heartgoogle

I heart Google

This post is the first in a series of observations entitled I heart_______. Each long form observation is specifically a look at why I like the prospects of the subject. In some cases, it may involve multiple posts/parts on the same subject. In my analysis I can & will include inferences, speculation, and hope. Hopefully, it will also be grounded in educated reason. In all, it’s just supposed to be fun. Let’s begin.

Point of Disclosure: Long Google in accounts & adding added today.

Google.

Maybe some of the things you hear about Google sound like pie in the sky. Some of the ideas are pie in the sky. But some of the ideas speak to the big idea behind Google. How Big?

In math, Googol is a 1 followed by 100 zeros.

In business, is Google worth the $516 price tag today? I have no idea. Do I think it’s worth more than $516 10 years from now?  Pretty surely. Could it go to zero? Absolutely.

But here’s why I heart Google today.

See– to really understand Google, you have to go way back to 2004 and read the Owners Manual. Current CEO Larry Page, is the one who penned it.

Google is not a conventional company. We do not intend to become one. Throughout Google’s evolution as a privately held company, we have managed Google differently. We have also emphasized an atmosphere of creativity and challenge, which has helped us provide unbiased, accurate and free access to information for those who rely on us around the world.

Here’s the thing. The whole letter was inspired by Warren Buffett’s essays in his annual reports and his “An Owner’s Manual” to Berkshire Hathaway shareholders. Larry Page hearts Warren Buffett. And when I let myself wander in thought with the idea that Larry Page could run Google like a Berkshire, I have to tell you– I get a bit giddy. Think about it. It could be like a 21st century GE. An information conglomerate. And could you imagine the labs in Google factories? I can — they’re making smarter data farms right now to lay the foundation.

The problem right now is the execution. Until Google learns not to kill everything it eats, it will never be an incubator for anything but more of the same. In some cases, that may mean limiting themselves to more strategic investments, more of a gentlemen’s banker, rather than outright acquisition. I think now that they are on a new Page {I couldn’t resist}, hopefully that vision will bear fruit. If they do acquisition & partnerships well, we have the makings of the next Berkshire Hathaway– a holding company of good ideas.

Here’s the areas I see showing promise:

Trading/Information

Did you know Google has a trading floor? Yep. Primarily its role is preserving capital and generating reasonable returns, so that Google has adequate capital to continue to make acquisitions. Many of the traders at Google are from Goldman Sachs & J.P. Morgan. According to Wall Street Oasis, “Google’s technology allows traders to see 98% of positions in real time, whereas most bank can only monitor 60-70% of transactions in real time.” Boom.

When I read about hedge funds managing money based on trends found using Twitter’s API with 87% accuracy (Bloomberg-video), I have to be honest– I actually start to salivate when I think about what Google could do with their data. Can you imagine the power they have at their finger tips? Emails, Maps, Videos, Documents, Search, — All of the world’s questions. Holy crap. What’s that worth? I have no idea– As with most things, it really all depends on the execution.

But what interests me most, is when you lay this foundation against the backdrop of a series of healthy ideas & companies that need a home, combined with the projects they are already involved with.

It all starts with insurance. If you want to be the next Warren Buffett you’d better learn about insurance. Me? I hate insurance, until I need it. It’s a terrible store of value for the individual. It’s great for bankers and people who like to buy buildings & bridges.

Somebody should do something to revolutionize such a big dinosaur like life insurance. Mortality tables are nice, but what if we had more perfect information?

23andMe

Did you know Sergey Brin’s wife is a co-founder of 23andMe, the low-cost DNA testing service? It used to be like $1000 bucks a couple of years ago, which WAS cheap. Today, it’s $99, plus a 1 year commitment of $10 bucks a month– but they send you updates with findings about yourself. I’m really tempted.

To me, what I love about 23andMe is the idea that someday we could actually have an insurance company that DOES charge prices based on my DNA findings. Because once you know exactly what you’re dealing with, you have almost perfect information to run a monte carlo simulation on me. I might get cancer? Fine, tell me how much I might have to pay. Now that Genetic Information Nondiscrimination Act has passed in 2008, there aren’t any really worries. No insurer can deny you because of any findings– so let’s do this already. Kill insurance companies, sell life insurance at killer rates.

Bank of Google

Google will never go into banking or become a hedge fund — no way. It sounds great in theory, but with all of the regulation– the closest they’ll ever get is the cash register. Which is fine — there’s more than enough money there for Amazon, Google & Apple to split. I honestly can’t see PayPal being a takeover by anyone at this stage because it’s too big, everyone would scream it’s unfair. But as MocoNews reports with Google’s Mobile payments partnership with Mastercard and Citi and their overall commerce strategy — they’re not slouching.

Google ChromeBooks

I dunno. I want to like this. My problem with this as-is, Google launches stuff (like the Google phone) and then kills it a month later. I don’t blame them, but it’s certainly not anything to hang your hat on — they productize before they monetize. The exact opposite of Apple. It’s not evil or bad business per se, just a bit more flaky. That being said, if America really does want to reboot education, leasing netbooks like these would be a great start. $240 per student, no maintenance, they can be monitored, easy integration, with easier setup & customization. Google is well positioned to make this a potential reality politically too. That is, if Obama gets a second term.

Google Labs

The self-driving car is real. This is going to happen people. They’re working on legislation in Nevada to make them legal (NY Times). And I bet they’ll get some good legal practice with drunk drivers on the strip. But remember– our kids want freedom to go where they want, when they want–  but they also want to keep texting. Driving is not the status symbol it used to be. I don’t know when it happens, but this car is not jetpack fantasy stuff. And we’re also not talking 25-35 mph zone either — we’re talking real driving. 

Google / Acquisitions-Partnerships

Here’s the thing– If Cisco, the king of consolidation, can trip up & fall, losing it’s way mired in failed acquisitions. Maybe Google, who admittedly gets a bad wrap about integrations, should refocus their efforts. The truth is, if you look at the list of acquisitions (Wikipedia)– their track record isn’t that bad. But I do think they are refocused in area of M&A. It start’s with Search – they are still very much focused on perfecting search. People would be dumb to think they’re not. Semantic & Visual. They’re experimenting with Voice Search. And as MG Siegler from Tech Crunch notes, Language. They know the space well; they should buy their brains out. But in other areas, rather than acquire outright, I hope to see more partnerships.

KickStarter – Google should invest in them. There’s a brilliant analysis over at Trendslate about why.

Foursquare – Google should invest in them. They’re already in with Crowley having bought Dodgeball, Foursquare’s precursor. There’s no incentive to grow inside the belly of the beast, but how can you not like talking to someone who already wrote a huge check to you once before? So, what Google should do, is lock up their attention with a big check and a few engineers. Deeply integrate Foursquare into the Google experience.

It won’t take much to out-socialize Apple right now, but if the gap widens at all it may be too late. Apple is moving hard to integrate Ping into a more unified experience, no doubt. And this will give them a big first mover advantage to making iTunes social. As it is, I think both Google & Apple have a better chance to monetize Social commerce more quickly than Facebook because people are so used to conducting commerce using them already. And both have the OS & hardware.

Formstack– Invest. Google docs is nice– And forms are a great data source to scrape. And this best-in-class site would be a great add to the arsenal. It’s forms on steroids.

Here’s the thing– Google is Search. I don’t think that should or will ever leave their DNA. It’s made them what they are– and finding the answer to search is a multi-billion dollar idea (today). Maybe even a trillion dollar idea…

TO BE CONTINUED…. {tomorrow}

One thought on “I heart Google

  1. Pingback: I heart Google: part deux « I heart Wall Street.

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