John Akerson's Thoughts

Business, technology and life

Google v Facebook

There is an important equation for the competition between Google and Facebook. 
 
Google and Facebook are both enormous companies, both are Internet companies, and both are at their core, fueled by competitiveness and greed. Sure Google has that “Don’t be evil” philosophy that was their corporate value at one point. I think Google abandoned that when they joined Verizon in the destruction of net neutrality.

But that is not the issue here.

The issue is a string of Tombstones the people erect at Google’s feet, as if Facebook has vanquished it at something.  These are ironic and irrelevant tombstones, and thoroughly inaccurate and deceptive.   Adam Rifkin wrote a good one yesterday on ”Why Google has no Game.”  His main point was that Google doesn’t really get social engagement. His underlying idea is that social engagement is a sort of be-all-end-all of internet value.

My initial reaction was that he was wrong. I read comments on his blog like this one: “if Facebook shut down today it would not impact on my life in any tangible way. However, if Google shut down, I’d be in deep trouble!” (attributed to Kullar) 

I agree with that, and would take it a few steps further.

For me – I would miss neither, but by a narrow margin, I would miss Google more, and here’s why. Google does things with the Internet, on the Internet, to the Internet and for the Internet. Facebook wants to be its own “internet.” That strategy didn’t work for AOL. Facebook is inherently more profitable than AOL because Facebook tries to be its own “internet” without the costs that AOL had in creating its own content. But that is a moot comparison because AOL isn’t AOL anymore. A better question to ask is whether Facebook more profitable than Google. Is it? No. absolutely not and it is not even close.

Why is Google more profitable? Facebook screams “We have 500 million users.” but users don’t translate directly to profitability. Google is more profiable because it is just inherently more valuable. Why? Because Google has enormous data on what people DO, around what people WANT, and around what ultimately inspires people to ACT – essentially Google knows who, what, where, when and to some extent, why people want, what they want, what they do about it, and what causes or inspires them to act – across the entire scope of the Internet. (not just Facebook’s 500 million members – but the ENTIRE internet) Facebook only has data around what people SAY on Facebook. I think Google’s data is inherently more valuable, more relevant, and I think it will only sap their energy if they chase Facebook. I don’t see any benefit for them.  Where is the profitability in chasing Facebook? Particularly when Facebook is a mastadon, big, plundering, and at some point, Facebook’s sub-glacial pace and lack of creativity and profitability will doom it to extinction.  Google has all that data, and as the icing on their profitability cake, they really know how to monetize their data.

I think it is all about money. Follow the money, the revenue and profits.  In that regard, Facebook is not really any competition for Google at all.  People have been surprised by estimates that Facebook’s 2010 revenue could be as high as $1.2b. This is so surprising because Facebook’s 2009 revenue was estimated at $800m.  ON that view, Facebook has increased income by 50% year to year. That seems great, but there are two critical issues with those numbers. One is that Facebook’s numbers are unaudited. It is a privately owned company, so there’s really no hard firm way to know if those revenue numbers are accurate.   The second and more important problem with those numbers is that they are only stating REVENUE… not Profits, not Income.

How does that compare to Google?  A quick glance at Google’s AUDITED and reported numbers shows that  Google’s Q2 revenue was 6.8b – their revenue for 2009 was $23.6b
Google’s net income was >$6.5b in 2009.  That is INCOME. Profit. That is actual money that they made.  Here’s another interesting statistic.

Google’s Q1 and Q2 revenue last year was about $5.5b each quarter.
Google’s Q1 and Q2 revenue THIS year was about 6.8b each quarter.

To put this in another perspective -> Google’s QUARTERLY INCREASE in revenue this year over last year is about $1.3b. To emphasize, that is the INCREASE PER QUARTER, and it exceeds Facebook’s annual revenue estimates.

Google is chugging along at a roughly 28% profit rate.  Again, since Facebook is privately owned, nobody really knows if Facebook has ANY profit, or what their profit rate might be.

So – what is the Google vs Facebook equation? $ = G > F.  It is that simple.

