-loan entrepreneur for 3 months?
> Work with a TED conference presenter out-in-their-field?
> Live in a yurt with Mongolian herders?
He is going to have to journey out-of-his-current-life to get a new perspective.
…and he should take his guitar and be singing
“In the middle of the Niiight
I go walking in my dreams”
I think this is a defensive and strategic move by Google in response to the success of iOS. Publicly Google is pushing Android, but privately, they fear getting locked out of iOS because of the bad blood between Eric Schmidt and Steve Jobs. In order for Google to collaborate with Apple in the future (integrating Admob, staying the default search engine, monetizing Youtube, developing GoogleTalk), ES had to go.
I can’t resist. Bob’s GoogleOn idea is very Microsoft like.
Countless times Microsoft would find a product or company of interest to them. One of the things they would do is determine what it would take to replicate the technology. Armed with that information, they had a price they would be willing to pay. If the company accepted the price, good for Microsoft. If the company didn’t like the price, Microsoft would go off and start doing it themselves. Often they would use their ability to do it themselves as leverage in their negotiations.
For years the worst thing that could happen to a firm would be to be interesting to Microsoft. For Google to grow and offer other services that are as profitable as search, they are going to have to search the world for good ideas. In doing so they will run a great risk of acting like Microsoft.
[…] d’ailleurs trouvé que cette somme était beaucoup trop grosse. Bob Cringley a trouvé que Google ferait mieux d’embaucher deux développeurs, les faire travailler en dehors du luxe du Googleplex et de donner $10 à chaque adulte qui utilise […]
pretty sure a $10 incentive would invite a hell of alot of fraudulent registrations and/or identity theft
think harder dude. buying a company would be much cleaner and occupy less brainpower
Really? Are you really that concerned with seeing one of the largest US corporations become even LARGER? Really?! Really.
Seems to me Google has its grubby little omniscient hands in too much of our business already. Advocating for a ‘hammer’ to come in and deal a death blow to competition is, well, kind of outrageous IMHO.
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[…] Larry Page’s running start: but is he running in the right direction?A few months ago I wrote a column giving advice to Larry Page when it was announced that he would be taking-over once again as CEO of […]
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