Business Lessons for FAANG, from FAANG?—?Google!

This is an era of unparalleled tech dominance. Behemoths like FAANG — Facebook, Apple, Amazon, Netflix, and Google intrude and control more parts of our lives than ever — building around data siphoned from multiple sources around us. The inherent intricacies and business flywheels these corporations have built are unprecedented — both in scope and scale. These exalted corporations have been credited with demonstrating exemplary skills to stave off competition.

The answer to the question — whether the genius of these companies is pure timing and luck or is it the leadership team and strategies — eludes us. This is the second in a series of articles, which are my humble attempt, to take a step closer to that.

In case you’ve missed the first, I recommend checking this  out.

Business Lessons For FAANG, from FAANG — Apple!

In this article, we’ll dissect Google — a corporation which is synonymous with the internet in ways more than one.

Google — the company which built an invincible technology moat!

What is it about college dorm projects and multi-billion startups? The intrigue, the dream, the setup, and the grand arrival. Think Bill Gates and his indefinite official leave notice to Harvard which gave the world Microsoft. Think Evan Spiegel as a college student amidst parties, booze, and immaturity thinking of Snapchat. And how can you not mention Mark Zuckerberg and his tryst with Facebook, perhaps the best-known of insanely successful dorm room companies?

But, while these titans of tech, most of the hegemon status, took a while to build to their climax, Google, took just 20 months to evolve from a college dorm room project to the search engine great it is today. It started off as a dissertation theme and eventually led Larry Page to work on the wonderful page rank algorithm that powers Google till today. While they were busy understanding how to index web pages and their web crawler exploring their web, they identified one key thing, almost sinister which was synonymous with humans — the desire to dominate.

Humans always had the desire and thirst for becoming the dominant species which led us to retain knowledge through generations with the help of the written script. This was the catalyst in pushing art and science forward. We created symbols and languages for communicating with machines we invented to simplify our lives. And the internet was the repository of it all. People were always going to use it for accessing information over generations. This was the human instinct Google tapped into foraying them to being hailed as “the future of the Web” by stock market investors during the growing dot-com bubble.

Staying true to its original vision, Google revolutionized search and rewriting our conception of the internet — which was once a disorganized mess of information, thanks to Google, had a structure. Google has never looked back. It has gone on to become the go-to source for information and has claimed its position as one of the few universally recognized verbs.

Just  Google it has almost become an instinct.

In 2015, Google officially became Alphabet, a cascading entity which to let the business units move faster and speed up the process of innovation (as if it wasn’t good enough already). It is a unique organizational structure where they can use the revenue from some of their “Alpha-bets” to fuel the growth of others.

Alpha-bets of Alphabet — Search, Gmail, Andriod, Chrome, YouTube, Drive.

Going through this picture, we can be sure of two things —

• Google aims to be at the forefront of some of the cutting edge technologies of the future.
• It aims to get there by using a few of its products from which it derives its maximum revenue.

To better understand Google, we have to see it as a media company. The only thin line of difference lies in the intent — the editors of big media houses curate our view of the world we inhabit. When the editors choose the stories for their front page, they set the agenda for TV and radio news, for the whole bird’s eye view of the world.

This is where Google chimed in with its creative destruction. Being a digital media company and promising more reach, Google struck contracts with multiple media houses across the globe. Google crawlers then, entered and scraped all of the content from their servers for free. Not only was it crawling the content, but it was also slicing and dicing that content for its users. It gave the content an organic nature which slowly won over the trusts of everyone who used it.

Today, Google provides indexed information on a plethora of topics as many as 3.5 billion times per day. Add YouTube to the mix, another Alpha-bet, and together they account for 90% of all the searches happening globally. Not only this, about 15% of all searches are for the first time. These are some serious numbers.

Adding to the search numbers is an excerpt from Scott Galloway’s The Four — “In Q3 2016 results, Google had a 42% increase in paid clicks. However, revenue captured (Cost per Click or CPC) declined 11%.” Analysts took it as a negative as elsewhere declining prices are an indication of loss of power in the marketplace. No one drops prices willingly unless you’re in tech. What most people miss is that with tech, you can acquire new customers with insanely slender amounts. This was something which almost everybody missed — despite declining their CPC, revenues grew as much as 23%.

