Photo Credit: clydeorama
Farhad Manjoo of The New York Times published this thought-provoking article: Google’s Time At The Top May Be Nearing Its End. Manjoo discusses how Google’s current and past domination in desktop search advertising is leading to the source of its undoing as a technology leader. (more…)
Photo Credit: Andy Ihnatko
I’m an Apple Stockholder and Apple Tribal Member with Tremendous Confidence in Our Leader, Tim Cook. He’s the right person to rocket Apple’s fanatic loyalty beyond its fanatical consumer base. Ginni Rometty, IBM’s CEO, describes Cook as the “hallmark of a modern-day CEO. It’s all about clarity of vision and knowing what to do and what not to do.”
Yet, critics shout: “Tim Cook is NOT Steve Jobs!” I disagree. Cook is a lot like Jobs.
Apple’s 21st Century Innovation Model is SICC: Simplicity + Inclusion + ControI + Collaboration
SICC Rhymes with SICK (and means the cool kind, not the feeling ill kind). Charlie Rose published his Tim Cook conversations after Apple’s September 2014 introductions for the iPhone 6, iPhone 6+, Apple Pay, and Apple Watch. Their conversations reveal Cook’s strategic vision for Apple and The Apple Ecosystem. His ecosystem-driven strategy explains the rationale for two (2) major 2014 corporate decisions:
Cook explains these major decisions within the context of these central themes:
Staying Focused Anchors Apple. Cook elaborated (paraphrasing):
“Unlike other companies, Apple’s objective is not to make larger product portfolios.”
“All of Apple’s major products could fit on this small table.” (in reference to Charlie Rose’s iconic interview set)
“It’s hard to edit. It’s hard to stay focused. The hard part is deciding what NOT to work on.”
Diversity in Thought Fuels Apple Innovation and Design (17:13 – 20:23). Cook’s leadership mission is ensuring Apple senior executives and team members collaborate at an incredible level. That mission begins with recognizing individuals who are historically strong Apple contributors. During this point in the conversation, Cook enthusiasically mentioned five to six senior executives (by first name) making considerable impacts during their Apple tenure — like Angela Ahrendts).
Brad Stone’s September 2014 BloombergBusinessweek article highlights Cook’s moves to include new perspectives at Apple. From January 2014 to September 2014, Apple hired approximately 20 senior executives from multiple industries (direct quotes below):
“(Cook) is very focused on finding a very wide range of people. It’s not automatically the way you think about diversity. It’s about bringing in experience, skill set, and perspective.” — Susan Wagner, founding partner and director of asset-management firm BlackRock.
“(Cook) is comfortable enough to say ‘we need help here,’ and then he goes out and gets it.” — Jimmy Iovine, Co-Founder of Beats Electronics.
It’s the Ecosystem Stupid! (h/t James Carville)
Betting the Farm on The Apple Ecosystem. Cook’s strategic bet makes collaboration an Apple strategic imperative. Apple senior executives are functional experts who collectively work as a team. Horizontal product development enables integration of hardware, software, and services to produce a killer product. Cook explains (20:08 – 20:23; paraphrasing):
“Respecting, trusting, and complementing one another (in thought and skills) is what makes this all work.”
Collaboration may be a virtue, but Cook insists it’s more of a strategic imperative. Aligning thousands of employees is crucial now that “the lines between hardware, software, and services are blurred or are disappearing,” he says (Cook). “The only way you can pull this off is when everyone is working together well. And not just working together well but almost blending together so that you can’t tell where people are working anymore, because they are so focused on a great experience that they are not taking functional views of things.”
The result is only now becoming apparent with services that work across different Apple devices. Embedded in the iPhone 6 and the new iOS 8 and Mac OS X Yosemite operating system is a feature called Continuity, which lets users start an e-mail or some other task on their Mac, pick it up on their iPhone, and then move it to their iPad or even the Apple Watch.
(Cook continues) “We would never have gotten there in the old model. These new products are reminders of why we exist.
The things we should be doing at Apple are things that others can’t.”
Google Is Apple’s Top Competitor (32:30 – 36:00). Cook’s answer to Rose’s “Who’s Your Competition?” question speaks volumes. He recognized Google twice during their conversation as Apple’s most formidable competitor.
He dismissed everyone else including Samsung and Amazon. Microsoft never entered the conversation.
Larry Page makes it no secret he’s pursuing an Android ecosystem-driven strategy. Google acquired Motorola Mobility in 2011 to gain control of the patents bolstering and protecting Android (and subsequent Google products and services). From Google’s Investor Relations Site, Page describes his strategic vision and rationale for selling Motorola Mobility to Lenovo):
“Lenovo has the expertise and track record to scale Motorola Mobility into a major player within the Android ecosystem. This move will enable Google to devote our energy to driving innovation across the Android ecosystem, for the benefit of smartphone users everywhere.”
Google Targets The Consumer Ecosystem. Just ask Tony Fadell, CEO and Founder of Nest. Just ask Walter Isaacson, Steve Jobs’s biographer. In January 2014, Isaacson declared Google passed Apple in innovation supremacy with the Nest acquisition (refer to CNBC video below).
