The Starbucks of the Internet

There's a guy named Matt who reads my blog regularly and lives on the other side of Washington Square Park from me.  We've never met, but we've exchanged a bunch of emails lately.

Today, we were having an email conversation about Google and he said that they'd become the "Starbucks of the Internet".  I replied "How So?"  He replied:

...just that they're on every corner.  It's like the quote from the
movie Best in Show:  "We met at Starbucks.  Not the same one. They
were kitty corner from one another.  We just noticed each other from
across the street."  ;-)

Later on in the day, I was talking to my friend Mark and he called Google "The McDonalds of Internet Advertising - Billions Served".

When two people who've never met express similar ideas in the same afternoon, I generally take notice.

And it really crystalized what I had been thinking and trying to write about for the past couple days.  I spent a half hour on the train down to Baltimore this morning trying to write a post about Google and didn't like what I wrote.  Mark and Matt helped me articulate what I too had been feeling lately.

I think Google has become so mainstream and so ubiquitous in our everday Internet lives that its lost its mojo in some ways. That doesn't mean it won't continue to be hugely relevant, hugely profitable, and hugely important.  But it does mean that there's a vacuum that can get filled by others who are small, innovative, new, and exciting.

My partner Brad used to go to Starbucks twice a day every day.  Once in the morning on the way to work and once after lunch.  It was his routine no matter where we were.  Recently a new coffee shop opened near our office called Joe.  They also have a store in the village.

Joe is twice as far from our office as the nearest Starbucks. It doesn't have wifi.  It doesn't sell music.  It doesn't have four stores in walking distance from our office. But Brad visits Joe twice a day and hasn't been going to Starbucks at all recently. Because Joe makes a damn good cup of coffee.

If you invest in the Internet, you must watch Google and understand them. And so I do that a fair amount.

What I see today is a big company (yes, they are big now) trying to extend its reach beyond search and into every nook and cranny of opportunity on the Internet.  And without a lot of rhyme or reason.

Google has recently launched some very attractive web services like Google Local and Google Maps. Their SMS service is a killer app for cell phones. It seems like they are launching a new web service every week. It's so fast and furious that it is making my head spin.

But I don't understand how all of these new web services have anything to do with their core business of targeting advertising via search and contextual advertising.  Do these services create more inventory for them to sell?  Do they generate more data that allows Google to increase the relevance of the advertising?  In some cases, like Local and Maps, I see the logic. In many other cases, it just seems like a laboratory turning out cool stuff and seeing what sticks.

And while they crank out more and more new stuff, their two core products, Search and Adsense, seem to be suffering from a lack of innovation.

Adsense doesn't perform very well for publishers. So much so that many publishers are turning back to banners. And Google is also turning to banners. It's back to the future.  That's not innovation.

Google could acknowledge the limitations of its current contextual ad system and improve it. Or they could invest in new targeting systems like behavioral and beyond. But they are turning to serving bannners like Doubleclick did almost ten years ago.  Why?  I don't know.

And what about search?  Has Google improved its search product recently? Not from what I can tell. I still get a tremendous amount of noise in the results. It's still better than Yahoo!, but not by much.

And finally, Google is acting like AOL all of a sudden. You can't do a deal with them without paying respect to their market position. That's fine and is always the case with a market leader, but it will come back to bite them because the deals they won't do will get done with others. And some of those deals are going to be important ones that will create new participants in the market who will grow and become more powerful over time.

Then there is the issue of caching the Intneret with the Accelerator. That is not web friendly behavior.  It's another AOL move. It's a walled garden approach to the Internet. Google is supposed to be the most net saavy company going. If so, why would they do something like that?

Some people are going to read this post and think that I am trashing Google. I am not.  Google has an enormous franchise and is better positioned than any Internet company I can think of.

But size is the enemy of efficiency and innovation.  And Google has become a very big company very quickly.  They are in Starbucks and McDonalds company now.  That's great for them but its also great news for the little guy like Joe who can make a better cup of coffee or a better web service.

Comments

[Mike D.]

Agreed. However, I think that a lot of the "products of marginal use" coming out of Google right now are simply the result of having a lot of people working on a lot of things. This is a behavior which, in my opinion, is almost a responsibliity for a company of Google's size. You must make small investments in directions which aren't likely to bear fruit, merely so you gain knowledge in said directions and hedge all your bets.

The temptation is to think, "well, wouldn't they be better off taking those 300 people and putting them on search?" But the problem is that -- as Microsoft knows all too well -- throwing more people at something often slows down its progress. One well-known tenet of organizational behavior is that groups tend to lose efficiency very rapidly as they pass the 150-person mark and I'd venture to guess Google is at or near this mark in their most important businesses.

