Maybe The Google Monster Ain’t So Scary After All

With the news that Google stopped work today on Wave, I’m starting to think I’ve been giving them too much credit as a product company. There’s no doubt they can build and monetize a business like search, and I expect they’ll add another big chunk of bottom line revenue with DoubleClick for Publishers. They kill at running huge-scale automated systems that have fat transactional revenues streams under them – and if anyone can find a revenue model for YouTube, I’d bet on Google. Plus they’re more dedicated to raw innovation than virtually any other company on the planet. But can they build something from scratch, market the thing and change the world? The answer seems to be no if you use Nexus One and Wave as examples.

I’ve had many conversations with entrepreneurs about the absolute terror of creating a business that Google could replicate with 20 engineers over a long weekend. While that’s probably still a somewhat legitimate worry for the two-person startup, I think the lesson here really is that Google web tools are the raw material you can comfortably use as part of your technical solution. Their strength lies in creating building blocks, not buildings. And the tech landscape is littered with examples that prove great UI design always wins over a truckload of poorly assembled features – witness 37Signals, Balsamiq, Wufoo, etc. And I can't think of a single UI improvement they've driven beyond threaded conversations in GMail.

The other important role Google plays is market maker. Their amazing pace of innovation rarely comes out the sausage grinder as a world-changing product, but it sure as hell can legitimize a market – like Google Voice did. Most Voice users I know are closer to creating a drinking game out of the transcribed text than depending on it for serious business communications. But more importantly, the market legitimacy enabled a company like Twilio, which has in-turn spawned hundreds of 2-3 person startups – including my man Andrew Watson at OtherNum. So at least all those innovation cycles don’t go to waste, but the Google kids haven’t quite figured out how to use their superpowers for their own benefit.

So maybe Google will simply continue to power its growth with big M&A deals like DoubleClick, but there’s always the chance the next product out of the gate will be a world killer. The next litmus test will be Google TV, which I would tell you is a Bermuda Triangle-like product space that’s stymied every big player that could have killed it – Microsoft, Tivo, Apple, etc. The fact they’re partnered-up with Sony to cook the platform directly into TVs give me a glimmer of hope that computing might finally end up in my living room in a meaningful way. And behind Google TV is Google Games, which a quiet $100M investment in Zynga should bring to life quickly.

They’re fun to watch from the outside, but I’m less scared of them as an entrepreneur these days. I’d love to hear other entrepreneurs’ take on Google as a competitor.


0 # Heath Wilkes 2010-08-05 12:45
Google reminds me of network television. They may love engineering, but their business is monetizing eyeballs. The heavily-hyped GWave was a victim of low ratings!

The Big G has always been more interested in 'copycat innovation' - improving a popular, existing category (search, mapping, email, office documents, smartphones, social media, etc.) rather than creating new ones. And given their deep pockets, acquisition of a solid starting point is now all too easy. It will be interesting to see if this philosophy is sustaining over the long-haul, but it sure makes them a buttload of money in the now. With respect to Mark Twain, the reports of Google's death are greatly exaggerated.

So the good news for entrepreneurs is the world (and Google) will look to startups more than ever for pure innovation. Insert Mufasa's 'Circle of Life' quote here.
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0 # LocalGuy 2010-08-05 13:33
I don't think it's entrepreneurs that are frightened by Google, but rather the investors that fund them. Google finds ways to enter, destroy, then abandon markets. Included in your examples could be GoogleTV, GoogleRadio, GooglePrint. On the horizon are GoogleDocs, GMail, GoogleAnalytics , etc. All these product "innovations" are intended to kill off paid product categories, subsidized by their Search business and used because it's a free alternative in a crap economy.

Search is such an inaccurate description of their core product - the correct word is Publish, for the only way to be found is to buy an AdWord or Cook your Content via SEO techniques. Their "Yellow Pages" approach has both killed the directory business while hijacking any semblance of fact-based or verified content. "Pay-up or take your chances in our shark-pool."

The worst thing Google has done is to legitimize Beta products shipped to scale. Microsoft played with opening their beta to broader audiences (Win95) as a marketing tactic, but Google turned the idea into a war game. We suffer the consequences.

fwiw, I think their approach to monetizing YouTube lies more in replacing Nielsen & Arbitron as a video content and ad measurement system then anything else. Because of their automated closed caption components, they are indexing the content automatically. Bye, Bye Nielsen.
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