Matthew J. Belvedere’s CNBC article concluded Apple and Tim Cook fell behind:
While acknowledging the China Mobile partnership is a “big deal” for Apple, he said (i.e., Isaacson) Google-Nest exemplifies the “amazingly strong integrated strategy that Google has to connect all of our devices, all of our lives, from our car, to our navigation system, to how our garage doors are going to open.”
Isaacson also pointed out that Nest co-founder and CEO Tony Fadell will be joining Google as part of this deal. “Fadell was one of the team that created the iPod. He was very deep into the Apple culture … when Apple was so innovative.” To play catch-up, Cook has to think about what industry he wants to disrupt next, Isaacson said. “I think Steve Jobs would have wanted as the next disruptive thing to either have wearable-like watches or TV, an easy TV that you can walk into the room and say put on ‘Squawk Box’ … or disrupt the digital camera industry or disrupt textbooks.”
“We ought to see in 2014, Apple do something huge,” Isaacson said.
Google-Android Commands Global Market Share, but Apple-iOS Captures Highest Profitability. Android is the defacto global, smartphone operating system. Conner Forrest’s Tech Republic article proves Android market share dwarfs Apple-iOS by a factor of four (4). His research strengthens Isaacson’s argument how Google is positioning itself as a consumer ecosystem powerhouse:
Photo Credit: Conner Forrest, Tech Republic
But, Does Market Share Dominance Mean Google Makes More Money than Apple? Tony Bradley’s November 2013 Forbes article shows Apple dominates profitability capture versus Android. That’s why “staying focused” anchors the Apple’s core values. Though not externally stated, Jobs knew and promoted that making money matters. Making money (or in Apple’s case, tons of it) bestows the rare, parallel luxury to sustain business AND develop new innovation.
Photo Credit: Conner Forrest, Tech Republic
Photo Credit: Neil Hughes, Apple Insider
Making Tons of Money Isn’t the Point. Apple almost went bankrupt 17 years ago. That’s the age of a teenager — it wasn’t that long ago. Walt Mossberg‘s November 2014 <re/code> article, The Mac’s Second Act: From Obscurity to Ubiquity, lends important perspective to Apple’s current financial situation versus its dire days in 1997. Jobs knew he needed someone of Cook’s supply chain and operations genius. That’s why Jobs hired Cook.
In 1998, Jobs and Apple needed Cook (not the other way around).
Photo Credit: W_Minshull
Driving Collaboration and Accessing Innovation Extends Beyond 1 Infinity Loop. The Charlie Rose-Tim Cook conversation turns instructive when Rose asks Cook if Apple is “more open (around 22:26).” Cook’s responses on iOS app developer relationship management, the IBM strategic alliance, and the Beats Music and Beats Electronics acquisition signal his mantra that creativity and innovation are a team sport (App Developers: 30:20 – 32:12; IBM: 22:26 – 25:37; Beats: 26:14 – 29:00).
Apple Manages Relationships with 9 Million Registered iOS Developers. MacNN News reported the number of developers registered with Apple has increased 47 percent since last year to 9 million. According to the United States Census Bureau, if “Apple iOS Developer City” was an American city, it’s population trumps New York (with room to spare for Nashville).
Cook recognizes the iOS developer community is key to Apple’s current and future success (paraphrased quotes from Rose conversation; 30:20 – 32:12):
“The June 2014 developer’s convention was all about giving developers access to iOS so Apple and iOS have access to innovation.”
“We treat working with them (i.e., the iOS developer community) that it’s Apple’s privilege.”
“Our (i.e., Apple’s) developers can sell their product (i.e. iOS app) worldwide in the Apple App store in 155 countries.”
Show App Developers The Money. Apple Does. Google Does Too. But, Apple developers earn tons more. Andreesen Horowitz Analyst Benedict Evans proves Apple paid app developers five times (5x) more revenue than Google. In the past 12 months, Apple paid developers $10 billion versus $5 billion by Google.
Photo Credit: Benedict Evans
Tim Cook Wants the Apple Ecosystem to Command the Enterprise Market (22:26 – 25:37). Steve Jobs transformed our daily consumer lives. Cook wants to reinvent our daily professional lives. That’s the mission objective for uniting with IBM, a former adversary. Cook shared with Rose the following anecdotes (paraphrasing):
“We believe we can change the way people work at an enterprise level.”
“The vision is to fulfill the unmet needs of the industry verticals down to the granular specificity of the job itself.”
“We can change the way people work. We spend so much of our lives working.”
Reuters reports the Apple-IBM alliance is developing inroads into the financial services industry (e.g., companies like CitiGroup). Furthermore, the same Reuters article states:
“The iPhone maker has worked closely with a group of startups, including ServiceMax and PlanGrid, that already specialize in selling apps to corporate America. The two people familiar with the plans, but who could not speak publicly about them, say Apple is already in talks with other mobile enterprise developers to bring them into a more formal partnership.”
A Play for The Enterprise Version of The Internet of Things? Sounds like it to me. Now, that would be both transformative and lucrative. Stay tuned. I’m looking forward to learning about the Apple-IBM alliance’s penetration and progress after Q1 2015 (even more than the Apple Watch Launch).
