| Do you have any idea how insanely hard it is to create 30 separate $30M businesses from scratch? Even with the weight of the Google brand, creating new businesses is HARD. It'd be roughly 1,000X easier to squeeze an extra $900M in revenue out of search than it would be to incubate 30 new mid-size companies. Instead of going on an insane boondoggle where your brand image is trashed by creating literally thousands of failed companies (the only way you're going to end up with 30 successful ones over the $30M hurdle rate)...why wouldn't Google just buy those 30 companies? They have enough cash on hand to buy 99.9% of Silicon Valley startups outright. And even then, would the 30 companies they buy grow faster than their core business...or even the S&P 500 at 9% a year? Because otherwise they might as well just dump that money in existing products or return it to shareholders. If Google buys a bunch of businesses that grow slower, then their valuation and stock price drops dramatically. If investors wanted to own a random sampling of 100 mid-size companies, they'd buy the appropriate index fund! They buy Google because they want a concentrated bet, not an index fund. This is nowhere near as easy or simple as you think it is. For all of Google's PR efforts around moonshots and only hiring "the best talent," a vast majority of their revenue still comes from only one product they incubated on their own, the google search engine. The next biggest bucket comes from external acquisitions (DoubleClick, YouTube, Android). I think the fact that Google hasn't incubated any big success in the last decade is a good thing! It leaves more room for others to take their place. Why would we want one company to dominate everything forever? |
First, you have all of the infrastructure for a business already in place. Even when I was there it was straight forward to get resources allocated to a project.
Next, you have billions of "seats" in that users the world over are already using Google branded services every day, have a reasonably good impression on the brand, and typically a low barrier to "trying out something new."
Finally, you have a tremendous amount of smart, experienced, people you can call on for advice for free! I know a lot of people have left but when I was there it wasn't uncommon to have the argument about a thing settled by the person who invented the thing weighing in on the argument. While it became clear to me that Google and I were not compatible long term, it was still intoxicating to walk around bounce ideas of some really really sharp people who could trim months off idea research and development.
As a result of that, starting businesses within Google was akin to scoring in baseball where you got to start at third base (or maybe second base if it was a longer stretch). That is significantly easier than starting from scratch.