Saturday, February 26, 2005

Weekend Reading: Google's Roller Coaster Ride

Google, no matter what anyone says, has changed our lives for the better. They've redefined how people view and use the internet, as well as the way start-ups market themselves to Wall Street bankers. Nevertheless, not much changes on Wall Street and there are patterns within Google's nascent history that chime with the histories of other explosive tech startups. That being said, has a really trenchant article on Google. Part commentary, part history, the author concludes that in order for Google to "make it," they'll have to learn the lessons their predecessors learned the hard way. Wall Street is the largest Shakespearean drama of our time--and right now, Google is center stage, wooing, amazing, and confounding us all.
Which brings us back to Larry and Sergey and the question of what they’ve learned. Having repeatedly ignored the prevailing wisdom in Silicon Valley—inventing a search engine when everyone knew search was dead; building a business on Internet advertising when everyone knew it was impossible; antagonizing two revered VCs whose rings they should have been kissing—the boys have undoubtedly learned that conventional wisdom often isn’t wisdom at all. But salutary as that lesson is, there’s also a danger to it. As Excite founder Kraus puts it, “The risk is, they’ll think the hallmark of a good idea is that everyone says it’s dumb.” Similarly, it would be easy for the boys to conclude that dissing Wall Street carries no penalty. In the IPO, they told investment bankers and investors to go pound sand—and they wound up happy billionaires. Today their message to shareholders remains: Trust us, or put your money elsewhere.

All of that is fine for now. As long as Google is growing like gangbusters and making money like the U.S. Mint, Wall Street, investors, and employees will be infinitely indulgent.

But if the history of the technology industry teaches us anything, it’s that no one is ever that lucky—at least, not for long. Every important high-tech company has at some point stumbled and fallen on its face. Microsoft, Intel, Oracle, Sun, Apple, Cisco—all have made severe mistakes, paid a price, and then survived in large part because they understood what being a public company is about. They learned that Wall Street matters. That investors like transparency. That “trust us” isn’t enough.
Google will undoubtedly evolve in the years to come. The question is--how far?

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