Has Google Bitten Off More Than It Can Chew?


Brent Schlendler asks if Google is spinning out of control.

Google is a company convinced of its own brilliance and its clear vision of the future. Being a hotbed of Mensa members will do that to you. As will stumbling early onto an obscenely lucrative business model. The same thing happened to a company called Microsoft.

But that doesn't mean that the fundamental rules of the universe don't apply – immutable things like Newton's gravity or Murphy's Law. I bring this up because Google has just announced two extraordinarily ambitious strategic gambits in the span of a week, and I'm not convinced that it can pull either of them off.

Google is a great company, but over the past few years, I've heard people predict crazy things… as if the laws of economics no longer apply. Yes I know, skeptical views are never as popular as statements about how "this is different" or "things have fundamentally changed", but I feel compelled to stay skeptical that Google can disintermediate any and every market it wants to.

Here is my concern. I have been following the business press for about 12 years now. In that time, I've heard that Microsoft was going to take over the world, then Cisco. By the time I began blogging, it was Walmart that was scary powerful and was going to own everything. All three of those companies stumbled. So now that Google is the flavor of the month, why I should I expect any less from them? The fact that they hire geniuses and give them 20% of their free time to work on whatever they want is not nearly as important as the fact that they were in one of the fastest growing markets in the world at a time when it exploded.

Google has slayed one dragon, and as a result, has built up a false confidence that they can slay all the other dragons they don't like. They may have a decent level of success, but it's much much harder now that the dragons know all about Google, and are prepared.

Don't get me wrong. I'm not saying Google is a bad company. Google is a great company. I'm just saying they are subject to the diseconomies of scale that come with trying to fight wars on multiple fronts and effectively manage dozens of major projects and tens of thousands of engineers. Size can be the economic equivalent of kryptonite for supergrowth companies, and I wish Google would return some cash to shareholders instead of waste their gains investing in new projects with mediocre returns.