Hacker News Reader

Comment by jacquesm | Hacker News Reader

They made - and still make - one crucial error: you need to spin those projects that are simply viable out immediately after they take root. Otherwise you will end up with the brand advantage but there will always be the pressure to use the resources (people, mostly) more efficiently in terms of ROI. And so nothing ever lasts and slowly but surely your reputation as a reliable partner for new products is eroded.

You can use your main brand for the launch, but then you have to be willing to support the child.

View on HN

In addition, I don't understand why they stopped them entirely, instead of spin them off as subsidiaries under e.g. Alphabet; make them financially self-reliant, have Google/Alphabet as the main shareholder, and give the people that worked on it (and whoever else wants to) the opportunity to continue working on the product.

Some wouldn't have been viable, sure. Others were probably too ingrained in Google's hardware/software ecosystem to be separated out (although I wonder if nowadays everything Google runs on its cloud offering, which would make it simpler, just change the billing).

Most of them were probably built on Google's core infrastructure in ways that make them difficult to externalize at sub scale. There's also compensation disparity - it's virtually impossible for a new startup / spinout to pay FAANG comp and remain profitable & nimble. This results in braindrain.

The reason is quite simple: why spend engineering headcount on a less successful product?

> Some wouldn't have been viable, sure. Others were probably too ingrained in Google's hardware/software ecosystem to be separated out (although I wonder if nowadays everything Google runs on its cloud offering, which would make it simpler, just change the billing).

Google Cloud is built on top of Google's tech ecosystem, not the other way around.

Because things need time and alignment of incentives between creators and consumers and if you interfere in that relationship all the time things will never ever succeed. The last thing any project needs is an investor with a majority interest that fucks up your plans all the time, can take your employees away at will and can axe the project at any time because it doesn't perform according to their metrics.

That's why VCs take a minority stake in start-ups. The trouble usually begins when the founders dilute to the point that they no longer have a majority.

Assignment: Consider Agilent, itself a spinoff from HP, also spun off four (I think) companies, because they were good businesses but distracted the management.

Is this the right strategy? I'm tempted to say Yes.

Reply on news.ycombinator.com