Over a decade after launch, how is Google Cloud still losing so much money?
Eg. Google took 9 years and Facebook took 11 years to get to a $4B quarter, but of course apples and oranges on business models. Advertising has a massive margin, so Google and Facebook were very profitable at those points. AWS took about 11 years to get to a $4B Q. (You get to do the adjustment for inflation ;-)
The problem is that unless you are monitizing a private cloud (Google-classic, Facebook, Apple, etc), the Cloud revenue sweet spot is enterprise sales, and enterprise sales are hard, with long cycles and expensive sales support requirements. When you are playing catch-up there are many more ways to lose a deal than close one.
Year-over-year, Google Cloud made about $1.25B more, and lost $800M less. It sure looks like they will be in the black by the end of this year. It would be a long business cycle for a VC, but looks like a well managed business expansion.
When will the entire venture go ROI positive? Dunno, but in some ways that is a sunk cash fallacy. It looks like a pretty decent business now.
(Ex-Googler still holding GOOG in case either of those color your view of the above.)
* Free support and consulting (probably useful for some less technical companies)
* Free or discounted resources for POCs (ie: "This customer wants to do a 3 month POC, we're going to spend literally 0 dollars on that infrastructure")
* Other misc stuff depending on the org
Source: received it. Not in a VC/incubator.
Last I saw they definitely do not take equity.
You do however have to be qualified by applying through a partner as you say.
The Google Cloud Platform product (or, "Let's sell some of that extra YouTube server space") is a decade old.
E.g. if I'm leading engineering for a startup and thinking about which of the three to invest in, the long-term profitability and stability of my choice here is important. You can't just rely on the "Google" name - if anything, that signals that they're willing to just shut it down or raise prices if they can't reach profitability targets soon.
Of course the short-term profits being lost don't seem so short-term at this point, so Google is surely debating internally on how long they want to continue this strategy if it doesn't begin to pay off.
I am certain that nobody is considering shuttering a business unit that has an annualized revenue of $16 billion and is growing 46% per year. Anyone who is “surely debating” this would be fired from management at any sensible company.
Google isn't interested in being a minority player in any market, if they can't capture it, they will eventually leave it.
And let's be real, a huge swath of VC funded startups recklessly engage in "growth hacking" to acquire users, without a legitimate business plan, usually, e.g.
Step 1: get users Step 2: <magic happens> Step 3: Profit!
And then it turns out their ideas for monetization don't work, and they get an exit via acquisition by one of the big players as the VCs try to get some of their money back and leave someone else holding the bag.
SV is littered with companies that had millions of users but ended up folding and selling, because ultimately, running a business isn't free, and those users have to generate enough revenue to cover costs plus ROI.
Which is to say, there's probably a decent number of apps Google created and shut down, which probably would've been pretty successful companies on their own with a modest monetization model. But Google never attempted it, because the user count didn't hit nine figures.
Fortunately, AGI is almost certainly not possible in the next decade.
Not sure I understand this response, nor do I agree. AWS drove $13.5B in _profit_ for Amazon in 2020, and has been profitable since at least 2014, _8 years_ after its founding.[1]
Why isn't reasonable to ask "where and when is the profit coming?"
[1] https://www.geekwire.com/2021/amazon-web-services-posts-reco...
Not only did GCP (and Azure, etc.) have to catch up with where AWS was 8 years ago, they've got to invest even more to catch up with where AWS is now.
It's obvious that GCP is a very long-term investment, but also one that it not just purely profit-driven for GCP in isolation, but also hugely strategic for Google as a whole.
Here's the question to ask: if Google stopped investing aggressively in marketing and building new offerings to expand the Cloud userbase could it be profitable today?
Or in other words, is it better to have 30% YoY growth and on paper profitability, or 45% YoY growth and an on paper loss, with the ability to flip the switch and move to the first option whenever you want?
This sounds suspiciously like a line from the WeWork documentary on Hulu.
Given that I expect to never see waymo brand cars shuttling people around, most likely they will license out the tech to companies who deal with customers or to the car companies themselves.
I'm a big supporter of what Waymo is doing, but I've always thought this is real end game for them precisely because of the reasons you mentioned. Google is incredibly shy of anything that involves physical support and running a robotaxi service requires a lot of it along with operations/logistics. They are no Amazon.