A lot of people seem to be chalking this one up in the “memetic imitation among tech execs” column. However, in the case of Google, I’m not so sure.
Google is an advertising business. And advertising revenue is extremely sensitive to changes in the economy (Companies cut ad spending when there isn’t as much demand to soak up). In the last recession Google was still rapidly stealing ad share from old media, but now they’ve won the game and are the market.
So this one makes complete sense to me. I’m sure everyone still thinks Google only hires engineers, but they actually employ A TON of ad sales people.
Advertising revenue is sensitive but number of engineer Google needs is not proportional to amount of ads they show. It's not like Amazon where if people order less they need less workers at fulfillment centers and less track drivers. And Google still profitable and can afford to keep headcount as an investment into future. Or they have no plans which spans more than a quarter?
Why a project they invested in would suddenly become unprofitable for all foreseeable future? They expect recession to last decades? It more looks like public companies value short term profit (the next quarterly report) more than a long term development and Google is no longer immune to this.
Just a theory but in a downturn I could see a lot of companies increasing their ad spend as they lose existing customers and find they need to work harder to acquire new ones.
Obviously this doesn’t apply to advertising which is just gratuitous brand building.
This is opposite. Marketing budget is second to be cut first being building (space expansion). The R&D budget however goes up mid recession.
Here is how the cuts work
R&D, space expansion, marketing, parties, raises, new product building, warehouses,
I think throughout their existence they tried hard to be more than that. If they settled to be just an advertising business, then easy, you become an equivalent of Lamar Advertising, you post an equivalent of billboards for over a hundred years, perhaps run a few servers and settle for that. An advertising company doesn't need to try to break into cloud computing business and do all these things that Google is actually trying to do (whatever the degree of success).
This all happened in the dotcom crash - all the companies shed staff.
It happened again during the credit-crunch.
It (used to?) happens in reverse every year in the banks - everyone watched Goldmans pay out bonus before xmas and then adjust their bonuses accordingly.
They've had all sorts of chances to expand that business, but have repeatedly shut down popular projects to the point where people hesitate before adopting new Google tools because they might get shut down with little warning.
I mean, if you can pay 150k to employ a salesperson to bring in an extra 400k of revenue, why wouldn't you?
Of course, the math kind of goes the other way once you're projecting that your salesperson is only going to bring in 100k due to economic circumstances...
Yes, but there are a lot of ad agencies that try to do Google ads on behalf of clients for huge fees. I'm sure part of Google sales people's jobs is to try and either drive such agencies out of business or get the agencies to spend more on Google.
Google is an advertising business. And advertising revenue is extremely sensitive to changes in the economy (Companies cut ad spending when there isn’t as much demand to soak up). In the last recession Google was still rapidly stealing ad share from old media, but now they’ve won the game and are the market.
So this one makes complete sense to me. I’m sure everyone still thinks Google only hires engineers, but they actually employ A TON of ad sales people.