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Google 'Wasting' $16 Billion On Projects Headed Nowhere
hapworth writes "Google's engineering culture is 'wasting profits,' according to a new report published today that refers to $16 billion worth of Google projects that are going nowhere. According to the analysis, it's not that the ideas — such as the Kansas City Fiber Project, driverless cars, and other engineering efforts — are bad. Rather, it's Google's poor execution that is killing the company and adding billions of dollars worth of projects to its 'trash pile.'" On the obvious other hand, Google's done a lot of interesting things over the years that they've managed to make work well, and that strayed from their initial single-text-field search bar.
What do they mean! Is google really being "killed"? I wonder where that money could be better spent, maybe on raises for the execs!
I fail to see how projects that are not yet complete can be considered 'going nowhere' -- especially ones such as driverless cars which was only recently announced.
You fund 1,000 projects, in the hope that 1 of them will return more then the other 999 consume. What Google is doing, is what most US companies are failing to do to get ahead of the rest of the world.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
but investor capitalism is the ultimate creator of innovation! it can't possible stifle it!?
... into an innovative company, and then don't want them to innovate. They want their nice safe already-innovated to profit like a not-quite-so-safe innovator. Paradoxical, yes - but seems the norm.
Just waiting for a shareholder initiative to kill the 20% developer personal research time off. To soon be followed by demands of a new CEO that will outsource and reduce staff to improve sagging profits.
Check your premises.
Article +1 Troll
Did you know that farmers don't grow just wheat? They actually grow chaff! I'm not kidding, they grow chaff literally around the wheat! Billions of dollars are wasted every year as stupid farmers grow chaff and then waste time separating it from the wheat to discard it. And they don't even burn it for fuel, they often return it back to the soil or feed it to their cattle for roughage and silage! What a waste! Sitting from my high and mighty armchair computer throne, it would save them billions of dollars to listen to me.
My work here is dung.
"Robots. Elevators to outer space. A nationwide fiberoptic network. ... Is it all worth it?"
You need to waste a lot of money and time to generate exceptional results. If you only do low-risk things, then sure -- you can grow you pile of dough now, but then another start-up google will come at some stage and pull the rug under your low-risk business.
Besides, "is it worth it?" kind of question is meaningless for a geek. It is interesting, ergo it is worth it.
While interviewing for an internship with Google, one engineer I spoke to described what Google does from his perspective: Google once discovered a hose that money poured out of. Its name is online advertising. Now, they spend their time searching for either the next hose, or new ways to increase the flow rate of that first one.
Now, whether this is the Chrome browser, Google+, Google Docs, self driving cars, whatever- they have no idea if any of them will be worthwhile. But, they have some of the smartest people in the world tinkering around to try to find out. And if they spend $16 Billion to find a hose worth $100 Billion, or more, then they come out ahead. But, that's the thing about exploration- you don't know what you're going to find.
"If you don't fall down, you're not really trying."
I once sat with a colleague who was dissing Apple because "Steve Jobs has made so many mistakes." He was partially right...Apple had tried lots of things that didn't quite work. But wow, talk about not seeing the forest for the trees...this was less than 6 months ago, and Apple computer is absolutely rocking. So what if they made mistakes? That's how they had successes as well. I would find it hard to imagine that nothing was learned from the Newton that didn't go into the iPhone and iPad...and nothing needs to be said about what incredible successes THOSE two devices are.
This sounds like the exact same thing. Google has been so successful that people are fearful of the privacy implications...and, right on cue, Google not only kicks off a benevolent, altruistic redesign of their privacy policy but does everything they can to get people to READ it for once. By doing that, they are working to shift the culture from a world where people expect privacy but do nothing to secure it for themselves to setting a standard for everyone else and trying to get people to start measuring others by it. It's a subtle but incredibly important thing to do for a company whose business model revolves around the collection, analsysis and presentation of information to and from others, and if they succeed it will have a major impact on competitors like Facebook, Yahoo, Microsoft (yes, Microsoft, who are throwing money at Bing like the second coming was around the corner) and others, to Google's advantage.
And if the investors think for a second, they will realize that nearly all of Google's revenue now comes from things which could have failed, which were just ideas that an engineer came up with in their alloted 20% time for innovation.
For your security, this post has been encrypted with ROT-13, twice.
Basically. This is why they kept majority control of their shares, and why Facebook and every other new tech IPO is doing the same. Investors hate it and bitch about it to the SEC and others, but fuck you Mr Investor, you destroyed the goddamned economy.
It used to be that way, get with the times.
Investing used to be risky. You risked a bit of your money on the chance of getting a ton of revenue out of it. High risk, high gain. Nothing wrong with that, if your risk is high, your profit margin should be high as well, so people actually dare to risk something and push us further on the pursuit of better technology and new, exciting inventions.
That's no longer the case. Investing today means putting your money into an innovative company whose creator already took all the risk and managed to come out on top. Mostly because they had a new and clever idea and dared to follow it. You pretty much offer them the choice between taking your money or watching you use that money to build a competitor instead. Either's fine by you, and either will allow you to come out on top, but pumping money in their existing venture needs less effort from your side.
Then you simply milk them dry, throw them away and move on to the next guys that had a nifty idea, risked it and succeeded.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
> At press time, Google had not responded to Internet Evolution's request for comment on this report.
