As a serial entrepreneur now Google employee, I think the bets have received too much funding. They seem like long term government research projects not scrappy startups trying to scale. Putting more rationality and business expectations is a good thing to determine the viability of some of the ideas.
I'm sure this is true by the standard MBA tooling. But if everybody is using those tools, it leaves opportunities for people thinking differently. Amazon, for example, has been hoisting a giant middle finger to MBA dogma for years with their overinvestment, and Bezos seems to be doing fine by it.
Another way to think about it is that Google really should be doing long-term research, because only finding and monetizing a major breakthrough is going to make it so that they don't have all their eggs in one basket. A basket that will, like all baskets, eventually break.
A third way is that as long as Google is extracting monopoly rents, they should probably put some of that money into government-like things that could have broad societal benefit. Because if they keep trying to maximize quarterly profit, they'll burn up all the societal goodwill that insulates them from real regulation.
Google are doing a lot of long term research though. Huge investments in AI, search tech, big data, networking, the TPU stuff. Self driving cars. Contact lens screens. Head-mounted displays. Drones. The list goes on and on.
Makani was funded for 14 years! 14 years!! How many companies are willing to fund speculative research programmes in things unrelated to their core business for so many years? None, that I'm aware of.
Truth is Makani should have been shut down years ago. Government or corporate has nothing to do with it (that is, the same assessment would apply if it was funded by the government too). Their idea clearly wasn't competitive with the by now highly optimised wind turbine industry. It's not obvious why it ever was expected to be so.
You seem to be arguing with something I didn't say.
I definitely agree that Google should prune their portfolio using rigorous standards. I'm just saying that if one judges the whole effort by typical established-business standards, you're going to get typical results. Some things need more time to prove viability. Since Google a) will be around a long time, and b) is currently dependent on a single cash cow, they can (and should!) take long-term risks with long-term payoffs.
> It's not obvious why it ever was expected to be so.
This is a very bad way to look at long-term research. Or any novel venture, really. You want to be a pundit with a great track record on startups? Just say each one will fail. You'll be right 90% of the time with very little effort.
But it's even easier to wait until something fails and say, "It's not obvious why it was ever expected to work." Of course! If it were obvious that something was going to work, it wouldn't need to be done as a startup. And once it has actually failed, hindsight bias lets us paint it as an inevitable failure. E.g., if SpaceX had had less money and a couple more explosions, it could easily have gone under, and then all of its detractors could have done the "we told you it would never work" routine.
>Amazon, for example, has been hoisting a giant middle finger to MBA dogma for years with their overinvestment
This is not a great way to think of Amazon. Amazon is basically a VC that only funds internal "start-ups" and "unicorns." You still go to Bezos and the leadership team with a business plan, financial model, path to profitability, market fit, differentiation, competitors, TAM/TAM growth, and "is it a land grab?"
They do not fund "interesting ideas for the sake of interesting ideas" like the Google X projects. Even the most secretive Amazon projects tend to tie pretty closely to their existing businesses and strategies when they are revealed.
Also, not sure if this is still true, but Amazon was the #1 largest hirer of MBAs from top programs for a couple years.
As I explained elsewhere, Alphabet's moonshot investments are a different kind of investment than the what Amazon has been making for decades. But Amazon has been investing very heavily in changing the nature of buying stuff. To much grumbling from people who preferred profit.
15 years ago Bezos could have retired rich and turned it over to a standard CEO, who would have milked their then-excellent position commanding a large and growing share of ecommerce. And he would have been applauded by a lot of analysts, etc. But instead he's put titanic sums of money into making what are, at least on paper, pretty modest gains in terms of purchasing friction and latency. Is 2 days really that much better than 3-7 days? Is next-day and same-day really better still? The customers' answer is "fuck yes!" But it wasn't clear up front, at least to a lot of investors and commentators, that it was really worth tens of billions in capex.
In both cases, what I'm talking about here is investments that go beyond the time horizon of most companies. If you measure them by the average company (which has a much shorter exec and CEO tenure), of course they'll look bad.
Amazon is not a good example to cite for going against the MBA grain. No amount of convincing can get Amazon to fund a Makani style kite energy, or other X moonshots that Google funded.
As for ploughing investment to keep growing at the cost of profitability, that's every VCs formula and very well understood by the MBA crowd.
It's the worst example for this kind of investment, sure. But the common theme is that what your average exec sees as needless investment may just have a payoff outside the few-quarters-to-few-years range that they are using to score investments.
I'll note that the US had much higher economic growth during a period where large companies all were, by modern standards, overinvesting in R&D. It could be that we're just much smarter now. But it also could be that since CEO tenure has fallen nearly in half in the last 50 years, execs have stopped investing in things that they won't personally be around to profit from.
It's interesting that while these projects don't go forward, Google doesn't open-source the work they already did on them. It may not be viable for a business like Google to pursue such an operation, but it might be a viable solution for other entities that could benefit from it.
