Google is not a one-trick pony, but is it a one-trick thouroughbred?
Google must diversify beyond its sole reliance on monetization via search and search advertising in order to maintain, let alone grow, its $150 billion market cap.
Google CEO Eric Schmidt put forth to Wall Street just last week in his 2006 Q4 report that Google is “now presenting a much larger business mission.”
In typical Google fashion, however, the Googley spin presented was rosier than the reality:
We're talking to advertisers about using Google for all of our advertising incentives, not just text search, and that is going well. Vendors are using products like Google Checkout, which is doing well for us, and other services to speed commercial transactions. Of course, in the media industries, because of YouTube and the success we're having in general, our role with respect to monetization and partnering with them is a story yet to come and one which we are very excited about.
Immediately after the Google conference call, I debunked Schmidt’s “going well” assertion of its offline advertising forays and tests and cut through his Google Checkout hype (see “Google Radio NOT a category killer ” and “Google Checkout is a loser, really”).
Two days later, a media “partner," Viacom, shot a DMCA arrow through Schmidt’s vision of a future YouTube “success” story to come (see “YouTube: Will TV networks call Google’s bluff?”).
Google diversification insiders appear to be doubting a future Google success story as well, and they are taking their necessary precautions.
In announcing its all stock acquisition of YouTube, Google underscored that using GOOG as currency made it “cheaper for us.” Google also proudly pointed out that:
But do YouTube’s Chad and Steve really want to continue “participating” with Schmidt and team in the future performance of GOOG enhanced by YouTube?
We’re pleased that the YouTube shareholders want to become shareholders of Google and participate with the rest of us.
YouTube investors and executives including co-founders Chad Hurley and Steve Chen registered to sell 3.23 million shares, Google said in a filing with the U.S. Securities and Exchange Commission, Bloomberg reported earlier this week.
What about dMarc Broadcasting’s Chad and Ryan (Steelberg)? Google’s acquisition of their radio advertising platform company more than a year ago was structured as a multi-year earnout, designed to ensure that those two co-founders also wanted to “participate with the rest of" Google.
Google confirmed to me today, however, that “Chad and Ryan Steelberg no longer work at Google.”
Chad and Ryan are no longer participating in the operations of dMarc enhanced by Google and Chad and Steve may no longer be participating in GOOG enhanced by YouTube.
If the founding management teams of the major acquisitions Google has undertaken to diversify beyond search do not have confidence in Google’s future diversification prospects, who will?