On the Surface, Beats Masquerades as a Headphone Company. Unseen by the deal’s critics is how Tim Cook discovered powerful and influential diversity in thought.When Rose asked Cook, “Why did you buy a headphones company?” he responded (26:14 – 29:00):
“Talent. It’s the idea of gaining great talent.”
“The creative genius of Jimmy Iovine and Dr. Dre.”
“Iodine’s deep knowledge of the entertainment vertical (i.e., music industry)”
“Dr. Dre knows artists and is an artist.”
Cook Recognizes Remarkable Human Centered Design (HCD) When He Sees It, Hears It, and Feels It. Cook shared with Rose how “not all subscription services are alike.” His enthusiasm in describing Beats Music after experiencing it himself is palpable (paraphrasing):
“Beats recognized the importance human curation can make in how you feel and experience something.”
“It (Beats) affects how you feel.”
“You know it when you see it and feel it.
Jimmy Iovine Nails It Why the Apple-Beats Deal Is Smart. Apple is about feel and emotional connection. That why the Apple Tribe continues shelling out big bucks to replacing their perfectly working iPhones with more expensive ones at a record pace. Check out Iovine’s commentary on feel, the state of the music industry, and why he believes Apple and Beats are primed to transform it. I can’t wait to see the impact of his influence at Apple in its future product development:
Strategy+Business’ Matt Egol and Christopher Vollmer Argue Why Apple Bet Big on Beats Music’s HCD Intangibles. Egol’s and Vollmer’s article describes how both companies focus on delivering an amazing HCD experience. The critics who say this deal is the tipping point for Apple’s inevitable innovation demise fail to recognize this fact. Here’s an excerpt their article:
The story behind the deal is much more nuanced, however. It’s not just about those tangible assets (referring to Beats’ headphone and streaming music platform), but rather a really big bet on capabilities—especially in product development, marketing, and branding. The fact that Beats has achieved a 59 percent share of the high-end headphone market in the United States and launched a high growth, buzz-worthy streaming service demonstrates the power of HCD principles at work.
Apple is well positioned to accelerate this momentum, given its own commitment to HCD.
Photo Credit: Gideon Tsang
Cook’s critics point to the Beats acquisition as a leading indicator of Apple’s inevitable demise because it “no longer innovates from within.” Nonsense.
The Cautionary Tale and Parallel Paths of Apple and Merck as Fortune Magazine’s Most Admired Companies. From 1987 – 1993, the pharmaceutical company, Merck, graced the covers of Fortune Magazine’s Most Admired Company issues as the Number 1 company in corporate reputation. In 1994, the company tumbled to Number 11. Merck’s CEO at that time, P. Roy Vagelos, declared the company would return to Number 1 (direct quote from Fortune’s Most Admired Companies February 7, 1994 article):
”WE WERE the first company to be selected No. 1 seven years in a row. My plan is that we’ll be the first company to bounce back.”
So says Dr. P. Roy Vagelos, CEO of Merck, no longer America’s most admired corporation. A year of economic turbulence, plus a far more extensive survey of companies, has produced a new crop at the top, with half of America’s ten most admired corporations newcomers to that elite group.
The long-reigning king is deposed, relegated to No. 11.
Vagelos’ Bold Proclamation Never Materialized. Merck’s 2014 Fortune Most Admired Company Ranking is Number 65 (in 2013, it was Number 58). Why’s this important? For seven (7) consecutive years, Merck was Apple.
Guess Who Fortune Magazine Ranked as The Most Admired Company in 2014? Guess who’s monopolized this title for seven (7) straight years since 2008? Apple. But, the similarities end there. How Merck chose to sustain innovation in its “Year 7” (and beyond) proves instructive.
Merck Caved to Not-Invented-Here Syndrome. John Simons, February 2008 Fortune article explores Merck’s research and development insularity post-1994:
“Merck’s scientific excellence had long inspired admiration and envy; corporate leaders voted it America’s Most Admired Company in Fortune from 1987 to 1993. By the early part of this decade, however, Merck was finding it difficult to turn its science into new, profitable medicines. In Merck’s case, there was a unique element added to what was an industrywide drought.”
“Merck was so pleased and proud to be Merck that its research culture had become haughty and insular. The company refused to consider medicines discovered outside its own labs and spurned the mergers and research alliances that were reshaping the industry.”
To Peter Kim’s credit, President of Merck Research and Development from 2003 – 2013, Merck reversed its attitude course. The Simons article continues:
“By late 2004, Kim had overseen a new system that allows scientists to mine scientific literature to identify promising chemical compounds. He also encouraged Merck scientists to use their connections to open doors for Merck’s acquisitions department
“In 1999, Merck entered into just ten collaborative licensing deals; by 2006, there were 53 joint-development transactions and small acquisitions.”
10 years passed before Merck transformed its strategic thinking towards developing and accessing innovation. In three (3) short years, Cook’s decisiveness and focus proves what happened to Merck will not happen under his “Apple Watch” as CEO.
