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October 9, 2006
Main GooTube Takeaways
My main impressions:- It is a big deal that Google is doing a major acquisition in area where it has an existing product (i.e., Google Video). A tech company without not-invented here (NIH) syndrome is a competitively dangerous tech company indeed.
- Google is very, very bullish about online video. It was more than spin, with the conviction coming through loud and clear.
- Eric is being Toffler-esque, and pushing the "I'm a futurist" and video is the natural next step, which I entirely buy.
- There is going to be immense pressure on networks and others to figure out whether they partner or compete (read: buy) by way of response. Google clearly hopes they partner, but Fox, for one, has made clear its wants to compete.
- It is also a big deal that Google tipped other large acquisitions in this area. Even If not reckless by intent, it will cause even larger capital inflows into this over-heated area.
- Finally, while not necessarily a big deal, it was interesting that both YouTube founders were on the call, as was Eric Schmidt and Sergey Brin, Larry Page was nowhere to be seen.
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Great comment, Todd. You're right: Google is a media company, not a tech company. People keep missing that distinction, even though I won't shut up about it. It's a big difference.
It was an advertising and infrastructure company. Now it is a media company. Big difference there too, no? It was in the position to take a cut from every purveyor of media on the web; now it is positioning itself as just another consolidated media silo, which seems (to me) to be a much weaker long term position.
Media companies are very shy about giving anyone they power to be a gate keeper. Blame John Malone for that. MSFT has never gotten an upper hand online for that very reason in my opinion - they have been trying to play nice with the media companies and they keep getting told - we hate to pay gatekeepers. One of those first time - shame on you, second time - shame on me things.
What's interesting to me is why hasn't Yahoo! scaled as much with it's m& strategy vs. what google's deal might do with youtube or said will google's financials come to earth as it adds more acquisitions and begin to look more like yahoo long term.
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Great insights as usual. I agree that Google acquiring a company (YouTube) where they already have a product (Google Video) is a clear message that they will not allow NIH thinking to get in the way.
Scoble points out that even if Google gets sued, and loses one or two...so what. They may lose a battle but will win the war.
I wrote a blog with more lessons from this merger. More details here http://dondodge.typepad.com/the_next_big_thing/2006/10/lessons_from_th.html
Interesting that you spin a crushing defeat for Google Video as a win for Google. Yes, it shows upper management's willingness to accept other people's work. But what does it say about product management? Why was Google Video losing so badly in the first place? Somewhere in Google there is a team responsible for costing Google billions of dollars.
2 things:
Google isn't a tech company - it's a media company something you have noted many times. And judged on a media company basis this makes tons of sense - you buy eyeballs and distribution - the same reason disney buying abc made tons of sense (as someone who was working at disney at the time - disney wasn't buying abc it was buying espn with abc thrown in for free on top). Media companies rarely suffer from NIH in my experiene.
Second, Yahoo has been pursuing this strategy very effectively since it's earliest guys - Oveture, Flickr, Delicious, etc. Google gets credit for this deal strategically, but it's a path that others have gone down before.