Is Google in Decline / Facebook on the Rise?

An answer I wrote for Quora recently:

Google is not in an absolute decline, but it is in a relative decline. Google is the USA and Facebook is China. Our GDP can grow indefinitely, but at some point, we will be outpaced. That’s what’s happening with Google now. They are losing key people and being poached by Facebook and Twitter. Look at Google’s recent search results. Have you noticed how spam filled it is? Have you noticed the bad decision making to implement a lot of flashy, but meaningless services? This is the kind of stuff that companies do when they lose talent. Google used to be all about simple interfaces that provided exceptional value. Now they rely on gimmicks like page preview and other "services" that infuriate people without the ability to shut them off.

The SEOs have finally cracked the algorithm. Search results return nothing but spam. Even date searches don’t work properly. Pagerank is in need of a serious overhaul. But really, what can you do when you’re suffering from brain drain?

Mr. Mallin mentioned a host of reasons why Google and Facebook don’t compete. True, they provide different, non-competing products and services. Yes, it does appear that Facebook is but a one trick pony in the face of Google’s dozens. Yet, the problem with that analysis is that it doesn’t see the reality for what it truly is.

What is the reality?

First, ask yourself what kind of business McDonald’s runs. Hint: they are not in the restaurant business. At least, that is a grossly inadequate description of what they really do. (Google for the answer) Therefore, the same applies to Google and Facebook. Google is not a search company, or an email provider or a potential cloud computing company. Facebook is not a social network. At the very least, these descriptions miss the fundamental essence of what the companies are.

They are both truly nothing more than advertising companies. PERIOD.

The difference between them? Google is the world’s biggest advertising company in the world.
Facebook is potentially the best advertising company in the world.

All of the services that these companies provide are a red herring with regard to what they really do: aggregate data to sell you stuff. That’s not entirely a bad thing, either. We’re overdue for a renaissance in the advertising model. The reason we hate commercials is because they are either 1. not relevant to our interests or 2. not entertaining. The future promises to eliminate both of these problems. When a company knows that I’m a 30 something male with a post graduate degree, I am certain not to ever see a tampon advertisement. I consider that a good thing. Imagine if every advertisement you saw automatically lined up to your interests.

What if the advertisers knew what you might like before you even search for it?
Three things should have clicked in your head.

1. Google would no longer be as relevant an advertiser.
2. We already use this technology (e.g., Amazon recommendations) and
3. The recommendations will be based on your friends’ opinions.

This is the future that Facebook promises. This is the future that is simultaneously exciting and terrifying.

Google’s Pagerank was done by an algorithm made by a couple of geniuses from Stanford. But that’s the problem with pesky algorithms. They can eventually be outsmarted. Facebook aggregates data based on your friends and their preferences. Facebook, in essence, is one gigantic focus group made up entirely of people within your demographic: your closest friends. How can Google outsmart your best friend’s recommendations?

So back to the original question: is Google really in a decline? In absolute terms, no. They provide so many services where they are the best and have no competition: Gmail, Google Earth, etc. In relative terms, however, I’m not sure that they haven’t already lost the war.

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January 11, 2011 at 5:21 pm Leave a comment

We Need Highly Skilled Immigrants NOW!

I don’t have an opinion on the DREAM Act.  At least not one that I care to share publicly.  However, I do have an opinion on our current immigration policies that affect highly skilled individuals from working in the United States.  That is, our current government policies disallow the best minds around the world to come and live and work and be Americans. 

First, we need to stop comparing our manufacturing capabilities to China.  When a Chinese worker earns $1 per hour and the US federal minimum wage is $7, there is no competition.  No amount of legislating, embargoes, taxes, subsidies, will do anything  to equal the playing field in competition.  If your job was in mindless assembly work that did not require more than a high school education, your job is gone and it is never, ever coming back.  Because as soon as China’s GDP per capita rises, manufacturers will move to the next source of cheap labor.  Yesterday’s boogeyman was Japan, today it’s China, tomorrow it’s Indonesia.

