In the past few years, Larry Page has effectively shaped a narrative about himself and Google that goes like this: Google is only interested in big, world-changing ideas.
Page’s big, world-changing ideas are called “moonshots.” His moonshoot ideology was captured best by Steven Levy in Wired almost two years ago:
Larry Page lives by the gospel of 10x. Most companies would be happy to improve a product by 10 per cent. Not the CEO and cofounder of Google. The way Page sees it, a 10 per cent improvement means that you’re basically doing the same thing as everybody else. You probably won’t fail spectacularly, but you are guaranteed not to succeed wildly.
Since then, Google has demonstrated what it considers 10X improvements. It founded Calico, an anti-ageing company designed to ultimately cure death. It developed its own self-driving car. It announced development of tiny, magnetic nanoparticles that will be able to search the human body for cancer and other diseases.
There is, of course, much, much more.
Larry Page reiterated his interest in huge, world-changing technology in an interview with the Richard Waters at the FT:
As Page sees it, it all comes down to ambition — a commodity of which the world simply doesn’t have a large enough supply. In the midst of one of its periodic booms, Silicon Valley, still the epicentre of the tech business world, has become short-sighted, he says. While arguing that the Valley isn’t fundamentally “broken”, he agrees that it is overheated — though how much that matters is a different issue.
Page estimates that only about 50 investors are chasing the real breakthrough technologies that have the potential to make a material difference to the lives of most people on earth. If there is something holding these big ideas back, it is not a shortage of money or even the barrier of insurmountable technical hurdles. When breakthroughs of the type he has in mind are pursued, it is “not really being driven by any fundamental technical advance. It’s just being driven by people working on it and being ambitious,” he says. Not enough institutions — particularly governments — are thinking expansively enough about these issues: “We’re probably underinvested as a world in that.”
While Page’s ambition is admirable, there’s something ironically short-sighted about pursuing a long-term vision.
Not all big ideas come from big, ambitious companies. Sometimes, big ideas come later on from smaller companies. Just look at Google and Facebook. Both started as standard web apps and have evolved into much greater companies.
Hunter Walk, a former Googler turned VC wrote about this risk saying that many big companies only want to pursue ideas that can clearly generate a billion dollars in revenue. He argues that it’s foolish to try to size up a market before launching a product: “market sizing forces you to understand the world as it exists today as opposed to how it might look tomorrow.”
Page doesn’t have the revenue problem. But he has something similar. He’s looking down at the development of smaller companies focused on consumer technology. He thinks they’re not ambitious enough.
This begs the question: What would he think of company like Google in its early days? Just trying to make search better? What would he think of Facebook? Just a 10% improvement on MySpace? What does he think of Snapchat? What about Pinterest? How about Twitter? Instagram?
With the exception of Tesla, most major technology companies today started out working on a small improvement to existing products. As they succeed, people recognised that they are massive improvements to what already existed.
By insisting on starting at “moonshot” level of ambition, Page risks missing out on the creation of small projects that lead to the real moonshots later on.
A similar mentality plagued Steve Ballmer at Microsoft. He tended to think about revenue. He was, and still is, hesitant to pursue a new product if it wasn’t going to make lots of money. That thinking gave Google an opportunity to destroy the Windows business with Android. It gave Google an opportunity to challenge Office with Google Docs.
Page could miss the small projects that blossom into bigger projects if he insists on starting big. And there are a lot of small projects that are posing risks to Google’s lucrative search business.
Google’s search business is the most perfect business in the world. People are essentially asking for advertisements every time they search for something on Google. The ads, when done right, can be helpful for users. This has turned Google into one of the world’s most valuable companies.
But nothing lasts forever. And while Page looks to the moon, the search business is at risk of being surpassed by another, bigger form of online advertising.
Ben Thompson at Stratechery wrote about this:
$US50 billion for worldwide search advertising (of which Google captures a huge majority) sounds like a lot, but it’s only a small percentage of total ad spend, projected to be $US545 billion in 2014. The vast majority of that spend is not about direct response — i.e. ads that spur you to make a purchase on the spot; rather most of the money is spent on brand advertising.
The next wave of internet advertising, argues Thompson, is going to be “native advertising.” Native advertising is advertising that is in a stream of user generated content. Think of the ads that appear in the Facebook News Feed. Think of the ads that appear in Twitter’s feed. Think of the ads that are in Snapchat and Pinterest.
Google doesn’t own any stream like Facebook or Twitter or Pinterest. It is therefore at risk of missing the next wave of money-making products.
The question is whether Larry Page cares. He just handed off responsibility for Google’s major consumer applications to Sundar Pichai. Page wants to focus on the bigger picture.
There’s a danger in that. If the CEO and founder is only interested in major problems like curing cancer, does that attitude permeate the company? Do people at Google opt to ignore ideas that seem small, but could potentially become big to focus strictly on big moonshot ideas?
And what happens if all the moonshot ideas fail to materialise? There’s a reason they’re moonshots, after all. There’s a cliche that if you aim for the moon, but come up short you still land in the stars. Sometimes that happens, but just as often you crash back to earth.
That’s not to say Page shouldn’t be pursuing big, earth-changing ideas. He should be. He’s smart, ambitious, and has a gigantic checkbook. As people that live on earth, we hope he changes things for the better!
But, there is a risk that the constant focus on big ideas could lead to missing the next big thing.