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Google 'Wasting' $16 Billion On Projects Headed Nowhere

Posted by timothy on from the preemptive-sour-grapes dept.

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.

19 of 408 comments (clear)

  1. killed? by dittbub · · Score: 5, Insightful

    What do they mean! Is google really being "killed"? I wonder where that money could be better spent, maybe on raises for the execs!

    1. Re:killed? by 0racle · · Score: 5, Insightful

      They mean money should not be spent on things that can not be instantly monetized. That's what was killing Bell Labs ; once they went the instant monetize project route it was all wine and roses.

      Google is at risk of not becoming another Bell Labs.

      --
      "I use a Mac because I'm just better than you are."
    2. Re:killed? by Anthony+Mouse · · Score: 5, Insightful

      I hate to have to point out the cynicism, but the GP is not faulting Google with what they're doing.

      And I think the concluding sentence is better written that "Google is at risk of not becoming another Lucent Technologies," which is the mediocre company that Bell Labs turned into after it stopped doing first-class change-the-world fundamental research.

      The point is that asshats don't want another Bell Labs. Bell Labs wasn't about quarterly profits. They invented transistors, lasers, information theory and UNIX. None of that stuff was profitable within two quarters, was it? So obviously it was useless and they shouldn't have wasted the money developing any of it.

      Is the sarcasm clearer now?

    3. Re:killed? by ByOhTek · · Score: 5, Insightful

      I think it may be more of a case of:
      "These people are doing something new, and it scares us, with our conservative, slow progress, get money now priorities!"

      --
      Self proclaimed typo king, and inventor of the bear destroying coffee table (patent not pending).
    4. Re:killed? by Oswald+McWeany · · Score: 5, Interesting

      I DO want a driverless car. I'd much rather spend my commute reading than driving. Unfortunately as a one income family I won't have the income to buy a driverless car even if/when they come out on the market.

      Heck- my current ancient car doesn't even have door handles anymore. The satelite radio I installed works great though! :) - out of three of the speakers at least.

      I like that google is maintaining a pioneering spirit. Yes, they could sit on cash cows instead- but instead they are innovating- not to make the world a better place because they only care about money- but things like driverless cars WILL make the world better, safer, and more googlicious.

      --
      "That's the way to do it" - Punch
    5. Re:killed? by Anonymous Coward · · Score: 5, Interesting

      You missed his sarcasm. For a long time, Bell Labs did a whole ton of shit that seemed to make absolutely no business sense -- a friend of mine is writing a book on just one employee's work there, which involved things that no modern man in a suit would approve. When they started paying attention to those guys in suits, their value and impact were tremendously diminished.
       
      That said, my problem with Google's approach has nothing to do with whether they are or or not aimed towards making money, it's that Google tends to pull the plug on projects after spending lots of effort (and money) but before they've been seen through. Projects are started, some are brought to market, and most of those are killed quickly without a chance to be refined. Hell, sometimes slashdot runs an article on Google killing a project, and most of us are like "Oh, that sounded cool. I never knew it existed until now."

    6. Re:killed? by scamper_22 · · Score: 5, Interesting

      There's a very big difference... one that most people in our industry miss. Bell Labs could spend it's money on such things because it had a monopoly behind it... AT&T. As an aside, most of the open source culture tends to forget this part of history as well.

      That nice stable cash-flow allowed it the freedom to spend on such things.

      Then came the thought of monopoly was evil. Vertical integration is absolutely evil... or so they say. ATT was broken up. As soon as Bell Labs lost that monopoly association and became Lucent... it essentially died.

      Both Google and Microsoft got a certain level of defacto monopoly... or at least to a level of very comfortable cashflow so they could be in the same position as ATT was back in the day. They can and so spend lavishly on R&D because they have a service to back their spending.

      I'm not saying I'm for monopolies or such vertical integration. Well I am less averse to them than most people. Just saying that the 'good ole days' came with a price. The money and stability came from somewhere.

    7. Re:killed? by luis_a_espinal · · Score: 5, Informative

      I think it may be more of a case of: "These people are doing something new, and it scares us, with our conservative, slow progress, get money now priorities!"

      Nah, the way I read the article is not that they are faulting Google for trying things out. They are faulting the execution of things, pulling the plug before shit even becomes realized. In R&D (even commercial ones), it makes no sense to spend hundreds of millions, billions, on stuff that gets killed prematurely. To dole that kind of money, people need to look beyond two-quarter time lapses. And if they can't (or aren't willing to), then they shouldn't dole that kind of moolah.

      The corollary of this is that if you are going big on R&D, you need to look at it long term, you need to abandon the idea that you'll reap the dividends within a year or two.

    8. Re:killed? by Certhas · · Score: 5, Informative

      Absolutely. They do really fundamental stuff actually. Including things like topological quantum computing. Not going to yield a product this decade or next, but at the cutting edge of the interface between physics and mathematics.

