Google 2.0, and the Hunt for the Next Googly Thing

Many in the media and analyst community are fretting about the future of Google. While worry about a supposedly “slowing” company that has still grown its share price 30% in the past year might seem misplaced, the company’s stock is down almost 4% this year, and that will make this the first time that the company’s shares have turned in a down quarter since going public.

What does it mean? The Google 2.0 hypothesis is that investors are nervous about Google’s inability to find a second leg for its business. The company remains all search ads, and despite repeated forays into other services — i.e., Google Finance, radio, Google Apps, etc. — it has yet to find a new business that takes any heat off the core advertising biz.

True enough, and I’m the last to be a Google apologist, but so what? The $130-billion global advertising business in the middle of the largest change in its hundred-year history. And Google remains ideally positioned to continue to benefit. Granted, the company has to continue to overcome its own growing size — it wasn’t a multi-billion-dollar run-rate company when it did its IPO — but it is still growing impressively.

So, no concerns? Of course, there are plenty. Let’s just start with capital spending. There is a whiff in the investment community that Google could be Amazon 2.0 rather than Microsoft, with capex damaging cash flow, and that has investors rightly concerned.


  1. One minor nit: I think the global ad business is way bigger – greater than $500+ B/yr. US alone is bigger than $130B.
    Or are you citing some subset of that?