Software scales. Salesmen don’t. (Image from YouTube.)
Google is ignoring the rule and will pay a price for it.
In 2020 Google reports it lost $5.6 billion on Google Cloud. That’s in contrast with Amazon and Microsoft, which both made big profits on their cloud operations. Yet Google’s share of the cloud market barely budged. It’s still under 10%.
What happened is that Google let Tom Kurian build an empire. Kurian was hired a few years ago from Oracle to build Google Cloud. He has done that in Oracle’s image, even though Oracle’s image sucks it’s moving to Texas with its tail between its legs.
Kurian’s empire consists of salesmen who have called on big customers to do big deals. Their fat expense accounts have gotten Google some big deals, like a recent one with Ford Motor. But they haven’t moved the needle. They haven’t increased the market share of Google Cloud. They also cost a lot of money, which is why Google lost money on cloud in its most recent quarter. It was saved by its traditional search unit whose ad services remain automated.
Analysts who follow this market claim Kurian is the best hire Google has ever made. I think he’s their worst, and it points to a deeper problem.
Ever since co-founders Larry Page and Sergey Brin sailed into the sunset (why do they still have voting control when they don’t even work there, and are their kids going to be controlling it when they’re gone), former Morgan Stanley banker Ruth Porat has been steering the ship, as COO. Instead of dreaming about changing the future, she’s trying to extract rents from it. Instead of valuing her engineers, she now faces a union movement.
Wall Street loves Porat. But it’s software people who make Silicon Valley go, not salesmen. People who care about the mission more than their next bonus check. Google is losing these people.
As of now, Wall Street is ignoring the Google Cloud loss. I was told that Google’s capital spending is now even higher than Amazon’s, and that more of it is focused on building data centers. Well, Google’s Capex in 2020 was almost $23 billion. Amazon’s was $29 billion.
I’m seeing more and more spam in my Gmail folders. There have been some complete service outages. These are small cracks, but the cracks are growing.
Google is in trouble.