The Tim Cook Leadership Era Means the “I” in Innovation Means “Inclusion Inspires.” That cultural pillar extends far beyond sexual orientation. He’s driving cultural and strategic shifts at Apple to sustain and grow a core Jobs-Apple value (10:37 – 12:04): “To Be the Best.”
When Your Competitor is “The Most Ambitious CEO in The Universe,” You Better Continue Reinventing and Transforming. Talent isn’t enough. Company culture drives innovation and competitive advantage.
Here are two amazing books on the significant impact of company culture:
Final Thoughts: Blocking Out the Noise and Questioning Conventional Wisdom
Will Tim Cook Continue Being Criticized for Not Being Steve Jobs? Yes. When you succeed an icon and legend, that’s a given. But, Cook won’t blink twice. He described to Rose his skill in “blocking out and filtering the noise.” (20:59 – 22:05)
Tim Cook Bets His Legacy and the Apple Ecosystem on “The Corporate Internet of Things.” That’s a massive pivot for a company whose past successes are rooted in consumer fanaticism. But, Cook has no interest in “following the herd.” Cook described to Rose why he decided to leave Compaq and join Apple in 1998 (36:13 – 37:00; paraphrased):
“Well I’m just thinking I’m going to meet him and all of a sudden he’s talking about his strategy and his vision (i.e., Jobs), and what he was doing was going 100 percent into consumer. When everybody else in the industry had decided you couldn’t make any money on consumers so they were headed to services and storage and enterprise. And I thought, I’d always thought that following the herd was not a good thing, that it was a terrible thing to do right? You’re either going to lose big, or lose, but those are the two options.”
“He was doing something totally different.” (referring to Jobs)
Not Following the Herd. Questioning Conventional Wisdom. Being the Best. Sounds a lot like:
Photo Credit: Apple Website on October 5, 2011
Thank you for taking time to stop by. Please let me know if you agree or disagree with my thoughts in the comments. If you disagree, I would love to hear from you. I’m also here to read, listen, and learn from YOUR PERSPECTIVE.
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Tony Faustino is a marketing and corporate strategist. He thinks and writes about how The Internet reinvents marketing strategy in his personal blog, Social Media ReInvention. Follow his tweets @tonyfaustino or circle him on Google+.
Miguel Helft and Jessi Hempel wrote a great Fortune Magazine article, Facebook Vs. Google: The Battle for the Future of the Web, in the November 2011 issue. It's an insightful article filled with many interesting facts / statistics describing each company's operations, financials, online performance, and rivalry:
Facebook Statistics
1. 3,000 Employees. Facebook's estimated number of employees in 2011.
2. $4.3 Billion. Facebook's projected 2011 revenues.
3. 800 Million Users. Facebook has 800 million users / members.
4. 81% Revenue Increase. Facebook's display advertising revenue is expected to grow by 81% in 2011.
5. 50% Increase in 2011 Overall Revenue. Facebook's overall revenue is smaller than Google's. But, Facebook's overall 2011 revenue is expected to grow by 50%+ (compared to 2010's $2 billion overall revenue).
6. 30% of App Revenues. Facebook takes 30% of the reveunes app developers (i.e., companies like Zynga) make on its online platform.
7. $80 Billion IPO Valuation. Facebook is expected to top an $80 billion valuation at its much anticipated initial public offering (IPO).
8. 155 Million Monthly Unique Visitors. Facebook's estimated number of U.S. monthly unique visitors.
9. 400+ Average Monthly Minutes. Comscore says Facebook visitors spend an estimated 400+ average minutes on Facebook.com.
10. 27 Years Old. The age of Mark Zuckerberg, Facebook's CEO.
11. 60 Days. Mark Zuckerberg called on Facebook engineers to work nights and weekends for 60 days when word leaked in summer 2010 Google was developing a "Facebook Killer."
12. Four (4) Facebook Executives. Four (4) of Facebook's to 11 executives are ex-Google employees.
Google Statistics
13. 31,353 Employees. Google's estimated number of employees in 2011.
14. 2,600 Employees. In third quarter 2011, Google added nearly 2,600 employees. That's just 400 employees short of Facebook's entire workforce.
15. $38 Billion. Google's projected 2011 revenues.
16. 41% of $31 Billion (or $12.7 Billion). Google currently captures 41% of the $31 billion U.S. online advertising market.
17. 34% Revenue increase. Google's display advertising revenue is expected to grow by 34% in 2011.
18. 30% Increase in 2011 Overall Revenue. Google's 2011 overall revenue growth is predicted as 30% on $38 billion in forecasted overall revenue.
19. 180 Million Monthly Unique Visitors. Google's estimated number of U.S. monthly unique visitors.
20. 250+ Average Monthly Minutes. Comscore says Google visitors spend an estimated 250+ average minutes on Google's sites (e.g., Google.com, YouTube, Gmail, Google Maps, and other properties).
21. 40 Million Users. As of the publication of this article, 40 million people signed up for Google+.
22. 4 Months. Google+ acquired 40 million users during its current 4-month launch period.
23. 100 Features. Google has introduced 100+ new features since Google+'s June 2011 launch.
24. 598,000 Google+ Followers. As of this article's publication, Mark Zuckerberg has 598,000 followers on Google+.
