Google's Abject Failure

Google's Abject Failure


Google's $1.65 billion purchase of on-line storage provider YouTube is sending shock waves through the industry.

• Roelof Botha of Sequoia Capital, the hippest actuary in Silicon Valley and the only VC to invest in YouTube is saying "neener, neener" to Mark Cuban, John Battelle and all the others who just couldn't see how YouTube would ever make them money.
• In its 21-month life, YouTube has created value at the rate of $80 million dollars a month, sending every venture capitalist and smart kid searching for the "next big thing" in Web 2.0
• Founder Chad Hurley has proved that even a BA in Fine Arts can make you a billion dollars
• Finally, it is Google's first public admission of abject failure, failure that is costing them $1.65 billion and which will rend the carefully fostered geek culture of the company

Google is an advertising company and the world leader in monetizing internet eyeballs. They are also the worst marketing company in high tech.


Failure carries a price


I admire Google's tech chops, as I've documented over at StorageMojo.com. Yet I've been equally dismayed by their inability to gain market share in anything outside of search.


Google's culture will suffer from the YouTube acquisition. Sure, the guys on the Google video team will wondering why they aren't richer. But the bigger hit comes from knowing that YouTube isn't about the technology, it is about the market. And there Google didn't have a clue.


If Google can fail at video, what other failures lurk?
Every Google engineer has to be wondering if their next project will be superseded by something smarter hatched outside the company. And that also makes their founders culture heroes and insanely rich. Sure, Google is still a great place to work, but if it is no longer hatching the Next Big Thing, some of the top talent will get restless. As soon as they vest they'll be gone.


I don't think Google will ever get its marketing act together and reach their full potential. Nor is it clear that they will be able to maintain YouTube's market dominance. Yet it is nice to know that YouTube is now backed by some of the deepest pockets in the world.