In light of all that, it seems to me that the best strategy for Google is to make sure their best and brightest are working on their key products (search and targeted advertising) and keep lighting up side projects as long as they can afford to. If 90% of their side projects fail, it probably won't make a dent in their bottom line. Web Accelerator? As big of a deal as people are making out of it, it probably took two Google employees a month or two to crank out. The bigger issue, however, is that Web Accelerator isn't going to just quietly fail... it's actually a big negative on the karma scale. And that's what I think the concern is with Google long-term. They're not just the big happy do-no-wrong web company anymore.

[Russell Buckley]

Hi

I know what you mean. Tom Peters calls it ho-f***ing-hum. Originally applied to Burger King, it shows that to succeed you need to be remarkable and Google just isn't anymore.

Tom also pithily says that incrementalism is the enemy of innovation and all the stuff coming out of Google is incremental.

The big opportunity for Google (or anyone for that matter) is surely Mobile/Cell Phone Local Search. This allows them to stick to the core business of providing great search *and* contextual ads.

Cheers

Russell
www.mobile-weblog.com

[Nivi]

1. I don't think there is anything wrong with Google "turning out cool stuff and seeing what sticks." I believe that is essentially what AdWords was. An experiment. That worked. These experiments probably cost them very little and have tremendous potential upside.

2. Due to Google's massive position in the market, they need to be careful with things like behavioural advertising and integrating all of their solutions and accounts into a mega-Google. Why? Because people will rant and rave about privacy concerns whether there are any or not. In this sense, Google is the Microsoft of the internets.

3. Due to competition from MSN, Windows, and Yahoo, Google has to be stealthy about painting a coherent picture of how their different services feed into each other. Why? Because the individual services are not ready yet nor is the integration. I believe this is a "Stealth Play" in the sense of John Zagula and Richard Tong.

To me, Google is one of those companies that I am truly passionate about. A company that can practically "do no wrong" in my eyes. The list is short: Google, Apple, Whole Foods, Patagonia, ...

[Nivi]

If you want to see what Google is doing to improve the performance of their core search engine, check out this rambling analysis of a recent Google patent that claims to reduce link inflation and search engine spam.

[hugh macleod]

When they were "cool" they had a different set of paymasters.

Going public, though it's good news for any VC with a stake in it, can be quite corrupting because what is good for shareholders is not always good for the actual business.

[Tom Nelson]

I think answers.com may be "the little guy named Joe" here. Please compare answers.com and Google search results at the link below, then tell me if you prefer the Google results:

http://answersblogger.blogspot.com/2005/04/better-than-google.html

[jackson]

I don'y know about all that, but since New World Coffee on 6th closed, Joe is a welcomed addition to our hood.

[Brian Carnell]

"Then there is the issue of caching the Intneret with the Accelerator. That is not web friendly behavior. It's another AOL move. It's a walled garden approach to the Internet. Google is supposed to be the most net saavy company going. If so, why would they do something like that?"

Nope, sorry, try again. The problem is not with the Accelerator. The problem is that 37Signals is using GET rather than POST here for there "Delete" function. GET is *ALWAYS* supposed to be non-state changing, but lazy developers use it anyway and then whine when someone like Google creates an app that actually follows the specifications.

One more reason to cancel my Backpack account.

[Neo]

Google still seems like the last attempt to bring back the dot com boom. It's directors still talk with that irrational exuberance that underscored the boom's big players like Netscape.
The whole "multiple projects" thing looks a bit like all those endless Microsoft initiatives that are seemingly searching for the next "best thing" before the current "best thing" (and all the cash that comes with it) goes to naut. All this while trying to make investors believe that there will be a next "best thing".
My advise .. sell.

[Dan Malven]

Two comments / observations:

1. Banner / image advertising may be considered "back to the future" when looked at from the negative spin side, but from the positive spin side it makes a lot of sense. Doubleclick doing it in 1996 wasn't worth much because there was no targeting. But doing it in response to a search query or page context makes a ton of sense for marketers, consumers and Google. The comScore/Overture study released earlier this year showed that for people who entered at least one search term in the consumer electronics category had a 25% rate of converting, with 92% of them converting offline. Marketers don't need a click-through on an ad to help influence offline conversions...just an impression helps do that. Don't think of Google's efforts as selling banners, think of it as selling CPM programs...and think of it in the context of broadband video to the desktop. So quick little video / animation ads based on what people have searched on is hugely valuable to marketers using the online channel to drive offline conversions. CPM-based video ads in response to search or context will start taking share away from traditional television: why wouldn't GM run video ads online to people searching for new car info? When they run ads on TV they have no idea whether the viewer is in the market for a car, not so when its triggered by a search. And the ads can be valuable to consumers who get to see a product demo or something else of value to them to help in the shopping process.