25. Four (4) Previous Attempts. Google made four (4) previous attempts to launch and establish a successful social network before succeeding with Google+ in June 2011.
26. 5% of App Revenues. Google takes 5% of the revenues app developers make on its online platform.
27. 38 Years Old. The age of Larry Page, Google's CEO.
28. $10 Million in Equity and Cash. Google offered its top engineers and executives $10 million in equity and cash to remain at Google.
29. 20 Years of Government Monitoring. Google accepted 20 years of government monitoring after Google Buzz exposed Gmail users' contacts to others. This public misstep triggered a Federal Trade Commission investigation forcing Google to revamp its privacy policies and accept the government monitoring.
May 17, 2011 Update: This list of articles / references grows every day as I monitor news sources. The number of curated articles is now up to 26.
Instead of continuously updating the title and picture to reflect the number of resources, I'll focus on updating the hyperlinks. Enjoy!
Original Post Begins Here: My last two posts provided perspectives on why Facebook poses a threat to Google. If you want to understand why Google views Facebook as a competitive threat, this centralized research should makes things easier. Happy Reading!
How Facebook Threatens Google's Search Business
* CNN Technology: How Facebook Eclipsed Google in 2010
* Great Wall of Facebook: The Social Network's Plan to Dominate the Internet — And Keep Google Out
* Singel-Minded: How Facebook Could Beat Google to Win The Net
* Ken Auletta's Googled Interview with Charlie Rose (links to Charlie Rose's Website)
* Fast Company Article: "Underdog Bing Talks Facebook Partnership, Google Rivalry
* My Blog Post Detailing the Ken Auletta-Charlie Rose Interview
* HubSpot's Inbound Internet Marketing Blog: Google Launches a More Social Search
* John Byrne's post from his C-Change Media Blog: What Really is Hurting Google – Social Search
* Wall Street Journal: How Google Wants Search to Be More Social
* Wired: Bing Bumps Facebook Options to Outsocial Google
* Search Engine Land: Bing Ups Ante in Social Search, Adds More Facebook "Likes" to Search Results
How Facebook Threatens Google as an Advertising Platform
* Mashable: Google Versus Facebook – Following the Money
* Fast Company: Facebook-Google Privacy PR Smear is a Campaign in an Epic, Escalating War
How Corporate Bureaucracy Makes Google Vulnerable
* The New Yorker Article by Ken Auletta: Why is Eric Schmidt Stepping Down at Google?
* Google's Facebook-Killer Slowed by Political Infighting
* Wall Street Journal: Chief Seeks More Agile Google
* Wall Street Journal: Power Shifts Atop Google
* New York Times: Google Shake-Up is Effort to Revive Start-Up Spark
* Search Engine Land: Was It Time for a Fresh Face? Thoughts on Larry Page as the New Google CEO
* Search Engine Land: Google Turns to Page — The Day Two Narrative
* Mashable Op-Ed: Why Google Needs Its Own Steve Jobs
How Facebook Threatens Google in The War for Talent
* The Wall Street Journal: Google to Give Staff 10% Raise
* The New York Times: Google Grows and Works to Retain Nimble Minds
* Information Week: Google Co-Founder Larry Page to Replace Schmidt as CEO
* The Street.com: Forget Apple — It's Google's Turn Now
* Fast Company: Engineers to the Valley – Pay Up
How Facebook Threatens Google in Mobile Services
* The Wall Street Journal: Facebook's Web of Frenemies
In light of the recent power shuffle at Google, I think this Saturday Night Live (SNL) clip featuring Mark Zuckerberg is important. Just hang with me for a few moments.
This SNL Appearance Represents an Important and Implicit, Market Signal. Zuckerberg and Facebook are accelerating the public relations momentum leading to the upcoming Facebook IPO. The subtle, market signal Zuckerberg and Facebook are sending:
Mark Zuckerberg Will be a More Visible and More Marketing/Public Relations Savvy CEO than Larry Page.
Here's my short list supporting my market signal hypothesis:
1. Zuckerberg is capitalizing on the the recent, real-time public relations momentum pre-IPO.
Time Magazine selected Zuckerberg as its Person Of The Year. The Academy of Motion Pictures Arts and Sciences (aka The Oscars) nominated The Social Network and Jesse Eisenberg for Best Picture and Best Actor respectively.
Give Zuckerberg credit for putting himself out in a high-profile situation like SNL. And remember, Jesse Eisenberg's portrayal of Zuckerberg in The Social Network is brutal.
Is Zuckerberg noticeably stilted and uncomfortable in the SNL cold open? Yes. Did he know this appearance on a such a high profile stage leaves him vulnerable to significant public scrutiny and criticism? Yes.
But, he had the guts and courage to do it anyway. And, with more practice and exposure to similar situations, Zuckerberg will get better. As a mid-twenties leader and visionary, he'll get more opportunities.
