It's perfectly fine to say that you have lots of investment ideas, but they don't add up to needing $100 billion to implement them. Especially when you are earning more cash every quarter.

At Google’s size they can invest a lot in R&D and product iterations, but because they are so big the innovation seems way less drastic relative to their size. Put it this way, if I put a new motor, deck, and paint on a small boat, it would seem like I did a lot, whereas if a giant cruise ship did the same thing, it wouldn’t really carry the same impact to outside viewers.

Let's rephrase:

Alphabet has far more cash than it has ideas, which is definitely a good sign that it is far past being classified an innovative company and stockpiling it can be seen as denial.

To look at it from another perspective: if it's cheap for you to innovate, ok great! That means you can innovate a bunch more! Spend all that cash innovating away! Oh, you can't spend it all? That means you don't have a bottomless supply of ideas that you haven't been able to try out, it means you're already innovated out and should just buy back the stock to give the money back to investors

Then give dividends?

No mega company really has to have internal innovation. And I doubt the pretend internal startups ala skunkswork with an unlimited budget and extensive runways are a real replacement for innovation popping out of the marketplace among the bodies of a hundred other failed/acquihired startups.

Because it's inefficient. Google could buy a thousand biotech startups that are all doing innovative work trying to cure cancer and things like that, but that work has nothing to do with search engines or data centers, so it makes no sense to put it under the same roof. The same management staff isn't going to be effective in managing both types of business, all it's going to do is split their focus.

But give the money to the shareholders and the ones who want to can use it to invest in biotech, others can invest in electric cars or new types of power generation or energy storage or space exploration or whatever else.

Using the profits from search engines to fund cancer research and space exploration is great. Running those businesses inside the search engine company is pointless.

Yet it has a lot to do with Calico, another Alphabet company.

What if I want to invest in Calico but not Google, or vice versa? All it's doing is making the market less efficient.

Only they can't do it that way, because if you buy a share of Alphabet, basically the entire value is from Google and even if one of the little left-field bets triples in value it would have only marginal impact on the overall share price.

Meanwhile if you did want to do such a thing, the better solution would be to have a fund with the sole purpose of investing in high-risk biotech startups, and then invest in a slew of them to better diversify the risk. Then let retail investors buy shares in that entity, which is all biotech instead of being a tiny sliver of biotech but really mostly Google.

With all of the failed and failing products from Google acquisitions, is that really a great idea?

Firebase (acquired in 2014) seems to qualify as semi-recent given it's become a massive product line in a few years.

It adds value to their cloud, is responsive to actual customer desires, and generally seems like a bargain at the right stage (a Google-supported tool being more valuable than a third-party GCP tool, even with Google's questionable dedication to longevity).

Just don't make the IBM / MS mistake and think adding more PMs to previously successful company is a good idea.

There are an almost unlimited number of things to do with money. Even if you have lots of money, the number of good opportunities exceeds the amount of cash. It doesn't even have to be high-risk acquisitions - Just anything that will get a good return.

I'm reacting to the "even distribution" notion not taxing in general. I think there are legitimate reasons for government to collect taxes but ensuring even distribution of wealth isn't one of them, IMHO.

You're making a value judgement that it's worse to distribute some tax dollars than to turn a blind eye to poverty.

It's both.

You don't tax people and then provide everyone with a free dog, you just let people keep their money and they'll use it to get a dog if they want one.

If you want to help the poor, you don't give them bureaucratic programs that require them to buy specific amounts and types of food, housing and education, you just give them the money and they can figure out what they need better than you. In that case some of the money came from different people than it went to, but it's still the same principle.

Alternatively they fall prey to lotteries, casinos, drugs, alcohol, or any other number of things and you're right back at square one... give them more money.

It's a blackhole feel-good policy that ignores reality. It's better to put strong social safety nets in place. Buy the food and the clothes for them, maybe even establish a discretionary stippend. But don't just say to people here's 20K ... Good luck! Most people don't have a concept of budgeting... It's not going to work.

This is contrary to evidence. There are people who are poor and there are people who are addicts, but the extent to which they overlap is only because of the tendency of addiction to make you poor. The bulk of the poor are not poor because they piss their money away on drugs and casinos.

