A while ago I wondered where Google was going as a business. I wondered, how can a company invest so heavily in building products and services that don’t push up the bottom line? For example when Google acquired JotSpot for an undisclosed sum, JotSpot had about 2,000 users each spending between $5 and $200 on services per month. This puts JotSpot’s revenue at a maximum of about 2000 x 200 x 12 or $4.8 million dollars or as little as $120 K. Given the server and employee costs, JotSpot was probably just scraping by running in the black, they were probably still be paying down some of the original investments in the company, it’s even conceivable they were not yet making a profit.
For a company like Google, and considering JotSpot was earning at most 4.8 million dollars per year in revenue, is this what Google is looking for in an acquisition target? Is this the type of crazy their chief has put a come one come all invitation out for? Initially when Google purchased JotSpot they did so citing "a strong fit" with the Google Groups discussion forum and the Google Apps suite of hosted communication and collaboration applications. Good for Google. After all that is what I look for when I buy my jeans – but then again I’m not making any money of my jeans – or could I if I had the right type of sculpted muscular male body … ahhhhh … I dunno …. I have to admit it is a very strong fit and Google’s enormous muscular body may be able to pull it off.
Building on this Crazy, almost as Crazy as Google’s next move which was to release it’s premier line of Apps attempting to target Micorosoft’s Office Suite in an enterprise productivity environment. Great for Google if they manage to steal even a small percentage of the enormous market. But one thing that must be considered is Microsoft can meet and even beat Google’s price target of $50 per user for it’s office productivity suite. It can do this with a far more feature rich set, it can hedge some of it’s costs against the other Microsoft things that your coroporation is guaranteed to use, and it can do so at a profit. Further, it can probably do nothing to the product for 5 years and watch Google pour money into their product, and still come out with a more robust toolkit.
As Ricky Bobby would say, Google wakes up in the morning and pisses excellence. At least that’s how the internet community seems to see them. How can an advertising giant do any wrong in innovation, and is there really a ceiling you can put on this type of business?
Sure, most firms would probably be happy making $928 Million dollars in ad revenue in 2006. But it seems the company isn’t satisfied. When the director of corporate development Salman Ullah comes out with a statement like ``We look at everything very carefully,'' and follows that with a ``The really crazy ones do really well.'', I really have to think that their growth strategy is totally and completely lunatic – well, OK not lunatic – possibly just bursting at the seams.
I think this is best left up to Mr. Balmer in quote, talking to Google’s other plan to double their employee base in 12 months : "They are trying to double in a year," … "That's insane in my opinion." … but he adds … "it doesn't mean they won't do it well."
I personally would love to work for a company like that.
Over And Out