2. This high profile appearance is a subtle public relations shot at Google and Larry Page.
Page is a notoriously private person who historically loathes investing time/financial resources into marketing/public relations. Ken Auletta, author of Googled, reconfirms my opinion in his New Yorker article discussing why Eric Schmidt stepped down at Google. Mr. Auletta's is the authority on the Google mindset. If you're interested in learning more about Mr. Auletta's Google insights, here's my post discussing Mr. Auletta's interview with Charlie Rose about Google and Mr. Auletta's book.
Zuckerberg carefully selected this particular media appearance (just as Steve Jobs carefully selected his appearances before/after his publicly disclosed illness). Here's Steve Jobs' now mythical 2005 Stanford Commencement Address. Don't tell me Mr. Jobs didn't carefully select this venue / moment at this particular stage in his life:
3. A pre-IPO, Facebook supplants Google as the cutting edge Silicon Valley place-to-be.
Silicon Valley's brightest engineering talent wants a shot at wealth and riches too. They can achieve that by joining Facebook. The opportunity to achieve that once-in-a-lifetime dream shot is gone at Google.
Facebook continues stepping up its efforts to attract/recruit the brightest in Silicon Valley talent – at Google's expense. Here are two articles from The Wall Street Journal and The New York Times:
Furthermore, review this video. Who do you think Facebook wants to attract? Sounds an awful lot like the engineering talent Google used to easily attract and retain:
Conclusion
The Google-Facebook rivalry will intensify. This rivalry will touch every aspect of our online, media lives (desktop, mobile, publishing, entertainment, etc.).
Who do you think it will be?
And, somewhere deep down inside, Steve Jobs must be smiling …
Part 7 of The Business Value Behind Social Media focuses on future opportunities in social media marketing and public relations (e.g., what's the next big thing). Chris Brogan, Charlene Li, David Meerman Scott, and Martin Giles (moderator) discuss future trends such as:
* Opporutunity #1: Responding to Customers and Influencing Business in Real-Time
* Opportunity #2: Giving and Gaining Our Permissions to Use Social Data
* Opportunity #3: Exploring Email Marketing and Online Communities
* Conclusion: The Implications of Gaining Permissions to Our Social Data is Why Google Fears Facebook
The panel's discussion takes place from 58:24 to 1:01:45 of the embedded video:
Opportunity #1: Responding to Customers and Influencing Business in Real-Time
The Real-Time Transformation of Traditional Marketing and PR (58:24 – 59:07). Real-time applications in marketing and PR fascinate David. He notes how social media is transforming the traditional, long-term planning / campaign process by contracting time. Long term campaigns are not going away. However, the future opportunity will be in engaging customers instantly.
Opportunity #2: Giving and Gaining Our Permissions to Use Social Data
Privacy Is Not the Main Issue Because Our Social Norms on Privacy Continue Changing (59:09 – 1:00:09). Our social media activities generate significant amounts of data. What advertisers and marketers can potentially do with this data is what fascinates Charlene. Gaining consumer permissions for what our data will be used for is the hidden opportunitity.
Charlene's Caller ID Analogy and Its Application to Our Social Data. When phone companies first introduced Caller ID, consumers complained the service invaded personal privacy. Now, consumers will only answer the phone if they know who's making the call. Charlene emphasizes our norms for what is private and how our data will be used changes daily. A prime example: Facebook frequently changing its privacy policies.
What Will Be The Accepted Norms for Granting Permissions. The opportunity is working out the accepted norms for granting permissions to our privacy data in social media (analogous to what credit card companies do with our purchasing data). If marketers and advertisers gain our permissions to use our social data, consumers will demand a transparent understanding of how this data will be used.
Opportunity #3: Exploring Email Marketing and Online Communities
Two Technologies Which Can Offer Much More (1:00:11 – 1:00:21). Chris is working on applications of email marketing with online communities. These are two, early 1990's online technologies that haven't gained a lot of traction. Therefore, he thinks these technologies have a significant upside.
Conclusion — Gaining Consumer Permissions to Social Data is Why Google Fears Facebook
Mark Zuckerberg's Power to Grant Advertisers The Permissions to Facebook's Social Data Scares Google. In my opinion, this is why advertisers are clamoring to gain permissions for Facebook's social data. I also contend this underlying phenomenon is what's driving Facebook's current $50+ billion valuation.
Why Advertisers Covet Facebook's Social Data. The data or "friend updates" we disclose in Facebook is information we opt-in to share with Select Consumers: Our Friends and Family. Our relationships and influence with these select consumers may be the more efficient and effective way for advertisers to influence consumer behaviors.
Therefore, Facebook's social data is extremely attractive to advertisers. And, this social data may be more valuable to advertisers than the search behavior data that's the foundation of the Google AdWords Pay-Per-Click (PPC) Model.
Google AdWords drives roughly 90%+ of Google's revenues. As a result, Facebook legitimately threatens Google's core business.
Here are resources I've researched and studied to support and understand why Google fears Facebook:
* CNN Technology: How Facebook Eclipsed Google in 2010
* Google's Facebook-Killer Slowed by Political Infighting
* Great Wall of Facebook: The Social Network's Plan to Dominate the Internet — And Keep Google Out
* Singel-Minded: How Facebook Could Beat Google to Win The Net
* Ken Auletta's Googled Interview with Charlie Rose (links to Charlie Rose's Website)
* Fast Company Article: "Underdog Bing Talks Facebook Partnership, Google Rivalry
* My Blog Post Detailing the Ken Auletta-Charlie Rose Interview
Facebook is Gaining Traction as the Doorway to Consumer Intent (not a Google Search). Facebook Connect allows consumers to login to almost any social networking related application. For the past decade, a consumer's stated online intent almost exclusively began with a search engine (e.g., a Google Search).
