Bloomberg recently published an article titled, “Google Makes So Much Money, It Never Had to Worry About Financial Discipline—Until Now.”
It’s a fascinating look at how the company works, and how the culture is changing as they try to become more financially disciplined with their moonshots.
Over the 12 months ended in September, Google’s ad business accounted for 89 percent of Alphabet’s revenue, or $76.1 billion. As one ex-executive puts it, “No one wants to face the reality that this is an advertising company with a bunch of hobbies.”
Their ad business has historically subsidized all of the cool shit they work on.
However, as their “Other Bets” businesses—self-driving cars, wifi delivered by weather balloon, and so on—lose billions (with a B) a year, they’ve started to change how they approach these kinds of of moonshot ideas.
The architect of this reorganization—known as “Alphabetization” at the ever-sunny Google—was Ruth Porat, the new chief financial officer… She instituted rigorous budgeting and, according to people familiar with Alphabet’s operations, forced the Other Bets to begin paying for the shared Google services they used. Projects hatched with ambiguous timelines of 10 or more years in some cases had to show a path to profit in half the time.
As you might imagine, a lot of people are unhappy about this, and Google’s seen a loss of some key players in the last year.
Go read the full article on Bloomberg. It’s fascinating.