BEST OF THE WEB: How Google plans to reload its venture capital arm
Wednesday, April 25, 2012/
The past few years have been huge for venture capital, with some of the biggest tech companies in the world delivering returns some firms had never dreamed of. But Google isn’t happy with the way things are going.
Bill Maris, who heads up the company’s Google Ventures team, laments to FastCompany that he’s trying to do something “completely different… not because it’s different, but because we’re looking for a different outcome”.
So what is that outcome?
As Maris points out, despite a few massive deals, venture capital hasn’t been performing very well over the past 10 years with a 2.6% interest rate for investors, according to research from Cambridge Associates.
There’s a bigger problem. Google Ventures lacks the clout of other firms such as Andreessen Horowitz or Sequoia Capital. And Maris knows it.
“If I’m an entrepreneur and I have a term sheet from Sequoia and Kleiner, that’s the safe choice. Google Ventures is the brave choice.”
“We’re in the process of rethinking everything, from top to bottom, so that over time, Google Ventures becomes the safe choice.”
Google’s been given more money from Google Ventures to invest – $US200 million in 2011 – and more than 70 companies have been given investments. In fact, the department is so active it’s investing in at least one company every week.
The piece delves into some of the more successful companies that have received funding from Google Ventures, and just how Maris plans to raise the company’s prominence. It’s building a new office, a larger lecture auditorium, and as Maris points out, financial returns are improving.
“We have already generated tens of millions of dollars of profit for Google,” Maris says. “That’s almost unheard of in the venture industry for a firm our age.”
Google has grown to become a company of gigantic proportions, and has been criticised for losing the feel of a start-up. Whether it can put that energy into other companies – and do it successfully – will be a huge challenge.
The “don’t be evil” problem
Google is famous for its “don’t be evil” motto, but it’s gotten the company into trouble over the last few years. With all of the privacy issues it’s faced – including the most recent case involving a $25,000 fine from the FCC – the motto may be losing its clout.
But it isn’t just Google. Massive consumer-focused tech companies including Facebook and Apple have given shoppers the impression they’re to be trusted, but time and time again, privacy violations occur.
As this piece in the New York Times points out, maybe it’s time to change the motto.
“Don’t be evil” also represents the impossibility of a more nuanced social code, a problem faced by many internet companies. Nearly every tech company of significance, it seems, is building technologies that are producing an entirely new kind of culture.”
“eBay, in theory, can turn anyone on the planet into a merchant. Amazon Web Services gives everyone a cheap supercomputer. Twitter and Facebook let you publish to millions. And tools like Google Translate allow us to transcend old language barriers.”
There’s nothing wrong with building a culture, but these tech companies are so large they are the culture. They control they internet, and as the piece points out, these businesses are no longer working on behalf of “the little guy” anymore.
“We need something more than, ‘We’re good guys, trust us’,” Hoffman said.
“There should be an industry group that discusses overall issues around data and privacy with political actors. Something that convinces them that you are good guys, but gives them a place to swoop in.”
The fight over Apple’s new data centre
Apple’s building a new data centre in North Carolina, but there’s a problem – Greenpeace isn’t a fan. In fact, the two companies have been disputing publically over the data centre, arguing over just how much clean tech is being used to power the centre.
As this piece in The Atlantic details, the dispute has gotten complicated.
“On Monday, Greenpeace released a report calling Apple’s data centre a power-hungry threat to the environment, but Apple responded by saying Greenpeace got its facts wrong. The key sticking point is a simple question: How much energy is Apple’s data centre burning? Greenpeace says 100 megawatts, while Apple says it’s only 20 megawatts.”
It’s an interesting piece on the dispute, but also shows how important the debate over clean energy is becoming – especially as data centres require more and more power.
Management lessons from Steve Jobs
It’s been a big news story this week, but it’s still deserving of a read. American journalist Brent Schlender revealed he had interviewed Apple co-founder Steve Jobs during the 1990s – after he had been kicked out of the company, but yet to return.
The multiple interviews reveal some nuggets of gold from Jobs on managing people, why Apple was failing at the time, and his challenges in moving from a technology consumer company to a Hollywood film studio, Pixar.
But the more interesting lesson comes from Schlender’s piece at FastCompany about how Jobs changed during the 1990s. After having his position taken away, he started a decade of introspection that was necessary to develop the skills he needed to drive Apple’s runaway growth in the 2000s.
“The barefoot hippie who dropped out of Reed College to hitchhike around India, is in truth the equivalent of Steve Jobs attending business school. In other words, he grew. By leaps and bounds. In every aspect of his being.”
“With a little massaging, this middle act could even be the plotline for a Pixar movie. It certainly fits the simple mantra John Lasseter ascribes to all the studio’s successes, from Toy Story to Up: ‘It’s gotta be about how the main character changes for the better’.”
Jobs was a fascinating character, and this was arguably the most interesting period of his life – and it carries plenty of lessons for entrepreneurs.