2. For certain things I find Technorati to be *way* more relevant than Google or any other "traditional" search engine. I was recently searching for the number of portable music devices sold to date and couldn't get anything valuable out of Google and Yahoo after trying several iterations. I went to Technorati and found it immediately because bloggers who follow that market talk about it all the time. To me, that's a version of vertical search (the vertical of conversations), which works well depending on what you're searching for. If Google doesn't innovate or acquire in the vertical search space they will suffer loss of market share. But I would be surprised if they don't become more active in different vertical search segments. But it also means there are lots of opportunities for entrepreneurs in vertical search (and in personalized search).

[Dimitar Vesselinov]

Google's War on Hierarchy, and the Death of Hierarchical Folders

http://www.microcontentnews.com/articles/deathofhierarchy.htm

A must read!

[Mike D.]

Brian: I know don't man. Pre-fetching is a delicate endeavor, generally only recommended for images and other media. I agree that Google's brute-force method of basically "clicking every link on a web page" is indeed not very web-friendly. Google, as a generally company strategy, *always* takes a brute force approach to everything but this is the first case I'm aware of which actually creates a negative. You can blame developers for using GETS and not POSTS, but the web is an imperfect medium filled with imperfect code and Google's biggest strength up to this point has been in dealing with that very fact. Semantic Web purists want everyone to write perfect XHTML so search engines and other applications can derive meaning from web pages based on said semantics, but Google realizes this will likely never happen (at least anytime soon) so they write brute-force algorithms to parse meaning from imperfect web pages. If they are going to make a web accelerator product, they need to build this tolerance for imperfection in as well.

[t]

Google's initiatives aren't random; they're very deliberate. Look at them long enough and work in the advertising business, and you'll find the pattern.

I'd liken them more to Microsoft in regards to their ubiquity and competitive style. In a couple of years, that "don't be evil" quote is going to seem ironic to the businesses that get wiped out by google. More of a death-star than a local coffee shop IMHO.

[matt schulte]

I say their core business is not 'targeting advertising via search and contextual advertising'.

Their core business is momentum.

[Jack Krupansky]

As another one of the blind men opining about the elephant, I would simply note that Google is all about network effects: the degree to which any given addition to their portfolio is not simply additive business, but *multiplies* all of the other components of the portfolio.

That's where Netscape (and AOL) went wrong: they inadvertently got sidetracked with additive effects rather than network effects.

-- Jack Krupansky

[Earle]

As an example of google's current ubiquity, my just turned 4 year old nephew commented the other day, "what's this google?"

He was referring to the change in the google headline image of the day for teacher's day.

[Jerry Kindall]

Google is not the Starbucks or McDonald's of the Internet, simply because there is no boutique search engine that snobs use because they think they're too good to use Google.

I'll totally disagree that Google has lost its mojo. The Web Accelerator thing is exciting and has enormous potential for reshaping the way search works. The prefetching issue with the initial release is a red herring; it's a technical issue in a piece of beta software, which will be worked out.

[Matt Stoller]

Google has the resources to fight legal challenges on behalf of innovation that others can't.

[Thomas Hawk]

"You've Got GMail!" Nope, it just doesn't sound right.

I've saved one hour in one week with the Google Accelerator

[Matt]

**BREAKING NEWS**

Google to aquire Dodgeball! I feel like the guy in their logo!

Duck!

www.dodgeball.com

[Brian Horey]

They have something else in common with McDonalds - the French see both as threats!

France Mobilizes,
Seeks European Allies
To Fend Off Google

http://online.wsj.com/article/0,,SB111584964489931020,00.html

[Jojo]

The problem with Google (besides poor search results) is that as a company, they have an average age of something like 30 or 31. If you're over 40 or so, good luck on getting a job there. The government should look into the rampant age discrimination there.

Google employees are mostly kids too full of themselves, kids who think they know better than everyone else about what works and what doesn't. But they really don't have the experience nor maturity in the business world to truly understand how the world works. They will eventually self-destruct, superseded by something better.

[scott partee]

Your point about Google using the Maps as a way to gather more data may be very true. I just moved to Portland, and I've been doing a lot of Google mapping. Now, a lot of the targeted advertising when I'm on other sites is not only about the keywords and content, but Portland-specific. They could be using my IP address, but probably, more likely, they have seen that I did about 100 Google Map views of the PDX.

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