Moreover, giving people stuff instead of money doesn't help the addicts -- or anyone else -- because stuff is fungible like money, only less efficiently. You give an addict food and shelter and they'll sell the food and sublet the shelter and go blow the money on their addiction. Because the root of their problem isn't that they don't have enough food or housing or money, it's that they need to break their addiction or they will never hold onto those things.

Meanwhile giving out stuff instead of money only costs the taxpayer more for the same amount of benefit, because that inefficiency is universal. You give people money for clothes and they'll buy clothes with it, even if they already have clothes, because they can't spend it on anything else. But that's just a waste of the taxpayer's money, when it could otherwise have gone to something they actually needed.

Imagine, if Google returned money then investor gets the money and now they try to invest it somewhere else, highly likely, these guys will go after companies which Google want to buy out. Why make it expensive for yourself to buy your threats?

The idea is that investment opportunities are shrinking, more money in market for limited opportunity is what creates inflation, makes it expensive for everyone to acquire new companies.

It's specially true for big tech companies where pension funds and other investment fund own large chunk of stock, if they get the money, they'll put it in venture capital or private equity which either increases cost to acquire technology (patents etc...) Or existing businesses.

I am talking specifically about inflation for purchasing future cash cows.

"... when we look at CAPEX and R&D as a percentage of revenue ... over the past 25 years, we see that the overall investment intensity of S&P 500 firms, while quite volatile on a year-to-year basis, has been rising over the past decade, and is now near peak levels not seen since the late 1990s."

If you had $25B to start a company what idea would you tackle?

It never seems to work, and it never seems to work for the reasons outlined in The Innovator's Dilemma. Big companies are held hostage by their customers. A new company needs to a.) find new customers b.) be hungry and c.) have total freedom to configure the market around oneself. None of these exist within the cushy environment of a big company - a.) is contradictory with maintaining Google's brand image, b.) is contradictory with continuing to pay the people involved in these efforts, and c.) is contradictory with Google getting first dibs on the spoils of these efforts.

What's wrong with that ?

There are only two YC companies that have gone public and both of those are still losing money -- PagerDuty and Dropbox and as far as I know, none have reached profitability.

If Google/Alphabet does too many investments which fail shareholders will cry.

Medical. I would provide FDA approval process funding and indemnification for medical devices.

Medical is rife with areas that could be disrupted by startups. The blocking limitation is that you can't afford the funding to get clearance for your product.

While I have lots of beef with the FDA and could easily write encyclopedic tomes on the subject, there is practically no other agency anywhere that actually makes sure before the fact that drugs or devices are actually better than nothing and actually fit for purpose.

The biggest problem is that the FDA could move much faster if they had a way to do detailed monitoring on things after approval. Alas, there is no incentive or system to handle that.

Also, I will be presumably able to play it on mobile, TV, and any laptop I have (I actually played it on a chromebook during the beta) which is super convenient.

Investors want companies to invest where it makes competitive sense, in the amount that makes competitive sense, and return a dividend (or do buybacks) for all the cash beyond that.

Investors only invest for the dividend/buyback ultimately -- if it didn't exist, every stock would be valued $0.

I think it's perfectly clear to anyone that all of the tech Big 5 are plenty profitable enough to innovate plenty and also provide dividends/buybacks.

The criticism is perhaps valid for a company 1/100th the size of Google, or maybe even 1/10th... but certainly not current Google-size.

https://www.thebalance.com/why-dividend-stocks-outperform-no...

Also, is buying back stock really any different than a dividend? I would say that it is, but only in the sense that most of that buy back money gets transferred to employees in stock grants.

Power-law distribution in stock-based compensation.

And when I say buy it also means invest internally in new technology.

And this has nothing to do with company's size.

I'm as cynical as they come, but I'm skeptical that all people at these levels are that driven by their compensation. They are ultra-wealthy, and forever will be; a few extra million here or there isn't anything compared to what they stand to lose in wealth and reputation in the face of negative public sentiment.

But I could be wrong.

All of your arguments make sense...except that we see people at these levels take actions to increase their compensation so frequently, even at the risk of their reputations.

I don't know about Pichai personally, nor can I explain WHY the mega-rich are so interested in getting richer when it can't possibly change their day-to-day or even long-term comfort, but there does seem to be a lot of evidence suggesting they are motivated by that.

