Google's Strategy Explained

I recently had a dozen or so conversations with executives and entrepreneurs about what Google is doing. Some imagined buying yachts after a Google acquisition. Others feared downgrading to a canoe if Google entered their space. So I put this fun little video together for LinkedIn [to accompany my article on Forbes and full (free) report) explaining why Google does what it does - and what it might do next.

The 4E's of Google Strategy

Unlike companies with swarms of MBA's making slides few will cherish, Google has an experimental culture that empowers employees, but ultimately defends its core. The approach can be broken down into four parts.

The first part is 'Earn'. Google makes 95% of its money from advertising. Even though other parts of its business are growing faster, it's not going to morph into a chain of waffle houses anytime soon.

The second part of the strategy involves enticing people to use services that can either deliver ads or collect data to improve targeting. Others fall into the Expand category where Google seeks to increase internet usage. If you're online more, Google knows it will ultimately benefit. That explains projects like self-driving cars or wifi balloons in Africa.

Finally, Google lets employees experiment. Some become full-fledged products. Other experiments are "big-bets" on things like solar or investments by Google Ventures in promising startups it might someday ingest.

Google Asset Size & Growth

Here’s a snapshot of Google’s products. For all three sections, growth is the vertical axis. We used a combination of available data, educated guesses and Kangaroo hair. Don’t ask... The idea was to show relative performance.

As you can see in the first column, the big earners like DoubleClick and AdWords are growing in the 16-18% range. Offers and wallet, will be important, but hardly register on the revenue meter so far. As I’ll explain later, I think they’ll play an important part in Google’s future.

Shopping has undergone a lot of changes since its Foogle screen scraping days. Now, it requires merchants to upload inventory, not unlike eBay and Amazon. The site is not at critical mass and some categories look like shelves in Soviet-era supermarkets. It might have limited time to adjust its business model or risk turning off prospective users who came expecting an orgy of options.

The entice category has most of Google’s high growth properties at the top. Search has over a 1 billion users. Chrome isn’t far behind with 39% global browser share or roughly $750M. And Gmail is right around 500. Google+ is said to be between 150-200 million, but it’s hard to say for sure. Some have an account just so they can use other Google products. Android and Play are at about 400 million phones. Blogger and Orkut might as well call a priest. Father Google Plus is about to drown .
In Expand,

Motorola is in huge market but not growing. Only Samsung and Apple make any profit in this market. So expect Google to sell it sometime soon. Nexus plays in a 400M tablet market, but really it’s a need to compete device a lot like Microsoft Surface.

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