Google Just Isn’t Very Good

I was reminded again today of the number of smart people that have been swallowed up by Google. Google seems to have hired everyone in San Jose, according to Indeed.com’s new job numbers. They have offices in New York, and I hear they are opening new offices in Philadelphia and Boston. They seem to be willing to acquire entire companies just to get their employees.

The big question is, what are they all doing? The stock market seems to think that they are secretly working on The Next Big Thing. Based on Google stock price, investors expect that any day now we will see a beta of cancer.google.com. “Just click here and our AJAX-enabled Web 2.0 service will cure your cancer.” That isn’t too far from the truth though. Google seems to be adopting a similar model to big pharma. They are doing drug discovery. But what they are trying to discover is the next big idea.

However, much like big pharma, they are failing. A large number of researchers packed into a company, with too many PhDs, is unable to justify it’s cost. Sure, Google will produce neat new things. They’ve produced several. But when you consider that they employ thousands of people, several good ideas just isn’t cutting it. But much like big pharma, Google has enough money to decide that next year they need 30% more innovation, and hire 30% more PhDs. Of course, that isn’t going to work. Each new good idea is going to cost Google more and more money.

Most good drugs in the pharmaceutical industry come from startups. A biotech startup gets together a few good people who believe in an idea, does the preliminary implementation, and gets it through a few rounds of trials to show that it works. If it does work, a big company comes in, buys the idea, and applies their knowledge of scalability and marketing to finish the idea.

That is exactly what Yahoo is doing with Web 2.0 companies. They are letting startups be the proving ground for new ideas, letting them put the ideas through human trials, and then buying up the good ones. And since there is no FDA driving up costs, the companies (and their ideas) come cheap. Order of $10 million a pop. For $10 million, how many PhD-years can Google buy? Not enough.