It's amazing how much the internet has changed in just 13 years. Makes me wonder if the tech giants of today will become irrelevant by 2030s or we're past the point where the giants are rich enough to just buy up anything with potential while their original products fade into obscurity.
If anything it's more amazing how much it hasn't changed lately. The early days were a wild west full of market share battles and failed startups/ideas. Now the market appears mature with a few companies with strangleholds on it until perhaps a technological sea change catches them off guard.
If you look back a decade, things haven’t changed that much.
Facebook was public, growing, had figured out mobile and had already acquired Instagram. It was by far the top social media company.
Amazon had taken over online retail. It was already a behemoth. AWS was in its infancy, but it was growing.
Apple was already the most valuable company in the US.
Microsoft had been one of the top 10 most valuable companies for a decade.
Google was already a behemoth when it came to search. YouTube was massive and Android had just started gaining traction.
Out of the top five companies, Google is the only one that hasn’t been able to pivot or diversify. The rest of the companies have been able to learn from the mistakes of the previous generation.
In the case of Apple and Microsoft. They have both been around for 35+ years. Microsoft wrote the first version of the embedded AppleSoft Basic interpreter for Apple //e’s in 1980.
Google is well diversified. You even mentioned Youtube and Android. GCP isn't at the top but it's huge. Google docs/business suite is taking over, it's the goto for startups. They have a mobile carrier business. Self driving cars (although its dropping in valuation but they do have a large stake in Uber). Google is now Alphabet which it restructured into because of its diversification.
Small nit: FB wasnt public 10yrs ago but your point is valid either way.
How else do you measure whether it is successfully diversifying if not by revenue or more importantly profitability?
Contrast Google with Apple. Even though the iPhone is 60% of Apple’s business, last time I checked, the Mac business alone would put its revenue well within the top 100 companies.
According to public records that came out during the Oracle lawsuit, Android had only made $22 billion in profit from its inception through the time of discovery (2016). Which is really nothing overall.
On the other hand, it’s reported that Google pays Apple $12 billion a year to be the default search engine on Apple devices.
Apple makes a lot more from Google on mobile than Google makes from Android.
Andy Jassy, the CEO of AWS, has said in plenty of public statements that only 4% of all enterprise IT spend is on any cloud provider. GCP is in a distant third.
Youtube is a net loss and GCP has a 4.6% market share so I wouldn't really count this as diversified since very little of their overall revenue comes out of these two projects?
Google docs / business is interesting but I'm not sure they make much money out of it and are scatting on the freemium tier success.
You’re still conflating “profit” with “revenue”. No one is doubting that YouTube’s revenue is substantial. There is doubt that it’s profit is substantial. If it isn’t contributing any meaningful profit to Google’s bottom line, it isn’t successful.
Is this really a serious question? The success of a for profit company is defined by “profitability”.
Spotify - like Jobs said about DropBox, they are a feature not a product. Most of their revenue goes back to the record labels. Their gross margins are slim
Uber - is losing billions and it’s unit economics isn’t good.
It was indeed a serious question. Thank you for your answer.
I disagree with the notion that the success of a for-profit company is solely defined as "profitability". Factors such as growth or value are also often cited as success criteria. I couldn't find literature supporting your statement that profitability is the only measure of company success.
Intuitively, it also seems wrong to me to claim that a children's lemonade stand netting $10 in profit is a more successful business than Tesla.
How can a company be sustainable if it continuously loses more money than it brings in?
If I sold a bunch of dollars for 95 cents, my revenue would be astronomical. But does that make it a sound business model?
Which is a better business model? An Indy writer with 3000+ people charging $100 a year for a newsletter (Ben Thompson/Stratechery) or a multi million dollar news organization employing dozens of people with higher revenue losing millions per quarter?
The startup model is all about exponential increase of the user base. For example, Amazon was running at little to zero profit until 2015 [1]. Google and Facebook added ads years after they became extremely popular.
What you're saying makes perfect sense to me though.
Once you go public, you can no longer call yourself a “startup”. All of the companies mentioned were public.
Facebook was profitable before they went public. The main reason they went public if I remember correctly, is because they had more than 500 shareholders and it made it more difficult to stay private.
As far as Amazon, Amazon wasn’t GAAP profitable. But it did have positive cash flow and was investing in infrastructure. The companies mentioned above have very slim to no marginal profit. They are literally selling dollars for 95 cents.
Except for Amazon, that would still be extremely successful without AWS, the others had their original business model disrupted.
So far Google still have a stronghold on search, they've been able to secure it with Android and Chrome by controlling the devices, they seem to be doing fine.
Android (profit of $23 billion from 2010-2016) hasn’t really done that great for Google. They still have to pay Apple a reported $12 billion a year+ to be the default search engine for iOS devices.
Apple’s business model has always been to sell “computers” at high margins. They had record Mac revenues last quarter. All of their other devices are just computers with different form factors running a variant of the same OS, most with a variant of the same processor.
Office and Windows have been the main driver for MS for over 25 years.
A primary benefit of Android is that Google is allowed to put their search engine on Android mobile devices for close to free instead of multiple billions of dollars.
If Apple customers are the most affluent and are worth at least $12 billion a year to Google, how much are the statistically less affluent Android users really worth?
How much are customers buying $200 phones worth to advertisers compared to customers paying 3 times as much?
Google also has to pay third party Android OEMs a share of search revenue.
I would imagine a lot of it is mindshare. Apple is trendy and had already called their bluff once and made Bing the default search engine for a time.
Google pays Apple to make Google the search engine on the iPhone for the same reason that Coca Cola and Anheiseur-Busch spend tens of millions per year on 30 second spots during the Super Bowl.
