Google Makes So Much Money, It Never Had to Worry About Financial Discipline • Hacker News Board

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#131

Post by dionidium » Thu, Dec 08, 2016, 7:17 PM UTC

user5994461 wrote: post #128

matwood wrote: post #68

Earlier quoted context omitted.

Reminds me of Valve's no manager management style: https://www.bloomberg.com/news/articles/2012-04-27/why-there... When you have a lot of money, a lot of things work because you have a lot of money. You often see the same thing with people trying to emulate pro-athletes training methods. A genetically gifted pro-athlete can often succeed in spite of their training, and not necessarily because of their training.

I think you and the parent commenter are missing a critical points. These companies were successful because of what they were, and they continue to be successful because of what they are. It is a virtuous circle living on money, people, management and many more characteristics that go together.

They aren't missing that point. They are making the opposite point. Google had a great product at the right time and they executed well. Now it makes billions. All the other stuff is most likely incidental.

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#132

Post by user5994461 » Thu, Dec 08, 2016, 7:17 PM UTC

sahaj wrote: post #116

bad_user wrote: post #79

Earlier quoted context omitted.

All of Google's products are complementary products that create lock-in. For instance both Chrome and Android have been created with the purpose of controlling the underlying platform that people use, in order for them to not be at the mercy of the other platform owners, like Apple or Microsoft. And it worked. This is very obvious to anybody with an interest in how microeconomics works. For example this is why open s…

"All of Google's products are complementary products that create lock-in" I disagree. Chrome was created to be a standards based browser, Android to unify the different phone operating systems circa 2004. I picked Google products because they allowed me to get out if I needed to. Gmail provides IMAP, POP. Docs and Music let you take out your data as needed. Google intentionally creates a way to get your data out. All…

They're just ad distributing products.

Ever tried to install an adblocker on Android? There isn't anything you can do without rooting your phone. Seriously, it should be called Addroid.

Ever tried to install adblock/ublock on Chrome? only to find out that it doesn't exist in the chrome store or was removed again.

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#133

Post by rabidrat » Thu, Dec 08, 2016, 7:19 PM UTC

skizm wrote: post #76

I always wondered if Google just fired all their engineers except a few top guys, and focused on their core money making products like search / ads / etc. and tried to stay as lean as possible (lean being a relative term), how much profit they could make.

There's an old analogy that running a business is like taking a road trip, with money as the gasoline: you need to get gas along the way, but that's not the point of the trip. So effectively you're wondering how much fuel you'd have left over if you only had a few bicycles towing a fuel truck. What's the point?

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#134

Post by caminante » Thu, Dec 08, 2016, 7:21 PM UTC

georgespencer wrote: post #112

There's an interesting fiscal corollary of having unbridled ambition matched by enormous firepower which brings the world's smartest engineers and hackers together: a Xoogler who was early in the business once told me about how engineers would hack/exploit the travel allowance policy. Google allowed folks to book their own flight and accommodation, and had an algorithm which determined rewards for folks travelling wi…

  > After a while someone realised that a group of engineers 
  were consistently booking shitty travel around the same time,
  and then travelling first class the rest of the year.

How's that different than having an annual travel budget? Sounds like they sacrificed to feast later instead of holding accommodations constant at "above average."

I think you did a good job telling the story, but maybe I'm missing how gaming travel expenses is unique to Google.

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#135

Post by user5994461 » Thu, Dec 08, 2016, 7:22 PM UTC

Periodic wrote: post #40

muninn_ wrote: post #29

Earlier quoted context omitted.

I don't buy it. Many companies are able to get the perks, culture, and autonomy right without being a multi-billion dollar company. It does enable Google to do certain things (like moonshot projects) that smaller companies can't do, but a lot of the perks I've seen are replicated in other companies. In fact, I think your comment "Google doesn't do what it does to be successful, it does it because it is successful" is…

I tried to clarify the wording. I'm specifically trying to call out the structure of Google's management and the general way they approach problems. For example, even within the profitable Google portion of the business, they often have many competing projects. There will be competing search features, competing chat applications, competing cloud services. Google will make big speculative bets or internally competitiv…

> Google, as a company, doesn't really seem to have any idea of what most individual engineers are doing week to week.

Correct... but also correct if you replace Google by any company.

I've worked from zero management company (ala. Valve) to large fixed hierarchical structure (government).

The company never knows what people are actually doing. If it tries to find it, people will either game the system or waste time to justify they're doing instead of doing it.

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#136

Post by ChuckMcM » Thu, Dec 08, 2016, 7:23 PM UTC

RandomOpinion wrote: post #124

ChuckMcM wrote: post #118

Earlier quoted context omitted.

This is exactly correct. If you have a printing press that is dumping a couple of billon dollars into the basement every quarter in spite of what you're spending, you have the luxury of trying all sorts of novel things from a business perspective. That said, the margins on the search advertising business are shrinking, and have been for years now. You can cover for that by eliminating profligate spending and then eve…

> When that happens, Google is going to have to start rewarding operational efficiency gains at least as strongly as they currently reward popular science project type gains. And then it will be very interesting to see how they change and if the era of "but Google offers its employees ..." will be over. One has only to look at Microsoft to see an example of what might happen. Things were very carefree there as well b…

Agreed, and studying companies that have come through the transition to the other side is very useful. Particularly telling is how people describe what they "like" about work.