      (http://stationq.ucsb.edu/research.html)

    9. Re:killed? by Austerity+Empowers · · Score: 5, Interesting

      Bell Labs (aka Lucent Technologies) did pure research, and it did fantasy project R&D both. I worked there I'd know. You can't have one without another. Pure research is worthless (to shareholders) unless someone is looking at it and thinking about how to use it, and fantasy projects are worthless unless someone is trying to productize them. The company went down the shitter as these things lost funding, to borrow a term from a former Lucent CEO, in favor of the "near and clear". To be fair to that CEO, the company was headed down the shitter long before that quote, but every year there was less money for R&D and more wasted in marketing and sales, to find and get customers to buy products that were increasingly obsolete.

      Both pure academia and fantasy R&D made the company a lot of money, both in the 5-10 year scope and the 20+ year scope. That these inventions didn't make the gazillion dollars (defined as 10^wallstreet wet dream) they were worth was no one's fault but the suits who only knew they ran a telephone company. Bell Labs was at the heart of some of the most significant electrical engineering and information theory advances in the past century. That they ultimately blew up and went nowhere can only be blamed on the monkey the company had on its back, otherwise known as it's oddly unenlightened management. Where there was an intersection between developments and telephones, they got rich, where the technology wasn't immediately helpful, the resources were squandered.

      Google is trying NOT to do that. They definitely good do a better job at taking some of their inventions and making them into a product, or licensing the technology out, but Google is basically printing money, it's good to see them putting it to a good use. Any investor not happy with how google uses its resources is free to sell their shares, and stfu.

  2. Its called risk and research. by Kenja · · Score: 5, Insightful

    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?"
  3. Shareholders want to buy... by forkfail · · Score: 5, Insightful

    ... 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.
  4. Re:How is this a waste? by trainman · · Score: 5, Insightful

    Also how is this different from Xerox Parc, Bell Labs and IBM Research (or even Microsoft Research) where staff are given the freedom to innovate and experiment with technologies with no immediate marketability. Without such basic research, which corporate America has been languishing in their support of over the past decade or two, we wouldn't have the transistor, laser or so many other key pieces of our modern world.

    Google should be commended for being a good corporate citizen and giving back to science and society. Or as another commenter said, where should the money go, executive raises and dividends for shareholders?

  5. Attack of the Beancounter by Novogrudok · · Score: 5, Insightful

    "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.

  6. Searching for hoses by Mabbo · · Score: 5, Insightful

    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.

  7. Re:No such thing as wasted projects by Newander · · Score: 5, Informative

    I have not failed. I've just found 10,000 ways that won't work.
    -Thomas Edison

    --

    Jesus saves and takes half damage.

  8. Re:This is what happens when you have investors by forkfail · · Score: 5, Interesting

    The definition of investor has gone from "someone who places a portion of their wealth into a company in the belief that what the company is doing has inherent value and worth and will make money over time" to "someone who buys the privilege of gorging at a cannibalistic feast."

    --
    Check your premises.
  9. Scale by SirGarlon · · Score: 5, Interesting
    From TFA:

    In 2011, Google spent $5.2 billion on research

    Just to put that in perspective, the entire DARPA research budget for 2011 was 3.28 billion. This is the organization that develops a lot of the "Gee whiz" technology oft discussed right here on Slashdot. For a single company to devote more money to R&D than DARPA is just mind-blowing.

    DARPA has of course done amazing things in its history, and if Google can even approach the same magnitude of results it will change the technology world. Whether it can achieve something that impressive is an open question.

    Interestingly, the current DARPA director, Regina Dugan, has announced she is leaving the Pentagon to work for Google. So perhaps I am not the only one to notice the parallels ... Dr. Dugan is one of a very small handful of people with experience managing multi-billion-dollar research budgets.

    --
    [Sir Garlon] is the marvellest knight that is now living, for he destroyeth many good knights, for he goeth invisible.
  10. Re:Is it a risky project or a vanity project? by Anthony+Mouse · · Score: 5, Insightful

    That being said – of all the examples you mentioned – how much profit did AT&T make from these?

    Can you see how having a closet full of transistor-based network switching equipment could be an advantage to them over an entire office building full of vacuum tubes? Or worse, human operators switching phone calls instead of a UNIX-based phone switch? Or how lasers (and thus fiber optics) may have been useful to them? Or information theory, i.e. data compression?

    So how much profit did AT&T make from them? How about all their profit? I am not aware of anything AT&T currently does that doesn't depend on every single one of those things. And certainly anything related to the original, AT&T-as-telecommunications-company role does.

    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.

    That money doesn't belong to investors. It belongs to Google. Google, in turn, belongs to investors -- but that isn't the same thing at all. You can't buy a hundred shares of Google and then walk into the bank and withdraw that proportion of the cash from Google's bank account, because it's not "your" money. The people the shareholders elect to run Google get to decide how that money is spent, and if you disagree with the holders of the majority of voting shares (i.e. Larry Page and Sergey Brin) how the company should be run, you're free to invest in something else.