This is why I really think of advertising as tech’s version of the resource curse, where countries with rich natural resources are prone to foundering because even incompetent rulers can stay rich as long as the oil keeps flowing. Both Google and Facebook hit this point where they have an enormous influx of cash to support all of these ventures where people can make all kinds of bad decisions without impacting the bottom line for years, if ever.
As a [very small] shareholder I really think they’d be healthier if Alphabet siloed the finances more so e.g. the messages leadership got paid only if that project worked out. Right now they can just fiddle around and still be in the top couple percent income range without any feedback that they were making terrible calls.
> [...] the same thing can happen in technology companies that get monopolies. Like, oh, IBM and Xerox. If you were a product person at IBM or Xerox, so you make a better copier or a better computer. So what? When you have a monopoly market share the company's not any more successful. So the people that can make the company more successful are sales and marketing people. And they end up running the companies. And the product people get driven out of the decision making forums. And the companies forget what it means to make great products. [...] the product sensibility and the product genius that brought them to the monopolistic position gets rotted out. By people running these companies that have no conception of a good product versus a bad product. They have no conception of the craftsmanship required to take a good idea and turn it into a good product. And they really have no feeling in their hearts usually about wanting to really help the customers.
There's definitely a resource curse with the advertising dollars but how would chat/messaging be silo'd? Users don't pay for it (individually) and it doesn't show ads (afaik?). It doesn't make money. The only reasons to build it are so Google employees aren't using other companies meeting/chat/messaging apps, so users aren't lured into competitors ecosystems and... what else? Pride? Ego?
That's basically the problem, isn't it? If it's effectively make-work, you get the kind of decisions we've seen. In the unlikely event that their hiring process failed badly enough to put me in a C-level position, I would have approached it as a revenue-generating service: invest some initial startup funds but have a plan that you're going to build a paid service around it, maybe with an ad-supported free tier but in either case you need a revenue model where the head person's performance is measured on people actively using the service.
There's also the "commoditizing your compliment argument" for building a messaging platform but does that strategy make sense if all your competitors are doing the same?
Yeah, I don't want to claim that I have the secret for how to monetize these things well. My thought was just that they didn't consider the costs either to their brand of letting users down or by providing a path where entire groups of people could influence other parts of the company with no experience bringing in business.
Presumably any new product they are building is to increase revenue somewhere, even if it's in another product. They might expect that getting X usage in a chat app will translate to Y additional ads income; due to better tracking data, more chances to show ads, etc. In that case some of the ads revenue could be attributed to the new chat app, based on usage. Some assumptions would need to be made, but the allocations could be tracked, measured, and analyzed pretty well.
Of course an approach like this would require some amount of direction and purpose, which is not at all a part of Google's core competencies.
I won't claim to be an expert on that but I think that was kind of the goal in the sense of having companies like Nest or Waymo be more independent, but given how little difference it's seemed to make I've generally assumed it was either some kind of accounting dodge or simply that they were too timid to break up Google itself. One of the reasons for that is no doubt that shareholders would ask why they're funding so many marginal ventures if those were broken out separately.
As a [very small] shareholder I really think they’d be healthier if Alphabet siloed the finances more so e.g. the messages leadership got paid only if that project worked out. Right now they can just fiddle around and still be in the top couple percent income range without any feedback that they were making terrible calls.