Google's Moonshots lose a lot, or a little, money | Hacker News Reader

Google's Moonshots lose a lot, or a little, money

blogs.wsj.com

21 pointsanigbrowl27 comments

R&D is exactly what an innovative, cash-rich company is supposed to do.

And it's precisely why I would never invest in Apple, no matter how promising and successful their product strategy is. Their stagnated mountains of cash are a monumental waste of resources doing no one any good.

Throwing more money at something doesn't necessarily lead to a better outcome. Nokia was outspending Apple 9 times on R&D[1] and it didn't help them at all.

[1] http://blogs.wsj.com/tech-europe/2012/05/14/nokia-outspent-a...

Agreed. But throwing no money at anything necessarily leads to a worse outcome.

They could be doing R&D/investing it (+jobs, +spending), donating it (-taxes, +social good), or simply paying it back to shareholders if they can't figure it out (+money in circulation).

Anything is better than nothing.

I don't agree with that statement, but I don't even understand how it would apply to Apple. Apple spent $6 billion on R&D in 2014 [1] and that number has been increasing almost exponentially for years [2].

[1] http://www.ibtimes.com/apple-spent-6-billion-rd-nearly-100-p...

[2] http://www.engadget.com/2014/02/12/a-look-at-apples-randd-ex...

What about Bell labs, some of the most important innovations of the 20th century came from there, and it was an example of a large company throwing money at R&D. Honestly, i'm glad they did https://en.wikipedia.org/wiki/Transistor#History

Like any research project I think it's no surprise that they consume money instead of making any, at least in the short/medium term.

The real news would have been that they have made money instead of burning it.

When did we start calling R&D "losing money"?

Traditionally it's called "investing money".

So by this logic the whole startup scene is "money losing"?

It just shows how bankers are short-term oriented and do not understand long term investing that at the end really makes the difference for the whole society (and ultimately turn the profit).

Well, it is. Most startups fail, meaning someone's investment simply evaporates.

There are unicorns, sure, and some startups stabilize or cash out, but if you pick any startup at random, you're likely looking at something that's burning money and will fail eventually.

Of course, because startup success is not a linear distribution. Most startups fail, only a minority succeed, so "randomly choosing one" is a wrong way to assess the whole market.

And that was my point about bankers looking at moonshot projects as "money loosing". They should looks at startup ecosystem as a whole and assess how much return on investment it has long term, and then look at Google's moonshot projects the same way (or more favourably, because Google is not a random startup - they can execute much better).

Why wouldn't the whole startup scene be money losing? Seems like a lot of hot money being spent on desperately acquiring customers for unsustainable and insufficiently differentiated or useful products.

If the hot angel money disappears the customers for all the dubious startups will too and you'll see some interesting times. Guess we'll really know how many log-parsing etc startups the world needs.

It the whole startup ecosystem was loosing money (= not returning investment) then VCs would not exist.

Gamblers as a whole lose money, but casinos still exist.

Not only bankers.

Anyone that is doing R&D on some enterprise is always on the minus column.

I have been in a few enterprises where R&D costs where cutted down, because we were loosing money.

It was of course a recipe for failure, as the money losing department (R&D) could no longer fulfill the requests from the money earning departs (sales and marketing).

Bankers are not short term oriented. Their shareholders are. VCs play with their own money.

I wonder how much they'll bring in from self driving cars? How about the longevity stuff?

Self driving cars definitely appear to be a when not if and have the power to revolutionise the world. Might cost them a few billion to get there but the revenue they can generate from the technology once mature is immense.

Again the longevity has similar prospects, though it's a lot less certain if it will actually work and if it does will face an uphill battle. I think many will have moral objections to it (it will allow the rich to keep living and keep getting richer), few will have moral objections to the self driving car.

They might not bring in anything from self driving cars if the car manufacturers beat them to market. Tesla, Honda, Audi etc. seem to all be working on self driving tech.

In a recent Ted Talk[0], they detail that their goal does not align with that of their competing manufacturers. Manufacturers go for a quick-to-market, good-enough autopilot that requires human supervision.

Google's driverless car won't have a wheel, and therefore has a significantly smaller margin of error. Their reasoning is that rebuilding trust is a lot harder than building trust; catastrophes will make the news, unless avoided altogether. In light of recent events (the VW scandal), it is far from absurd.

[0]: http://www.ted.com/talks/chris_urmson_how_a_driverless_car_s...

Unfortunately, the most rushed-to-market self-driving car can ruin trust in them for everyone, which would cost many lives. This is where regulation is critically important to make sure that any self-driving cars allowed to be commercially sold are thoroughly validated.

> Their reasoning is that rebuilding trust is a lot harder than building trust; catastrophes will make the news, unless avoided altogether. In light of recent events (the VW scandal), it is far from absurd.

I think this only works if you're a new player, and even then not always. You bring up VW scandal, but do you honestly expect VW sales to drop in any meaningful way? For most of people, company ethics are at the bottom of the list of concerns when buying something - that is assuming that they even know that the company did something wrong.

Traditional automakers have a pretty good shot at dominating the self-driving market; they may launch a somewhat buggy system on expensive models, and then iron out the kinks. By the time your average Joe will be driving such a car, they'll could have most bugs fixed, with the added benefit of being recognized by general population as a well-established self-driving cars provider with years of experience.

A good bet for Google, I think, would be to design a perfect autonomous rig and then licence that tech to existing manufacturers.

Building a product with a very limited number of buyers is a bad idea. Self-driving cars need car manufacturer cooperation, and it's difficult to become a car manufacturer. So it's likely that car manufacturers will be able to negotiate a low price for Google's tech, if they buy it at all.

I saw the same thing happen to a startup that built some new set-top-box capabilities that needed cable company cooperation. No cable company wanted to buy the tech... "Our existing tech is good enough, we'll improve it over time to have those features anyway." The startup didn't sell anything, and died.

12 years later, it's finally becoming possible to control your TV by voice.

"analysts estimating operating losses ranging from $500 million to as much as $4 billion this year"

So 500 millions is a little money ?

Reminds me of a congressman that said (approximatively) : "a billion here, a billion there and pretty soon you're talking a bout real money".

I would argue that for a company with $74 billion revenue, $500 million invested in long-term R&D is indeed little money.

But I sure wouldn't mind getting "a little money" from google (by their scale) ;)

Isn't the main purpose patenting?

Even if Google does create a moonshot, they might not be the ones to directly profiteer from it. It might be preferrable to take rent from smaller startups that later on come up with the same idea.

You mean similar to the way Microsoft leaches money off of Android handset manufacturers? It's hardly a net win for consumers.

I didn't say that it was positive. I'm just being honest about Google's institutional capabilities for making money from their innovation.

I guess the more positive way to look at it would be as a way to get at least some return on the investments you made in R&D. Even if that investment doesn't lead to direct sales profits, you get a bit from others who successfully build on your developments.

Sure, it's never that simple in practice but I do understand the theory. Let's say "Company A" spends billions on autonomous car development but they also deal with every new problem and challenge as it comes up. As a result, subsequent products from competitors can avoid much of the trial and error thanks to the groundwork already covered, along with underlying tech that's been developed. This way, Company A still gets some compensation for the money and work they saved Companies B, C, and D on the way to their more successful consumer offerings.

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