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#137

Post by jasode » Thu, Dec 08, 2016, 7:24 PM UTC

muninn_ wrote: post #29

Periodic wrote: post #11

So many companies try to emulate how Google works. There are multiple books, hundreds or thousands of articles. People speculate on the perks, the review structure, the hierarchy, the autonomy. However, when other companies try to imitate Google they always fail because they're missing a crucial piece: Billions of dollars in ad revenue Google doesn't work the way it does to be successful. It works that way because it…

I don't buy it. Many companies are able to get the perks, culture, and autonomy right without being a multi-billion dollar company. It does enable Google to do certain things (like moonshot projects) that smaller companies can't do, but a lot of the perks I've seen are replicated in other companies. In fact, I think your comment "Google doesn't do what it does to be successful, it does it because it is successful" is…

>Many companies are able to get the perks, culture, and autonomy right without being a multi-billion dollar company.

You're right but I understood what Periodic intended to explain. Unfortunately, he phrased it as "billions in ad revenue" instead of a less common metric of "profit-per-employee".

If the company generates enough profit-per-employee, it can afford to pay for lavish perks.

Consider 2 different companies' revenue,income,#employees:

Walmart: $482b, $24b, #2300000 -- ~$10k per employee

Google: $74b, $19b, # 69952 -- ~$276k per employee

Take one example of a perk such as free catered food which is estimated to cost $20-per-employee-per-day.[1] For Walmart to offer this perk multiplied by 2.3 million employees, it would cost ~$11 billion which is almost half the $24b profit. Google's calculation for 69k employees is ~$349 million which is less than 2% of the profit. And the free food is just one perk... there are also massages, haircuts, laundry, daycare, etc.

Yes you don't have to have a billion in revenue to offer perks like that. SAS Institute of North Carolina in the 1990s didn't yet reach $1 billion in revenue but they offered lavish Silicon Valley style perks.[2] They could afford it because they sold statistics software with high margins (profits). Although they are a private company, we can safely assume they are generating much more profit per employee than Walmart.

So, if we have a hypothetical medium-sized company that has a revenue of $400 million with income of $100m ... to afford lavish perks, we need to generate that $100m with ~360 employees or fewer (Google benchmark). If it requires hiring 9500 employees to generate $100m (Walmart benchmark), it means we will have to pinch pennies and charge the employees for each pen taken from the supply room.

Direction of cause-effect: create a great high-margin business so you pay for free gourmet food.

Attempting the reverse of subsidizing $20 for each employee doesn't mean you'll end up with a high-margin business.

We can generalize the free food case study to other "Google perks/methodologies/culture" to see if we really have the direction of cause & effect correct.

[1] http://www.businessinsider.com/2008/4/googles-ginormous-food...

[2] 60 Minutes story (2002): https://www.youtube.com/watch?v=lvsIcwHavOs

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#138

Post by ambicapter » Thu, Dec 08, 2016, 7:24 PM UTC

gph wrote: post #18

mahyarm wrote: post #7

Earlier quoted context omitted.

A lot of that stuff although is cheaper for the corporation to provide than for the employee to pay for themselves in money and time. The corp has a tax advantage and a bulk purchase advantage. Not having a payment infra probably adds a little bit of efficiency too.

Which does seem like sort of a loophole. Don't companies have to add perks over a certain amount to the employees pay so that it gets taxed? Wouldn't feeding an employee every day qualify? It would be sort of weird if we turn back into having sort of 'company towns' where your employer provides a lot of what you need except they pay for it. It's not just Google this would be beneficial for, even if you run a factory…

> It would be sort of weird if we turn back into having sort of 'company towns' where your employer provides a lot of what you need except they pay for it.

It would be weird but it would make sense, in the same way that theoretically the 'best' government in a benevolent dictator. When it's good, it's great, when it's bad, it's BAAAD.

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#139

Post by ryandrake » Thu, Dec 08, 2016, 7:25 PM UTC

georgespencer wrote: post #112

There's an interesting fiscal corollary of having unbridled ambition matched by enormous firepower which brings the world's smartest engineers and hackers together: a Xoogler who was early in the business once told me about how engineers would hack/exploit the travel allowance policy. Google allowed folks to book their own flight and accommodation, and had an algorithm which determined rewards for folks travelling wi…

It reminds me of some place I heard about that had very generous patent bonuses, to the point where people would make more money filing for patents all day than their salary--so they would do the bare minimum to get their "official" job done and not get fired, and spend the rest of their time writing patents all day. Not sure if it was Google, but it's another example of incentive systems being gamed.

Re: Google Makes So Much Money, It Never Had to Worry About Financial Discipline

#140

Post by Arjuna » Thu, Dec 08, 2016, 7:26 PM UTC

ChuckMcM wrote: post #118

Periodic wrote: post #11

So many companies try to emulate how Google works. There are multiple books, hundreds or thousands of articles. People speculate on the perks, the review structure, the hierarchy, the autonomy. However, when other companies try to imitate Google they always fail because they're missing a crucial piece: Billions of dollars in ad revenue Google doesn't work the way it does to be successful. It works that way because it…

This is exactly correct. If you have a printing press that is dumping a couple of billon dollars into the basement every quarter in spite of what you're spending, you have the luxury of trying all sorts of novel things from a business perspective. That said, the margins on the search advertising business are shrinking, and have been for years now. You can cover for that by eliminating profligate spending and then eve…

"I hope the free sodas stay though."

For those that are not aware of the reference here, you will enjoy reading Steve Blank's post entitled "The Elves Leave Middle Earth - Sodas Are No Longer Free."

https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...