Wise decision. One should avoid talking to idiots.
I do not believe in karma. "Funny"=-6. Do good and forbid evil. Yours, Oft-Offtopic Flamebaiting Troll.
Look around at Google's investment relations pages, read their mission statement, review their bylaws. Seriously, if you're not going to do your due diligence before investing in a company you can't blame anyone but yourself. Their information explicitly says they have no plans to pay dividends. They explicitly say they take risks and maintain a long term focus. They explicitly say they believe building value for the users it he way to build value for the shareholders. They don't say they are out to maximize profit, or short term shareholder value.
Opinions like this are written from the perspective of a buyout company which is solely interested in maximizing share price.
Say you've got a company worth 10 million dollars. You have 1 million shares, each worth 10 dollars. Corporate raider comes in, strips out all "non-performing" assets like R&D, internal HR, IT, offshores programming, closes and consolidates stores. Voila! Now you've got a company (for a short period of time) that's worth 20 million since it has no drains on its "profit centers". Sell the company. Profit!
Private equity companies operate along similar lines. They'll buy a company take it private, "optimize" it, and resell it. As if they're any better business managers than the actual manager. In general, they're not. What they are good at is the leveraged buyout, field strip, and resell.
These types of activities result in healthy profits for the takeover artists, and jobs lost for the actual workers.
It's like harvesting the organs of a person while they're still alive in order to minimize the drains on ingested food. After you're done, they're going to be in very tough shape for any kind of long term existence. But by golly, food isn't being wasted on any of those useless organs.
Google is doing what companies used to do. They're going to become even more of a juggernaut.
This, on the other hand, is the way private equity execs dream of doing it.
At one time the challenge was mechanical - mechanical gearshifts and brakes were just too hard to control. Since the first Prius, that is a solved problem. Now a car can easily be operated by an automated platform, the problem is to guide it safely.
Once that is solved, there are many new opportunities. Optimum guidance; optimum traffic patterning, looking for people who would like to share your journey all become objects of research.
If Google cracks driverless cars, it will change the developed world. It will affect town planning, investment patterns, and the way people live. And of course it will transform the car industry beyond recognition.
This is one area where Google could leverage its core technology to become so huge it could buy Apple to provide in-car entertainment.
From scarped cliff or quarried stone she cries "A thousand types are gone, I care for nothing, no not one."
When I saw this conclusion, I looked up the background of the authors: Mary Jander: BA, English and Business Kim Davis: PhD, Philosophy Nicole Ferraro: B.A. / M.A., Media Studies and Creative Writing
Clearly this bunch is qualified to tell the founders of the worlds fastest ever growing company which technology is not going to pan out 30 years from now. To their credit I was expecting to find the resumees of 3 MBA's. At least these guys are not soulless, merely clueless (about tech anyway)
You are engaging in ad-hominen attacks right there dude. Understand that some of the comments have merit. The thing is, Google pulls the plug on stuff prematurely. Unless we are all missing some in-depth Google wisdom, you can't do that with R&D prematurely, specially if throw millions and millions at it. Now, this is purely an armchair opinion that I'm posting here, I'm no Google insider. But things seems to be either half-cooked (Google+) or killed quickly after spending millions because it is not going fast enough within the next two quarters.
As it has been mentioned by others here, it's not about blaming Google for doing R&D and trying things out. It's about execution and seeing things through to the end.
But Bell Labs was never meant to be profitable.
Bell Labs was sort of a sop to the Federal Trade Commission and monopoly laws. AT&T could have it’s national phone monopoly, but it had to contribute to the betterment of society via basic research. Which Bell Labs did fabulously.
That being said – of all the examples you mentioned – how much profit did AT&T make from these? Mind you, they are all wonderful and I am glad that we, as a society have them. But it’s very hard for corporations to turn basic research into profits. Myself, I always think about Xerox Palo Alto Research Center and how they did the ground work for the modern computer but could not execute on it.
The question that I think the writer is asking is that Google is spending a lot money that belongs to investors on long term high risk speculative projects. And the line between high risk / high return projects and vanity projects to buff the founder’s image is fine.
Those people are speculators, not investors.
Unfortunately the legal system and day-to-day economics do not make a distinction between the two. Mod points to you if I had them.
A Masters in Business Administration in not a soulless endeavor. A modern MBA (Post Enron) deals with ethical problems all the time as part of its training. Showing numbers on how happy employees work better etc... The problem is that there are a lot less MBAs then you think they are, and a lot that are got there degree from a Diploma Mill and not from a Fully Accredited Institution. I spent 4 years working for my MBA part time at an accredited institution and it actually help me spot unethical actions a lot easier then I did before I got the degree (Which had lead to me leaving a job for ethical reasons, before I had to get involved, which was good because months after I left the SH*T hit the fan and there was a lot of trouble) Before my MBA training I probably would have gone with the flow because I was unaware of the details on why they are doing what they were doing and I would have seen the increased pay as just a normal raise, not a method to move assets from one unit to an other behind the owners back.
Being an MBA doesn't mean you are a big shot Exec, it is a Masters Degree in Business Administration which helps you understand many details on what goes on businesses, Economics, and best practices learned for other companies and a lot of case studies on what other companies did or failed to do.
If something is so important that you feel the need to post it on the internet... It probably isn't that important.