Wall Street is short sighted and regularly see things by the quarter. Its long term outlook tends to be a year give or take. Alphabet needs more forward thinking investors who can see a payout that may not happen for a decade or more. While it has cool projects, the problem with X is that it doesn't seem to have a clear mission / message like SpaceX and Tesla where you are investing for more than just a profit. I could be wrong but they have a marketing / PR problem (in addition their other pre-exisiting ones).
Alphabet Loses $859M on 'Moonshots' in 2Q 2016
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Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#12All of humanity is going to benefit from these moonshots.
Sometimes, the original intent of a research program doesn't come to fruition, but there are a lot of downstream benefits and innovations that can be traced to the so-called "failed" research program. I believe that's exactly what's going to happen with some of these so-called "failures."
Even today, what Elon Musk has already done, is considered impossible for his companies to have done. (The car, and the backwards landing rocket.)
Here's to more moonshots from Google and Facebook! Salute!
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And here's Nassim Taleb on "inverse Turkeys" (i.e., positive Black Swans), from AntiFragile:
> Harvard Business School professor, Gary Pisano, writing about the potential of biotech, made the elementary inverse-turkey mistake, not realizing that in a business with limited losses and unlimited potential (the exact opposite of banking), what you don’t see can be both significant and hidden from the past. He writes: “Despite the commercial success of several companies and the stunning growth in revenues for the industry as a whole, most biotechnology firms earn no profit.” This may be correct, but the inference from it is wrong, possibly backward, on two counts, and it helps to repeat the logic owing to the gravity of the consequences. First, “most companies” in Extremistan make no profit—the rare event dominates, and a small number of companies generate all the shekels. And whatever point he may have, in the presence of the kind of asymmetry and optionality we see in Figure 7, it is inconclusive, so it is better to write about another subject, something less harmful that may interest Harvard students, like how to make a convincing PowerPoint presentation or the difference in managerial cultures between the Japanese and the French. Again, he may be right about the pitiful potential of biotech investments, but not on the basis of the data he showed.
Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#13"Moonshot" is the Google term for R&D. Google's R&D budget in 2014 wasn't even in the top 5: http://www.neowin.net/images/uploaded/2014/12/screen_shot_20... Problem for Google might be that Wall Street may look at a word like "moonshot" and basically associate it with wasting money whereas if you call the same things R&D, it's something companies have been showing as an "investment"(not loss) for decades.
I don't think this is true for Google. The "Moonshots" mentioned here are pretty far from Google. It is in some sense R&D of course, but it is not R&D that will benefit Google as a company.
Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#14There was an HN discussion earlier this week on Google X[0]. One important point made there, by snarf: > Google X is mainly about the PR value around its image and recruiting/locking up talent. Google would rather have smart people locked up inside the company working on projects with a high probability of going nowhere rather than having them going to a competitor, or worse, creating the next major competitor. 0: ht…
That entire thread is filled with snark/speculation and lacks any actual facts.
Is it that inconceivable that Google believes that one or more of these moonshots might actually take off?
Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#15"Moonshot" is the Google term for R&D. Google's R&D budget in 2014 wasn't even in the top 5: http://www.neowin.net/images/uploaded/2014/12/screen_shot_20... Problem for Google might be that Wall Street may look at a word like "moonshot" and basically associate it with wasting money whereas if you call the same things R&D, it's something companies have been showing as an "investment"(not loss) for decades.
I don't think this is true for Google. The "Moonshots" mentioned here are pretty far from Google. It is in some sense R&D of course, but it is not R&D that will benefit Google as a company.
How do you reach the conclusion that it is not R&D that will benefit Alphabet? They make it pretty clear it is a high risk high reward R&D, meaning if they hit pay dirt, it can be massively profitable for Alphabet.
Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#16There was an HN discussion earlier this week on Google X[0]. One important point made there, by snarf: > Google X is mainly about the PR value around its image and recruiting/locking up talent. Google would rather have smart people locked up inside the company working on projects with a high probability of going nowhere rather than having them going to a competitor, or worse, creating the next major competitor. 0: ht…
That entire thread is filled with snark/speculation and lacks any actual facts. Is it that inconceivable that Google believes that one or more of these moonshots might actually take off?
Well I'm sure the people working on it think one might take off. But if you're taking the pessimistic view it doesn't matter if they never succeed as long as the smart people are kept busy working for them.
Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#17Wall Street is short sighted and regularly see things by the quarter. Its long term outlook tends to be a year give or take. Alphabet needs more forward thinking investors who can see a payout that may not happen for a decade or more. While it has cool projects, the problem with X is that it doesn't seem to have a clear mission / message like SpaceX and Tesla where you are investing for more than just a profit. I cou…
Stock is up 4% after hours. I'm not sure which "wall street" strawman you are attacking, but it doesn't appear to be the one that actually trades stock.
Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#18This is simply how moonshots work. You lose $50m 99 times in a row, then make $50b on the 100th time. (This is also very similar to how venture capital economics work.)
I think it's wonderful that Google pursues moonshots and that they have the cash flow to keep Wall Street investors from freaking out. I'm confident that one (or more) of their experiments will eventually make a huge impact on people around the world.
Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#19There was an HN discussion earlier this week on Google X[0]. One important point made there, by snarf: > Google X is mainly about the PR value around its image and recruiting/locking up talent. Google would rather have smart people locked up inside the company working on projects with a high probability of going nowhere rather than having them going to a competitor, or worse, creating the next major competitor. 0: ht…
That entire thread is filled with snark/speculation and lacks any actual facts. Is it that inconceivable that Google believes that one or more of these moonshots might actually take off?
The "other bets" category accounts for $185mm in total revenue. By most normal reckoning, that has taken off. It looks small by google standards and compared the the spending on other bets, but that's a lot of money.
IIRC, most of the revenue and cost in "other bets" comes from Google Fibre. It's a signficant up-front investment for a fairly reliable long term revenue stream. treating the whole other bets category as R&D is not really correct. this isn't just google X.
Re: Alphabet Loses $859M on 'Moonshots' in 2Q 2016
#20All of humanity is going to benefit from these moonshots. Sometimes, the original intent of a research program doesn't come to fruition, but there are a lot of downstream benefits and innovations that can be traced to the so-called "failed" research program. I believe that's exactly what's going to happen with some of these so-called "failures." Even today, what Elon Musk has already done, is considered impossible fo…
The thing is, the car and reusable rocket stages exist and are far more difficult to pull off than creating and running an ad-network.
I am not saying ad-networks aren't complicated and involved and require highly intelligent people, but I don't believe them to be comparable to what Musk is delivering.