Honest questions here, as my stock understanding is fairly limited: Why does a company care if it's "undervalued"? How does a buyback actually change that valuation? (doesn't the market cap remain the same after the purchase?)

one fantasy calculation i do a lot is google-profits / total-google-employees or apple-profits / total-apple-employees and you get something like half a million dollars a year (60 billion dollars of profit divided by 132,000 apple employees for example)

in the above scenario, work a few years at a company like google or apple and your a millionaire basically... what would happen to the economy if suddenly there was hundreds of thousands of millionaires? how many new businesses and ventures could be started? would it in the end be good or bad economy? what about the company if it only had a few billion of liquid assets on hand instead of hundreds? would it make a difference?

if you added say half the profits to employees and half the stock as well, they could become multi-millionaires even sooner.... maybe it’s just my bias, but i feel like if those employees were really empowered by their earnings they would be more entrepreneurial and start all kinds of new ventures

i guess this is just my crazy idea, but it’s something i feel strongly recently... it’s just weird to me to see such huge amounts of capital just sitting there (or being used in buybacks)

Anthony Levandowski then left for Uber and the rest is history.

I saw him on CNBC claiming that Google was unpatriotic for dropping the government project Maven (machine vision for millitary drones) and that Google was also a Chinese sympathizer - despite there being no evidence and also the fact that you can't even use Google in China. The same Google employees that revolted against and killed Maven also did so against project Dragonfly. Thiel is on the board at Facebook so this could be part of his strategy for stirring the pot.

https://www.axios.com/peter-thiel-says-fbi-cia-should-probe-...

People’s motive’s have nothing to do with whether or not what they are saying is true or false. They are either speaking truth or not. Motives can explain WHY they are saying something untrue. But not IF what they are saying is untrue.

You are saying that Thiel has a reason to lie. But you aren’t addressing whether or not he is actually lying. Instead of attacking what he said, you are attacking him.

I don't understand. Supposedly Thiel "claimed that Google was unpatriotic for dropping the government project Maven" - why are we talking about truthiness? How is this a provable statement?

If someone without his proposed motives had made the same statement, the statement wouldn’t be more or less true.

However Thiel has a vested interest in making Google look worse. They're a competitor.

He wants to say that Google is no longer innovating and then uses a thin excuse to validate his claim. And we're supposed to trust his reasoning. But all he's really done is back-fitted a reason to his conclusion. He wants to believe that Google is no longer innovating, so he picked something Google is already doing and claims that that is evidence.

The first step would be to define "innovation" in a way all relevant parties can agree upon. Then we need to agree on the things Google has done that would qualify as innovation. Then we can plot how much innovation they've done then compared to now.

What does Elon know that Google as a whole doesn't?

They have Waymo for self driving, Verily for health and biotech, remote connectivity with Loon, and many more. And let's not forget of X itself which is even more experimental and out there.

They also invest heavily in all sorts of research, such as multiple fusion projects, and competitions such as their 1m$ moon prize.

Even within Google itself, Deepmind is doing all sorts of great research. They have Duplex, Stadia, Soli, etc.

If anything, I think the issue is that they have too many things going on.

In fact, the easiest way to invest in StarLink is to buy Alphabet stock.

It's not what he knows per se, it's what he does, it's the source of his motivation for being and doing.

It's that invention and innovation is most often driven by individuals - whether acting together or in solitary - in pursuit of something that matters to them. You saw this throughout the industrial revolution. You saw it at Bell Labs and Xerox PARC. You saw it with regards to the individuals that pushed the Internet and tech universe forward, from Ted Hoff to Dennis Ritchie to Tim Berners Lee.

It wasn't a giant corporation and team of 100 people that created Doom and Quake. It was a tiny team of highly motivated people doing something that mattered to them. That same conceptual story frequently occurs throughout modern history.

Elon Musk desperately wanted (wants) to build Tesla and SpaceX. Steve Jobs cared about Apple as though he were maniacal about it, like it was his true love. Who at the very top of Alphabet/Google cares about anything they do there that much? I haven't seen any evidence that there is anyone at the top of their organization that fits that.

>We are excited about… Getting more ambitious things done. Taking the long-term view. Empowering great entrepreneurs and companies to flourish.

that they are into empowering the organisation rather than being into particular bits of tech like iPhones or rockets.