Google’s Go-to-Market Gap

Perhaps the most surprising aspect of Google’s rise is that it is almost entirely attributable to having the best technology. That sounds like it should be the normal state of affairs, but in truth there are an untold number of research projects and startups that had superior technology but never became viable businesses; perhaps there was no business model, or an inability to build a requisite ecosystem, or most commonly, an inability to find a viable market and/or reach consumers who might be interested.

Great Companies Versus Great Technology

For example, look at the other technology giants, all of whom got their start on the basis of more than pure technology:

  • While Bill Gates and Paul Allen built Microsoft’s first product (Altair BASIC), the company’s dominance was established via a business development deal with IBM to provide an operating system for the nascent IBM personal computer; the actual OS (MS-DOS) was acquired from a company called Seattle Computer Products. And while Microsoft would go on to develop all kinds of technology, everything that followed rested on the leverage from that IBM deal.
  • Amazon started out as a primitive website that was differentiated by its selection and ability to deliver anywhere in the U.S. And while the company has certainly invented a lot of technology when it comes to web services and logistics, its advantage remains rooted in its scale.
  • Facebook’s technology was so basic that Mark Zuckerberg’s first employee — his roommate Dustin Moskovitz — didn’t even know how to program; he would go on to be Facebook’s first Chief Technical Officer. What got the site off the ground was the way it digitized pre-existing offline networks — it started from its market and worked backwards.
  • Apple’s strategy has certainly been predicated on having the best products, but that does not necessarily mean the company has always had the best technology. The Mac GUI was famously “inspired” by Xerox PARC, the iPod was hardly the first MP3 player, and while the original iPhone was certainly a technological marvel, it not only was built on everything that came before it but also required huge investments in distribution to become the juggernaut it is1

To be clear, all of these companies had great technology, but it wasn’t enough — it rarely is.

Google = Best

Google stands in stark contrast: relying on links and a lot of math to rank sites was a technological breakthrough of the first order — and no company wanted to buy it, despite the fact it was very much on sale. And yet, usage grew exponentially thanks to word-of-mouth: Google’s search was so startlingly better — and the cost of trying it was simply typing in a URL — that the product grew like wild fire without business development, distribution, or marketing. By the time Google did their first distribution deal, with Yahoo in 2000, Google was already handling millions of queries a day simply because they were superior; Yahoo only hastened Google’s inevitable domination.

The focus on being the best became a core piece of Google’s identity, and the biggest factor in how they hired. Steven Levy wrote in In the Plex:

The founders also knew that Google had to be a lot smarter to keep satisfying users—and to fulfill the world-changing ambitions of its founders. “We don’t always produce what people want,” Page explained in Google’s early days. “It’s really difficult. To do that you have to be smart—you have to understand everything in the world. In computer science, we call that artificial intelligence.”

Brin chimed in. “We want Google to be as smart as you—you should be getting an answer the minute you think of it.”

“The ultimate search engine,” said Page. “We’re a long way from that.”

Page and Brin both held a core belief that the success of their company would hinge on having world-class engineers and scientists committed to their ambitious vision. Page believed that technology companies can thrive only by “an understanding of engineering at the highest level”…

“We just hired people like us,” says Page.

So many of Google’s successes — and failures — is wrapped up in this sentiment. So, too, is their future.

The Google Assistant

Yesterday at the Google I/O keynote the dominant theme was the very real progress Google is making on genuine Artificial Intelligence that goes far beyond search. Sundar Pichai said in his opening remarks:

It’s amazing to see how people engage differently with Google. It’s not just enough to give them links. We really need to help them get things done in the real world. This is why we are evolving search to be much more assistive. We’ve been laying the foundation for this for many, many years through investments in deep areas of computer science. We’ve built the knowledge graph — we today have an understanding of 1 billion entities, people, places, and things, and the relationships between them and the real world. We have dramatically improved the quality of our voice recognition…Image recognition and computer vision, we can do things we never thought we could do before…We even do real-time translation.

Progress in all of these areas is accelerating, thanks to profound advances in machine learning and [artificial intelligence] (AI), and I believe we are at a seminal moment. We as Google have evolved significantly over the past ten years and we believe we are poised to take a big leap forward in the next ten years leveraging out state-of-the-art capabilities in machine learning and AI, we truly want to take the next step in being more assistive for our users. So today, we are announcing the Google assistant.

There is little question that Google is far ahead in artificial intelligence. Late January, in a humorous juxtaposition that was almost certainly coincidental but telling all the same, Facebook CEO Mark Zuckerberg posted about the social network company’s progress in building a computer that could play the board game ‘Go’, long thought unbeatable by computers. Mere hours later Demis Hassabis, the head of Google’s DeepMind division, revealed in a blog post that Google had done exactly that: their machine learning-based program, called AlphaGo, had defeated a three-time European champion, and would soon take on the best Go player in the world (AlphaGo would go on to win that match 4–1).