August 26th, 2010 Posted by | Business, Competitive Advantage, Technology | no comments

7 Skills to Unemployment-Proof

I read an interesting article at Computerworld this morning: “Ready for 2020? Advice for every career stage.“ 

It discussed the differences between different ages of technology worker, and the different interests and abilities. I thought the article had an interesting conclusion: that different workers had different challenges to face. It went on and on about how recent graduates don’t have experience and certifications, and how cell phones are more important, etc. That is obvious. Another article I read recently in Think Big Be Big showed that mobile DATA traffic exceeded cell phone PHONE/VOICE transmission traffic every month in 2009.
Data and Voice

It is a wired world and  I recognize the differences in the newest texting generation, but I completely disagree with the conclusion of the article.

Since I started working with technology around 1982, there has been a constant drumbeat of change. Every piece of technology impacts business. Someone needs to communicate it. It changes constantly. The points where technology creates advantages moves instantly and frequently. Those change elements are constant.

The offshoot is that technology professionals have to keep a relevant skillset, develop skills for whatever is coming next, understand when, where, why and how “their” technology provides value, and understand how to communicate all of that.  That means that with a common set of skills, technology professionals can be unemployment proof. These skills are the ones that provide value no matter what the flavor of the month is.

Here are 7 skills that will help unemployment-proof a technology professional:
1) A love of learning and willingness to learn.
2) An understanding of the impact that technology and business have on each other.
3) A willing acceptance of change in all its forms.
4) An ability to communicate and translate business and technology.
5) A professional willingness to do what needs to be done, when it needs to be done.
6) An ability to demonstrate and showcase your skills.
7) An ability to learn from mistakes and use that learning to prevent new ones.

If you have these, your personal professional competitive advantage will ensure you are constantly employable and constantly employed.  I’m not saying that a short sighted company won’t downsize you. I’m just making the point that with this skillset, you will have other companies ready and eager to onboard you if that happens. You will provide value across the technology and business spectrum. That’s a formula for unemployment proofing.

Can you think of other things? Do you disagree?  Let me know

August 23rd, 2010 Posted by | Business, Competitive Advantage, People, Technology | no comments

FOUR FACTS YOU MUST KNOW (to make your business fail)

I’m a fan of Bob Parson’s charisma and his videos. I think they explain powerful, simple, intelligent ways to improve business, to succeed, and I like it that he gives advice to anyone who wants it, whenever and wherever they are willing to listen.  He is also a former Marine, an 0311, I suspect – and I respect his service. 

You may not know Bob Parsons, but you know his company. Bob runs GoDaddy.com.  You’ve probably heard of them, seen their Superbowl advertisements, and their spokespeople.  You might not know that he was also behind Parsons Technology - Bought by Intuit for $64 million in 1994.
In short, he is a proven entrepreneur.

In his video blog Episode #36, “FOUR FACTS YOU MUST KNOW (if you’re going to sell anything)” he lays out 4 secrets for creating the sorts of enormous successes he is used to building.  He lays out these success secrets, but he could also explain the dark side of his secrets. they are …

FOUR FACTS YOU MUST KNOW (to make your business fail)  His secrets lead directly to 4 things NOT to do. 

His FOUR FACTS, paraphrased, are: 

1) A business cannot succeed by being exactly like its competitors.

2)People resist changing buying patterns.

3) To succeed, Give customers compelling reasons to change their buying habits.

4)Being better is not enough, you must let your customers know that you are better.

So – these are each great ideas.  I do not disagree with any of them. I think it is important to also highlight the dark side.

1a) If you are exactly like your competition, and nothing good separates you from your competition, why should anyone use your products or services?

2a) Help your customers make you their habit.

3a)DO NOT give them compelling reasons to change their buying habits once they are a loyal customer. Do not give them compelling reasons to pick someone else if they are a prospective customer.

4a) If you don’t tell your prospective and current customers why you are better, they will never know, and they will not become or stay customers of YOURS.

What do you think? Are there other business maxims that mean more when you consider their polar opposites? Why? How can you use them to help you with YOUR success?

August 16th, 2010 Posted by | Business, Competitive Advantage, Continuous Improvement | no comments