Growth report: Google at age 10

ITEM. I received a telephone call from a friend who works at a well-known media company. "Google," said my friend, "is not responding to my e-mail and not returning my telephone calls. What can I do?" The issue involved removing a particular story as a result of a legal action. No big deal to me, but it was an ulcerating moment for my friend. I’ve heard that Google has had partners set up meetings and then, without warning, not attended, asking the partner "to cover." I ran into the tough skin of Googzilla when my partner asked me to contact the company about Google’s work for the state of Tennessee. I expect Googzilla to ignore me, but those other examples hint at an administrative issue. Annoy enough partners, prospects and journalists, and some may see Google suffering from colic—maybe something much more debilitating?

Let’s hypothesize. First, about amplification and next about attenuation.

Amplification means that Google’s "beta spray" approach to innovation works to stimulate demand for its products and services. Ad revenues continue to flow, providing the nutrients for Google Labs. A feedback system develops, which over time, allows non-ad revenues to grow organically and slowly. Ad revenue can flatten over time, but as long as there are a couple of percentage points of growth, Google remains the undisputed champion of cloud-based services. A downturn can be rectified with some prudent cost control. After all, is it necessary to have Tony Bennett serenade employees in the Google cafeteria? A financial nanny with knowledge of the word abstemious will quickly replace Mr. Bennett with an iPod and ear buds. Green lights flash green. Google is off to the races able to challenge anyone in a digital shootout.

Attenuation means that Google’s aging process changes the chemistry of the company. The 10-year-old has different notions of what’s fun and what’s important. Mothers learn that precocious 10-year-olds don’t listen except to what they want to hear. Their energy level remains high, but attention can become an issue. With change, some of the precociousness of the bright six-year-old becomes less cute. Some adults are baffled by 10-year-olds who veer from acting beyond their years to the behaviors of the terrible twos. More disturbing, attenuation can alter the nature of the child. If an organization suffers attenuation at a critical age—for the sake of argument—of 10, the risk is that the glories of the earliest years are lost. In Google’s case, the loss translates to billions and billions of dollars and the stability of the online advertising business and beyond.

I plan to watch Google’s behavior in the next few months. Will the Xooglers develop companies that "surf on Google"—that is, expand Google’s reach? Or will the Xooglers create companies that compete with Google in an effort to out Google Google? What will happen if Google’s ad revenues continue to erode? Will Microsoft marginalize Google first in the enterprise and then in the online advertising space? Will newcomers in search like Powerset or Radar Networks move from the shadows into the sunlight? Will companies like Autonomy have renewed opportunities in behind-the-firewall search with Google out of the picture?

Google may be approaching an inflexion point. Will it be amplification (cheers from Wall Street) or attenuation (groans from employees and investors with polite applause from Autonomy-Microsoft-Yahoo)? An interesting scene in the Google drama is about to appear on stage. Let’s watch.