Google is likely the most ambitious company to date: They want to own every facet of the Internet experience. But this “strategy of everything” tactic may backfire; the costs are painfully high, according to one venture capitalist.
The Google SOE Gameplan
The Periodic Table of Google’s Products
Google’s monetization model is simple: sell online ads, expose people to said ads, and get the users to click. Google is very, very good at executing those steps.
However, Google’s business model is the furthest thing from simple. It involves winning loyalty across every facet of the Internet experience. From search to local to social to productivity to mobile and more, Google is trying to get its fingers in every pie.
That strategy actually makes some sense. Google is able to throw its weight into new products, pushing them to levels of success that would otherwise be impossible.
Additionally, every successful product launch means an increase to the overall time spent on Google services, and thus more time exposed to ads, not to mention increased brand loyalty. Several frontiers, such as social and local, even offer the possibility of new types of web ads; Google Offers explores the Groupon-styled discount model to promote local businesses, as just one example.
While a startup company could never survive this sort of spread, Google has both the capital (approximately $36 billion right now) and capital efficiency to make the SOE model work. But at what cost?
The Price of Google’s Omnipresence
As noted by venture capitalist Jean-Louis Gassée, Google’s decision to spread itself over every element of the web also spreads the company thin. With Google’s resources going to dozens of products instead of a select few, quality suffers.
With a veritable well-spring of new products and features coming out regularly, Google doesn’t have a lot of opportunity to make sure that the right hand knows what the left hand is doing; Google products follow their own lines of development, branching off into sub-sectors that make the user experience bumpy at best. At one point, there were three local services with large amounts of overlap being offered by Google simultaneously (Hotpot, Places, and Maps).
Integration isn’t the only area where Google suffers, though. The new features are added on top of the feature stack, not put into a reworked and simplified core design.
New options stay in beta for months or even years, and few ever get commitment from the company. Google can’t commit to anything beyond a few products, or they lose their capital efficiency.
And last, but certainly not least, trying to get into every ounce of the web gets you angry antitrust groups. The European and newly started U.S. antitrust cases are indicative of what the bloated size of the company has done to world perception.
But what’s the solution? No one wants to stop Google from innovating, and it’s many of the shot-in-the-dark products that have had the most booming success.
Simultaneously, if Google really wants to hit their mark, they need to focus. Pick a few products – five, six, even 10 of them – and run, rather than trudging along with their traveler’s pack of unpolished golden apples.