Sometimes the projects are "open sourced." For example, the findings of "Project Foghorn," which aimed to produce a synthetic fuel from seawater, were published in two academic papers, one explaining the economics and the other the chemistry. https://x.company/projects/foghorn/
Another, "Project Malta," which aims to store energy in molten salt, was spun out into an independent company. https://www.maltainc.com/our-story
This is a source of great frustration to me as someone who previously worked at Google X. So many promising projects thrown in the trash, when all of society would have benefitted if Google had open sourced their defunct projects. You know how some economists joked that you could stimulate the economy by paying people to dig holes and fill them back up again? Doing a bunch of development and then abandoning it seems just as wasteful to me. They trashed a lot of valuable off the shelf hardware that could have been donated to schools too. It’s all such a waste to me.
I tried. They were throwing away thousands of dollars worth of brushless motors. I asked in writing if I could donate them to schools and hobbyists. I was told no by a mid level manager. That rubbed me the wrong way, so I went to Astro Teller’s office hours. He said “this is our trash? We obviously don’t need it then.” He gave me tentative approval, and asked me to email him to check with legal. I did, and ultimately got approval from the head of intellectual property at X. I saved the motors from the trash, but apparently going to Astro was seen as “going over somebody’s head” so I pissed off upper management (the head of the team did not respond to my email and was on vacation while all this happened). So I parked the motors under my desk for a while while things calmed down, eventually got a few more approvals, and took the motors home. I’ve been donating them to hacker spaces and local robotics groups.
But the thing is, schools can’t use brushless motors by themselves. They need power supplies and motor controllers too. So when my team was throwing away fifty 600 watt power supplies, I wanted those too.
The whole time, I was not just asking for one item from the scrap bin, I was asking for an approval process. We threw away perhaps tens of thousands of dollars of valuable off the shelf parts a year. I couldn’t be talking to the head of X every time I needed approval. But management in my team didn’t care. Instead of responding to my request, they complained about my methods, saying I need to go through “proper channels”. I drafted a document describing a process for saving items from scrap that had documentation and oversight without requiring much bandwidth from the higher ups. It went nowhere.
So Google X still scraps thousands of dollars of stuff on the regular. Many people inside X want to help donate that stuff to schools. But the management on my team didn’t care one bit. I guess when you’re paid a million bucks a year, you just can’t relate to the local school kids who can’t afford motors for their robot. But I was once that kid, and to see these people dismiss what help we could give them was too much for me.
It’s still upsetting. Google X talks about changing the world and moonshots but you know what would change the world? Giving valuable supplies to local schools. I offered to do all the work on my own time, but they couldn’t be bothered to give me the time of day.
I understand your feelings about taking things that are waste for a corporation (R&D is a very wasteful process) and giving them to local schools.
As a contrast, the team I was on (Making and Science) purchased an enormous number of safety glasses, which we gave away at Maker Faire. We often gave whole boxes to teachers who asked (like, 144 glasses). You see them all over the place, and the teachers were always thrilled to get them.
But throwing away valuable stuff is still waste. If you can help someone a great deal for next to nothing, that’s worth doing. Forgoing that help and then making donations elsewhere is nice I guess, but it’s still wasteful.
also:
They are wasting resources with their side projects.
No one see the irony in that. I like their wacky projects. Obviously they to profit off of them at some point. But they are also kind of ground breaking if they actually turn out to work.
Alphabet also has the luxury problem of having discovered the most profitable business in the history of human kind. Now they struggle culturally to find something else to grow. They are user to basically make money for free and to so at insane scales.
Cloud is getting there but it‘s still nowhere near as easy. That‘s where Amazon in particular is very much in the advantage. They are already dominating the lowest margin business ever (online retail at scale). And they have a good foothold in cloud. Now they are getting into ads more and more. Much more comfortable direction to go.
In that sense the moonshots might make more business sense as well.
If Waymo works out globally. Add half a trillion to the valuation.
Wing: This could help them compete with Amazon.
GV/CapitalG: Very successful.
Sidewalk labs: could one day power cities.
Loon: not sure. Their better bet seems the heavy spacex investment with Starlink now. Though there are some pilots.
Verily: The health sector is fucked with leeches and inefficiencies. Especially entrenched players like epic who only want to protect their cozy position. Big opportunities there.
Calico: who knows. In a decade they could discover something insane. No idea.
Deepmind/brain: this is it. If only one project can succeed it should be this one in their view. If they succeed with AGI/ASI anything else doesn‘t matter. This is of course a big if and likely decades away.
The only thing they‘re currently not funding is fusion research. But that might be too long term even for them.
It is said that the laser printer in itself paid off multiple times for PARC (I think I read it said by Alan Kay)
But of course they could have own the personal computer space and the local network space too.
Companies as profitable as Google probably ought to be thinking of other companies/society rather than themselves. The idea that companies should optimise purely for profit is the worst part of capitalism.
Those were basic research, not 'we have a bunch of cool tech, let's glue it all together and go do crazy stuff'. If Google would pump money into materials science that would be Bell Labs, if they worked on next level interaction models that should count too, in that sense I think their general AI/ML work; speech recognition; synthesis and image classification work is more in line with what Bell & Xerox were all about than Makani, which is most re-using existing technology in ways that do not make much sense.
Opinion my own, not Google’s.