Trying to be competitive in low skilled manufacturing is a race to the bottom.  It’s like an adult trying to compete against children at childrens’ games.  Adults can do it, but why?  It’s not worth their time.  The adults need to focus on the value they can provide as adults.  That’s not a slam against China.  They are in their infancy and we are an old capitalist power. 

But we "don’t make anything anymore!"  Right, manufacturing is the backbone of industry and a sort of infrastructure to itself.  I get that.  But if Japan and Korea are any indication of manufacturing powers that have moved on to bigger and better things, I don’t see why the United States needs to be so obsessed about it.  What America needs now is not more muscle.  We need more brains.

As of right now, December 2010, there is talk of an oversupply of venture capitalists and/or angel investors.  The theory is that we have a glut of investors that are so rich that they put bits of money into every startup company they see.  The idea is to get in early on the action.  Why wait for an IPO, right?  That’s so 1999.  And because of all the investors putting their money into projects that they barely have any idea about, the actual resources, the actual coders, the engineers, the brains, are in short supply.  Investor money is pulling resources in the wrong direction and creating brain drain.  And while that theory is very eye opening, if true, it points the finger at the wrong person. 

A glut of investor money is not the problem.  Rather, it is a blessing that we can mobilize massive amounts of capital ready to fund a brilliant idea at a moment’s notice.  It’s the lack of brain power that is the problem to make use of all that investor money.  And what causes the lack of brain power?  It’s the immigration policy, stupid.   

1.  Investors are the only ones in America that have savings.  Ergo, why would we want them to stop spending?    
2.  We already attract the best brains around the world.  They are dying to live here.  Our government just doesn’t let them in. 
3.  Our geography is our huge competitive advantage.  There is a finite amount of physical land in the world.  The U.S. has awesome land that other people would really like to live on. 

While the immigration debate is extremely controversial, there is one aspect of it that should not be.  We need to attract the best minds and have them live in America and be Americans.  Those minds, if not allowed to flourish here, will be the revenue generator for some other country.  And I, as a strong believer in American Exceptionalism, find that appalling. 

December 27, 2010 at 3:41 pm Leave a comment

Thoughts on Wikileaks

This just in:  Bank of America is refusing to process payments to Wikileaks.  It’s not surprising since Wikileaks has been threatening to embarrass BofA by releasing the juicy parts of several gigabytes of data obtained from a BofA executive’s hard drive.  Since the whistleblower website relies on donations, I wonder how this will affect their operations.  Mastercard, Visa and Paypal had all decided not to process payments to Wikileaks prior to the BofA announcement.  Well, those are pretty much all of the major players for sending money electronically around the world.  I wonder if Wikileaks can keep running as an organization without resorting to selling tubesocks on the street corner for cash.  Perhaps Wikileaks can just set up agents to collect donations on its behalf and it won’t end up being a big deal after all. 

There have been allegations of impropriety on the part of the U.S. government in strong arming these companies to stop payments to W.  If that is indeed true, then that does seem Orwellian.  To complicate matters, Daniel Ellsberg has been a vocal supporter of Julian Assange, drawing parallels to the circumstances surrounding the Pentagon Papers. 

That said, why is Assange only interested in targeting the United States?  (Yes, let’s set aside the minor exceptions for now)  Speaking out against the United States made sense in the year 2000, when it was the clear hegemonic power.  In 2010, not so much. 

Russia is no longer committed to becoming a democracy. 
China tells the U.S. to piss off regarding the former’s currency manipulation. 
North Korea just showed off a technologically advanced nuclear reactor; and we suspect there are several others.  
Afghanistan is bleeding America dry.  

I don’t have any problem with criticizing government.  In fact, it’s not only part of our rights as citizens, but it is our patriotic duty to do so.   That said, couldn’t we start in the order of egregiousness?  Specifically, how about we start with the government that doesn’t let Liu Xiaobo pick up his Nobel Peace Prize for starters? 

If Julian Assange is committed in bringing down the United States, there’s no need to worry.  Most economists predict that China will surpass the U.S. in aggregate GDP at some point in the future, if not within 30 years.  What’s the rush? 

December 18, 2010 at 3:31 pm Leave a comment


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