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Google: The Information-First Conglomerate

By - November 21, 2014
FortunePageCover

Larry Page on the cover of Fortune, Nov. 13 2014

Last week Google CEO Larry Page got the Fortune magazine cover treatment, the latest of many such pieces attempting to quantify Google’ sprawling business. The business press is obsessed with answering the question of whether we’ve reached “Peak Google.” (Clearly Fortune’s opinion is that we have not, given they named him “Businessperson of the Year.”)

“Peak Google” is what I like to call a “contagious misconception” – it seems to make sense, and therefore is worthy of consideration. After all, we’ve seen IBM, Microsoft, and other companies hit their peaks, only to drop back as they face the innovator’s dilemma.  Search is past its prime, Google is a search company, ergo – Peak Google.

But as the Fortune piece argues (and yes, I’m quoted, for what that’s worth), Google has a lot more going on beyond search. And while it continues to milk that multi billion-dollar quarterly profit center, it’s built five additional billion-dollar businesses – some of which are directly related to its search empire, but others that are not. Google Apps/Cloud, YouTube/Play, Android, Ventures, and Adtech are already past the billion-dollar mark. Huge businesses in waiting include plays in home automation (Nest), healthcare (Calico), transportation (Chauffeur/self driving cars), and connectivity (Fiber). Beyond that group lie a dozen or so potential blockbusters in energy, robotics, AI, wearables, and the unknown moonshots behind the curtains at GoogleX.

It’s that stunning breadth of scope – what Fortune calls the company’s seemingly limitless ambition – that has caused a prolonged internal debate around Google mission statement:

“To organize the world’s information and make it universally accessible and useful.”

Page has been floating trial balloons about expanding Google’s mission statement for nearly two years. When Tony Faddell, CEO of Nest, announced Google’s acquisition to his staff in January of 2013, Page took the stage and took questions from the stunned audience. One staffer asked Page why Google had any interest in a home automation company – it seemed quite orthogonal to Google’s focus on search, apps, and mobile. According to sources at the event, Page answered by acknowledging that Google’s mission statement may not be large enough to contain his company’s ambitions.

Since that first admission, Page has been testing out the idea of an expanded mission, and with Fortune he aired his ambivalence in public, telling Miguel Helft that “it’s probably a bit too narrow.” And on first blush, that seems right – what does a thermostat have to do with organizing the world’s information, anyway?

Actually, quite a lot.

When you look at Google through the lens of what I call “information first” businesses, things start to make a lot more sense. By that measure, Google is not only an information-first company, it’s also the world’s first information-first conglomerate – starting or buying businesses in every market undergoing the transition from “matter first” to “information-first.”

We see the transportation business shifting to information first, for example. The currently maligned but nevertheless extraordinary Uber is proof of it, but so is Zip Car, Tesla, and the entire autonomous car industry. The true value of these new kind of businesses is in how they understand information flows in the transportation markets, then execute new approaches to old problems (how do I get from here to there?) using novel and/or more efficient methods based on information technologies. Uber doesn’t put cars (commodities) or drivers (means of production) first – it puts information processing first. The cars and driver then reorganize to the new information flows and – voila! – a $17 billion company is born in four years. Uber proves that if you solve difficult information processing problems in traditional markets, you can create world beating value. Airbnb, DocuSign, Lending Club, and many more are further examples of the same thesis.

So what markets are ripe for transition to an information first framework? Well, let’s break down what makes for a “ripe” market. I think there are two key attributes of a market ready to be radically shifted by an information-first approach. First, a market where there’s liquidity of poorly organized and processed information. In other words, there’s a ton of data, but it’s not well organized or computed. Think about the world wide web in 1998, for example. Sh*t tons of information, terribly organized and lacking a processing layer. Google came in and – voila – a multi billion dollar company was born in five short years. Secondly, look for a market currently controlled through centralized chokepoints, but with the potential to be rapidly reorganized if and when consumers gain control. Again, look at search – before Google, portals like AOL and Yahoo ruled the web. Everyone went to a chokepoint to “see what was on the Internet.” After Google, consumers took control of their own web surfing.

