If the giants learn how to dance, startups have less of an advantage and may stumble.

Google is hot; Apple is not. Ladies and gentlemen, we’ve entered bizarro world

ON JUNE 5, 2013


Okay, seriously, how the fuck did Larry Page pull this off?

Google should completely be sucking right now.

In the history of the Internet, the “hot” publicly traded consumer company has about four years or so on top. See: Netscape, eBay, Yahoo, etc. Amazon was always up and down, ditto Facebook so far. But somehow Google just won’t become irrelevant. It stubbornly refuses with its surging stock price and ambitious change-the-world gambits like Google Fiber and Google Glass that just can’t help getting everyone excited.It’s even managed to read all of our emails and show ads against them without seeming like a total creep. A new poll by Washington Post-ABC News says that Google beats out Apple and Facebook when it comes to consumer sentiment. Eighty-five percent of American adults have a “favorable” view of Google compared to 72 percent for Apple and only 60 percent for Facebook. Apple dropped significantly with users under the age of 30 over the last year.

Before last year, it looked like Google was sliding. It had plain missed social and was mea culpa-ing all over the place about it. The stock was well off its highs, as everyone anticipated Facebook going public and grabbing the spotlight, at least when it came to investor and press enthusiasm. In fact, Facebook putting off its IPO for so long had inadvertently helped Google. There were only so many large cap, high growth stocks to invest in. In the Valley Google was looking dusty as well. TechCrunch well chronicled the outrageous cash bonuses the company was having to pay to keep engineers from defecting. Never exactly a sign of momentum. Word leaked that Page was having some serious Zuckerberg-envy. All signs pointed to Google succumbing to the natural cycle of Silicon Valley life.

Eric Schmidt seemed to know it. Two years ago, as he did the opening night fireside chat at D, he seemed melancholy and even a little defeated by missing social. My, how quickly the old world order can be restored.

At this year’s D, Google was hands down the hot company, with Glass referenced in every keynote and several Glassholes in attendance. The opening night Q&A was Apple’s Tim Cook, and the room wasn’t even full. Cook was in a position no one could have expected two years ago. He spent the entire fireside chat on the defensive. He implied that people’s expectations that innovation had to equal creating an entirely new category had set almost an unsustainable and unfair standard for a company like Apple. Of course, Apple is the company that helped set that expectation. But it seems Google is outperforming at the game of getting people excited.

Cook’s dismissive commentary on Google Glass, that it wasn’t fashionable and was too intrusive and only a niche audience would want it, brought to mind Steve Ballmer’s original dismissiveness of the iPhone. Of course, Cook could be right. Google Glass definitely didn’t look anything you’d call cool in the wild. But the defensive posture for a company that seemed like it was incapable of doing anything wrong a few years ago was stunning.

It couldn’t have felt good. The cherry on top came after his keynote as the crowd wound down the resort steps to dinner. Security insisted on Cook having a badge to get through — much to a horrified Walt and Kara. Okay, so maybe they would have stopped anyone not wearing a badge. But it was also just that kind of night for Cook.

Part of the issue, of course, is that Apple has been so dominant of late that it’s reformed the idea of what a publicly traded tech company can be and how it can operate. Ditto, Amazon. And oddly enough ditto, Google. Kara asked Cook if part of the problem ailing Apple was that it finally had “competent rivals,” and he said the company had always had them, noting that back in the day, Dell was thought of as a top company; it just hasn’t stood the test of time.

Okay, true. And yet, it’s hard to imagine Amazon and Google going the way of Dell. Dell excelled at execution and efficiency. Right now Google is excelling with ballsy experiments most publicly traded companies would never attempt. As Google board member John Doerr said at our last PandoMonthly, when he brings up an idea to Page, Page almost always replies “John, you aren’t thinking big enough.” Google is aggressively working at reinventing what it does long before its core business has declined. Very few publicly traded CEOs do that. Even Apple was on the ropes before it came roaring back.

Even with Apple’s wobbles these three companies have ushered in a new era of what being a public company can be. And that’s important in a Valley that’s become disenchanted with going public. For all the bad of going public, you can have a level of impact and create more jobs and more wealth than a tiny startup. The key is not succumbing to all the negatives of being a publicly traded company like red tape, complacency, and the innovator’s dilemma. (Hi, Yahoo.)

Investors in the Valley have started to notice. In the last few weeks, I’ve had several conversations with investors who’ve worried that this trend could make starting the next generation of startups actually harder. They’ve had the benefit of dancing amid the plodding feet of stumbling giants drunk on a false feeling of invincibility for decades. If the giants learn how to dance, startups have less of an advantage and may stumble.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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