Can you imagine what might happen if  Unilever starts to dramatically improve their factories and product line while lowering prices 11% annually? Albeit this is a rare occurence but given this hypothetical setup, the news would send shock waves throughout the CPG industry. This is what Google did to the entire media industry — everybody sans Facebook is having trouble keeping up with Google.

Google operates in a sinister way, driving prices down and not up. This is the antithesis of most consumer firms. While corporations calculate the maximum price to squeeze the excess consumer value, Google works differently. This is why it has grown, and still continues to grow, dramatically year after year. The irony, however, is that the victims invited the company in, letting Google crawl their data. Now the company is worth more than the market caps of the next three biggest media companies combined.

Facebook ($382 billion) +  Disney ($160 billion) +  Comcast ($154.7 billion) = $696.7 billion.

Google = $721.5 billion*

*Stats are at the time of writing this article (i.e. IST11 PM, 30/12/18).

Few people can explain what Google or Alphabet for that matter is. Alphabet emerged in 2015, and Google is one of the subsidiaries in addition to numerous other ventures. We understand Apple — it only builds beautiful products around computer chips (or does it?). We understand Amazon — you buy a bunch of things for a low price and it gets delivered to you real fast. But few people understand what happens inside that holding company that happens to “hold” a gigantic search engine.

Google has a barrage of products which I like to call their “Alpha”bets — ranging from Search, Email, Drive, YouTube, Chrome Browser, Maps and Android. Each of these can establish themselves as independent entities but they all have the one trump card which makes Google what it is today — ease of accessibility. Each of these is FREE and that helps in scalability.

Across these “Alpha” products of Google, and a host of others, Google siphons our data, sometimes unknowingly too and uses all of that to create identities of individuals with distinct goals, problems, and desires. This gives them a huge leg up in advertising for much of marketing is the art of how to best change behavior. It is centered around making us buy this against that, find that cool and that lame. Google relieves brands of the hard, expensive stuff and just gives the people what they want after they’ve created their digital impression stating “I like to read/watch this.” or “I want to know more about this.”.

Google brands itself as an organic search engine which indexes almost all the productive information in the world and organizes it for the convenience of its users and posted images of people enjoying free god in addition to sleeping in giant cubicles with their pets. It understood that the web had a lot of information which they couldn’t own but if they could somehow become gatekeepers to it, they would be at a position where users trust them with their photos, information, wildest desires, emails and places they visit. Combining all of these places them at the epicenter of the digital world which even the other members of the FAANG envy.

They realized the importance behind the sum of individual parts being greater than the whole and while people were going gaga over their drones, Google X projects and Waymo, much of which is chaff and (barring Waymo) their presence is no less than Microsoft’s Internet Explorer. Google never created any of the content in their entire ecosystem — they just made the ecosystem favorable and likable for people. And since the numbers were so huge, reach was never a concern. People loved what Google built — a goofy name, simple UI, standard email, best browser, cheap mobile OS and the honest search, all of which was available for FREE conspired to make Google synonymous with the internet in ways more than one (remember that line which I started off with?).

From writing  Documents, making  Presentations, navigating  Maps, storing files on  Drive, using  Android OS, searching for information on  Google/YouTube, sending emails via  Gmail,  Keep notes on the cloud, browse on  Chrome and much much more — you can almost do anything and everything on the internet if you have Google.

After this, does it still surprise you when people confuse Google with the internet and vice versa?

Ultimately, however, it may not matter. The internet is just starting and in all likelihood, Google will continue to grow, accelerate and dominate — probably in its core advertising business. Humans’ thirst for knowledge cannot be sated and that’s where Google has a monopoly.

This is the second of five articles I’m planning to write over the next few weeks. I hope you enjoyed reading it as much as I did penning it down for you. In case you liked it, please don’t refrain from the appreciation it deserves and give it a few claps and help it reach a wider audience.

You can follow  Pratyush Choudhury for breakdowns of the hottest technology trends, translations of the business use cases involving tech buzzwords, and analysis of the business strategies that power the tech industry.