To be sure, this is a single example, but any time spent using the increasing number of Google products that rely on machine learning-based artificial intelligence — translation, voice and image recognition, and yes, search — quickly make it obvious just how much better Google is, and, thanks to the copious amount of data at the company’s disposal, how much better they are likely to become. The problem is that in today’s world being the best may not be enough.

Open Versus Closed

While describing how Google search grew by word-of-mouth, I snuck in one line that looms very large when it comes to thinking about both Google’s past and its future: “the cost of trying it was simply typing in a URL.” Google’s initial success was not just because they were superior at search: thanks to the fact that the interface with Google was a web page, the company had instant access to every person on earth with a PC and a functioning Internet connect — and they didn’t have to pay a dime. On the flip-side, if you heard about this amazing new search engine, you didn’t need to go buy a CD or even download a program: you simply typed “Google.com” and the results spoke for themselves. Make no mistake: the brilliance of Larry Page and Sergey Brin was only perhaps surpassed by the brilliance of the people they hired, particularly in the early days, but the company’s success was very much intertwined with the openness afforded by a browser and the world wide web.

Today, though, the PC is fading in relevance, and the browser along with it: what matters is mobile, and the means to connect with users is to either be embedded into the phone or have an app where people live. And while Google has a massive foothold thanks to Android, a huge number of its best customers are on iOS, and nearly all its customers live in Facebook.

The implications of this are obvious — just look at maps. Google Maps is widely regarded as being the superior product to Apple Maps, yet the latter is used three times as often on iPhones; such is the power of defaults and being “good enough.”2 Similarly, while Google’s voice recognition far outpaces Apple’s Siri, the fact that Apple sets the rules means that Google’s Gboard keyboard for iOS cannot include dictation.3 More broadly, on iOS the only way to use the Google assistant that Pichai announced yesterday will be to open a Google app (or go to a search field in, you guessed it, a browser): using Siri will always be much easier and frictionless.

The situation is even more challenging when it comes to social networks broadly and messaging specifically, which is to mobile as the browser was to the PC: a meta-OS where people spend the vast majority of their time. The problem for Google is that while the browser was an open platform that not even Microsoft could control — sure, they killed Netscape, but Google built its audience from within Internet Explorer — social networks and messaging services are not only closed but nearly impossible to compete with. No matter how great of a messaging service Google may build — another I/O announcement was a messaging service called Allo, which heavily features the Google assistant — the most important feature of any messaging service is whether or not your friends use it, and nearly every geography in the world is locked up by a competitor.

There is a new arena — the home, the one place where talking is usually better than pecking away at a phone no longer in your pocket — but here Google is behind Amazon. The latter, thanks to the failure of its own smartphone efforts, was freed from the smartphone obsession that resulted in Google wrongly identifying the smartphone-dependent Nest as its connected home offering, instead of a voice-focused standalone device like the Echo. There is almost certainly time to catchup, but it’s telling that Google’s announced competitor — Google Home — is still months away.

Google’s Go-to-Market Challenge

The net result is that Google has no choice but to put its founding proposition to the ultimate test: is it enough to be the best? Can the best artificial intelligence overcome the friction that will be involved in using Google assistant on an iPhone? Can the best artificial intelligence actually shift human networks? Can the best artificial intelligence win the home in the face of a big head start?

That the answer may very well be “no” (or mixed, at best), is at the root of my 2014 piece Peak Google. That piece was about business relevance, something that goes beyond the collection of cash or the creation of superior technologies. The question I was asking was which companies are the best equipped to build new businesses going forward, and here Google’s outlook is far cloudier than it was back when the company was, for all intents and purposes, invented.

The problem is that as much as Google may be ahead, the company is also on the clock: every interaction with Siri, every signal sent to Facebook, every command answered by Alexa, is one that is not only not captured by Google but also one that is captured by its competitors. Yes, it is likely Apple, Facebook, and Amazon are all behind Google when it comes to machine learning and artificial intelligence — hugely so, in many cases — but it is not a fair fight. Google’s competitors, by virtue of owning the customer, need only be good enough, and they will get better. Google has a far higher bar to clear — it is asking users and in some cases their networks to not only change their behavior but willingly introduce more friction into their lives — and its technology will have to be special indeed to replicate the company’s original success as a business.4

  1. To put it another way, the technology at the heart of Apple’s products — OS X and iOS — has its roots in NeXT, a business failure []
  2. By most accounts Apple Maps is indeed “good enough” in the U.S.; from personal experience, though, it very much falls short in many other countries []
  3. Google does deserve a lot of credit for finally remembering that Android exists to serve Google, which should be focused on all users, not its own platforms []
  4. Which itself is under threat: to fully leverage Google assistant in Google search will almost certainly deepen Google’s antitrust troubles with the European Union []