Now, Facebook is gaining prominence as the preferred front door for stating consumer online intent (not Google). The fact that Facebook eclipsed Google for the first time as the most-visited U.S. website in 2010 is evidence of this trend.
In my opinion, Facebook's strategic approach is the same but noticeably different: "To organize our personal information and make it selectively accessible and useful." At least for now …
The past 48 hours describing the power shake-up at Google provides the read-between-the-lines-evidence why gaining consumer permissions to social data impacts Google:
* The New Yorker Article by Ken Auletta: Why is Eric Schmidt Stepping Down at Google?
* Wall Street Journal: Chief Seeks More Agile Google
* Wall Street Journal: Power Shifts Atop Google
* New York Times: Google Shake-Up is Effort to Revive Start-Up Spark
* Mashable Op-Ed: Why Google Needs Its Own Steve Jobs
The future of consumer permissions will be a driving force in online marketing's near and distant future. Larry Page's (Google's new CEO) ability to contend with this driving force and the accompanying Facebook competitive challenge is the type of adversity Ken Auletta said that Google's founders had yet to confront.
Stay tuned. Now, it's getting interesting.
Tony Faustino is a marketing and corporate strategist. He writes about how The Internet reinvents marketing strategy for organizations and individuals in his marketing strategy blog, Social Media ReInvention. Follow his tweets @tonyfaustino or circle him on Google+.
I've started reading Googled: The End of the World As We Know It by Ken Auletta. There's no question Google is reinventing and transforming the world of traditional media. If you're an online strategy nut or corporate strategy geek like me, you'll love this book.
I discovered this book from a Charlie Rose interview conducted on November 5, 2009. After watching the original broadcast and studying the online archive, I had to write a blog post about the key takeaways from their conversation. I also purchased Mr. Auletta's book from Amazon because I love learning how Google:
* Approaches and dissects problems
* Views business opportunities
* Drives and sustains innovation throughout its organization
Furthermore, Charlie Rose is the television industry's best broadcaster and interviewer. Check out this Fortune Magazine article: Why Business Loves Charlie Rose. The outstanding content and insights shared on Mr. Rose's nightly show make it required viewing. I also learn from Mr. Rose's preparation, questioning, and listening. He possesses that rare ability to comfortably engage guests and non-threateningly ask difficult questions.
Without further adieu, here are the seven (7) insights I learned by studying the conversation between Mr. Auletta and Mr. Rose. If there are additional viewpoints or lessons you think should be included from the November 5th interview, please share them in the comments section.
Insight 1: Ask Why Does It Have to Be This Way?
Google asks this fundamental question whenever confronting a problem or business opportunity. Their engineers challenge the status quo by starting with a basic assumption — the traditional analog world is inefficient.
Advertising. Wouldn't you want to know if people are reading your ads? Wouldn't you want to know if the people who buy your product(s) do so because of your advertising?
Packaged Computer Software. Why does computer software have to run from our hard drives or a computer desktop? Why can't it run off a computer "cloud" accessible through our web browsers?
Newspaper Publishing. Isn't there a more efficient way to publish and distribute newspapers?
Bottom Line: Google finds a way to drive out inefficiencies. This "engineer's mindset" is the core capability Google brings to solving all traditional problems.
Insight 2: Google and Microsoft are Different – and Alike
Cold Engineers Versus Cold Businessmen. Google isn't out to destroy the competition. Their engineering goal is to drive out inefficiencies. Contrast this mentality with Microsoft in 1998 (when it was investigated for antitrust concerns). Here, the US government questioned the company's intent to compete fairly with Netscape and Sun Microsystems.
Both Share an Inability to Anticipate Other People's Fears. Both Google and Microsoft are brilliant in solving problems. However, both firms don't understand why the US government and public would question their business motives. In Google's case, people now fear them the way people feared Microsoft in 1998. The recent legal proceedings between Google and the publishing industry regarding the digitizing of books is a prime example. Here's a recent article about how Google is attempting to smooth over relations with the publishing industry from The Washington Post titled, Google Allows Publishers to Strengthen Pay Walls.
Insight 3: No One Saw Google Coming (Not Even Bill Gates)
You Can't Anticipate What You Don't Know. In 1998, Mr. Auletta interviewed Bill Gates during Microsoft's antitrust trial period and asked what worried him the most. Gates replied: "I worry about someone in a garage inventing something that will displace Microsoft." Ironically, Larry Page and Sergey Brin are now Microsoft's most significant competitor particularly with their push to establish cloud computing and Google Chrome OS.
2006 was a Tipping Point: The $1.65 Billion YouTube Acquisition. Before this acquisition, it was unclear if Google was making money. With the YouTube acquisition, traditional media finally realized Google's broad ambitions and imminent threat as a future media company. Mr. Auletta said it best during the interview (paraphrasing): "Wow, they're coming after me (e.g., traditional media)."
