reinharden

Google's Venture Capital Misadventures

I suppose what, perhaps, confused me is your re-inclusion of your four earlier points, of which, seemingly, only the latter is directly relevant to the situation under consideration. The first three might arguable me relevant; however, they're already mitigated because everybody at Google is allowed 20% time, everybody's 20% project has to be approved of, and the same rules apply to everyone's results. But certainly all these 20% projects, especially the ones that see the light of day, can be distracting to analysts because it's quite likely that the ones that even Google thinks are going to stick are not necessarily the one's the get embraced by the public.

The next issue, to me, then becomes one of what is Google's true core competency? Search results, eyeballs, advertiser relationships, or the networking effect created by the combination of each?

I believe that we'll end up having to disagree because I believe that Google needs to broaden it's base as well as increase its depth.

From my perspective, Google has worked on ways to make eyeballs sticky to Google sites in order to reduce its Traffic Acquisition Costs and simultaneously sell more adds. Thus Blogger, Gmail, Picassa, Reader, and all the other portal like components. Each of which makes eyeballs hang out on Google sites a little longer and (eventually) each click on a Google site allows one to three more ads (or at least salts the earth for Microsoft and Yahoo). This also explains Google's experiments with broadband (highly localized search results which will undoubtedly prove valuable if the iPhone or other Portable Internet Devices take off) and cellular (similar to broadband, but sufficiently different to require different technologies).

Google already has quite a large group working on maintaining their search algorithms. And another large group working on optimally monetizing their advertiser relationships. Considering the depth and complexity of what they're doing already my suspicion is that throwing too many more resources at those areas would run afoul of the mystical man month syndrome.

So, I, as one Google shareholder, would much rather see them attempting to broaden their base as well as deepen it. 'cause Microsoft and Yahoo are already broad and they're not going to give up on trying to get deep. And in fighting those two organizations, especially Microsoft, any territory you surrender without a fight will just be used to provide resources to your enemies.

reinharden