So…what markets have both data liquidity and are currently controlled by centralized chokepoints? Well, let’s look at mobile. Tons of data, terribly organized, controlled by the chokepoints of carriers and OS vendors. Check! Or, how about healthcare? Oh hellz yeah! Energy? Yep! Connectivity? Most certainly! Markets where there’s not yet liquidity of information, but there’s about to be – home automation, food, retail – are also ripe for reinvention.

The world is turning into information, and that information wants to be organized, accessible, and useful. I don’t think Google’s mission needs to change at all. Whether or not they knew it at the time, Google created a manifesto that I believe will prove to be dead on in the context of an economic shift to a information-first paradigm. And when the history of this era is written, I’d wager that Google will be seen as the first information-first conglomerate to both identify and exploit that shift.

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6 thoughts on “Google: The Information-First Conglomerate

  1. Henry Thornton says:

    The value of a small number of information-first companies and the threat they pose to economies is being understood by many including the EU – http://bits.blogs.nytimes.com/2014/11/21/in-europe-a-resolution-to-break-up-google/?_r=0.

  2. george says:

    It’s fascinating to see new tech shifts occurring throughout every business platform; even google is now faced to change their dominant business models.

    I believe Google’s ability and willingness to reorganize is what essentially will save them from the perils described in the innovators dilemma. As you point out, they have invested significantly in the unknown (uncertain ROI’s), but where powerful discovery emerges and billon dollar ideas develop.

    They may be caught in a slower growth cycle for now but Google is organizing well to sustain relevant next generation applications.

  3. Henry Thornton says:

    Consider the old-world data-rich company Oracle and the new-world data-rich companies Google and Facebook. For this argument, assume that Oracle’s customers data is in their cloud (which will happen eventually). Google’s data is obtained mainly from organizations websites and Facebook’s mainly from consumers. Both Google and Facebook slice, dice and machine learn their data for current services, other services and future services.

    Imagine if Oracle sliced, diced and machine learned from the aggregation of all their customers data for new services to sell to their customers and others. There would be one helluva market damage and litigation mess.

    So, why is it that Google and Facebook can get away with it but Oracle couldn’t?

  4. JG says:

    The world is turning into information, and that information wants to be organized, accessible, and useful. I don’t think Google’s mission needs to change at all. Whether or not they knew it at the time, Google created a manifesto that I believe will prove to be dead on in the context of an economic shift to a information-first paradigm.

    Whatever happened to this? (http://www.google.com/about/company/philosophy/)

    “It’s best to do one thing really, really well. We do search.”

    Are you saying that they were both right and wrong when they wrote this philosophy 15 years ago? Wrong, in that they didn’t end up doing just that one thing.. they got distracted by hundreds of things.. And right, in that one thing is still just one thing: information. Not search, but information?

    I suppose I could buy into that hypothesis. Problem is, they never did get finished (or even get started!) on the dozens of various problems and aspects of search itself before moving on to other areas of information. In search, as I’ve pointed out for almost a decade now here on your blog, they stay shallow. They basically just do fact lookup, navigational search. They don’t provide any kind of support for some of the deeper modes of searching and information seeking, such as investigation, learning, explicit comparison, exclusion/negation, etc. They never have, and still never do. They stay shallow, at least from the perspective of the tools that they provide to the end user.

    So I have every confidence that they’ll take the same approach in thermostats, cars, and whatever else they get into. They’ll keep it shallow, keep the capacity for any sort of real analysis and investigatory tools out of the hands of the end user. And they’ll make a s***load of money doing that. But get nowhere nearer to fulfilling their actual mission statement.. which is to organize all the world’s information, and not just the easily lookup-able information.

    The Google I wanted 15 years ago still doesn’t exist, and none of these ventures get anywhere nearer to that.

  5. Mick Kennys says:

    It is getting really creepy that all the most important internet services that we use are in hands of one company. What is more our devices are also controlled fully by Google software (Android, etc).

    They know more about us then 50% of facebook “friends”. Now EU is trying to fight with Google monopoly. Hope they will do something.

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