Insight 4: Google Views Itself as a Media Company Not a Search Company
Become the First $100 Billion Media Company. Eric Schmidt says this is the ultimate goal. Currently, Google hasn't significantly monetized their product portfolio beyond search. However, you can't bet against them because of their involvement in a vast number of areas:
* Advertising: Google AdWords, Google AdSense
* Telecommunications: Android OS
* Television: YouTube
* Books & Publishing: Digitized Books
* Software: Cloud Computing, Google Docs
Make Money But Not at the Expense of Violating User Trust. Mr. Auletta finds this insight or clarity of thought extremely telling. At a young age, Brin and Page recognized the value of building user trust because they've received plenty of opportunities to make "easy money." For example, they declined Visa's $3 million offer to place a banner ad on the Google Home Page. Brin and Page declined becaus they thought the ad would be intrusive and disruptive to the user experience.
Insight 5: Google's Simplistic Home Page is a Nod to Steve Jobs and Apple
Google's founders admire Jobs' passion and his vision to simplify with "elegant design." The simplicity and clean look of the Google home page reflects Jobs' and Apple's influence.
Insight 6: How Will Google Handle Current and Future Challenges
Challenge 1: Expanding Revenues Beyond Search (aka The One-Trick Pony). Mr. Auletta points out how Steve Ballmer, Microsoft's CEO, criticizes Google's reliance on search-related revenues. But, I liked Mr. Auletta's anecdote that Eric Schmidt, Google's CEO, replied: "Yeah, but it's a pretty good trick." Still, Ballmer has a point. AdWords and AdSense accounts for $21 billion in revenues (out of $22 billion total). Mr. Auletta puts this number in context and explained that $21 billion is roughly equivalent to the advertising revenues for all U.S. consumer-related magazines. Also, Google's revenue is also equivalent to two-third's of U.S. newspaper advertising revenues.
Not too shabby for a one-trick pony …
Here's a video clip from the CNBC Original: Inside the Mind of Google. It talks about how Google is looking to expand its influence into the mobile market with its Android Operating System:
Challenge 2: Google is Concerned About Vertical Search Via Social Networks. I can personally confirm the power and appeal of search via social networks like Facebook or Twitter. I've commented on other blogs that the reason I find Twitter so powerful is because the people I follow on Twitter are often a better source of content than my own Google search. The authority of your Facebook Friends or who you follow on Twitter is why Google wanted to acquire Twitter.
In many ways, real-time search or conducting a search through Twitter is what Google would ask or propose to threaten their own offering. Google is asking themselves: "Why should you conduct a search through Google when you can solicit the trusted opinion of friends or people who share your common interests?" This idea is captured in one of the best articles I've ever read on Facebook as a potential threat to Google: Wired Article – Great Wall of Facebook: The Social Network's Plan to Dominate the Internet — and Keep Google Out.
Challenge 3: Convincing Top Talent to Remain at Google. Mr. Rose and Mr. Auletta discussed the challenge of employee retention especially when your top engineering talent (1) has no shot at attaining the top spot because you have young founders and (2) the opportunity for a big pay day has already passed. A prime example is Marissa Mayer, Google's VP of Search and User Experience. Even though she's achieved significant wealth as one of the original team members, she may want to forge her own path by leading her own company. Here's an article about Marissa Mayer from the New York Times titled, Putting a Bolder Face on Google.
Challenge 4: Trappings of Your Own, Phenomenal Success: Arrogance and Hubris. Right now, Google is not concerned about Microsoft Bing. They respect what Microsoft has accomplished with Bing and are aware of the Microsoft-Yahoo combination. However, Mr. Auletta thinks Google looks at Microsoft as "an old company" that won't move as quickly as Google.
Furthermore, when you're young and you've become successful so quickly, you begin to question why would anyone question your business motives (e.g., why's the U.S. government giving our company grief for wanting to digitize all books)? In 1998 and 1999, Bill Gates had the same attitude when the U.S. government investigated Microsoft for anti-trust concerns. Christine Varney, Head of the U.S. Justice Department's Anti-Trust Division, is investigating all concentrations of power and the tendency of Democratic-led administrations is to introduce more government regulation. As a result, Google has been beefing up its Washington office with legal talent. Check out this June 2009 New York Times article titled, Google Makes a Case It Isn't So Big. The story profiles Dana Wagner and his significant role in Google public relations on Capitol Hill.
Challenge 5: What Happens to Privacy? Will Google Continue to Not Be Evil? With every Google search we conduct, we leave a digital fingerprint or footprint (i.e., our individual IP address). Everyday, Google collects millions of data points about our online habits and tendencies. This is the reason why advertisers partner with Google. Advertisers want access to that information. What happens if advertisers make significant financial offers to Google to access to that information? This concentration of personal information on Google's servers is the biggest reason people fear it is becoming too powerful.
Here's another video clip from the CNBC Original: Inside the Mind of Google. It talks about how this very subject and includes Marissa Mayer's opinion on this issue: