We usually believe that as a very successful young company always with two key points: A particular target which is necessary to subvert the monopoly in the market; a cool strategy with imaginative and subversive.
Normally, the second one is more important. In Coca-Cola history, the most dangerous competitor is 7-Up rather than Pepsi-Cola, because the crucial reason is 7-Up without caffeine; another case, Nokia the most subversive competitor is MediaTek rather than Motorola or Samsung, (I guess Nokia want to know how can compete with a company who does not produce the mobile phone all the time.) In fact, Coca-Cola can’t without mysterious 7X and Nokia will not give up producing mobile phone and diverted to make chips. This pattern is named “Unrestricted War” by military, which means the army through the imaginative strategies and tactics to attack the weakest weakness of the opponent, and it is not overcome the weaknesses, or the weakness is their greatest survival conditions.
Why the most of new businesses failed?
In my opinion, they do not meet the above two key points, That means they never used any creative and subversive strategy, it seems to be a reckless commander ordered the young soldiers to try to forcibly attack a fortified castle, Of course, they paid a lot of money and a lot of time and confidence.
What the concept of disruptive strategy?
(1) Sorry, I don’t know; or,
(2) We seem to know, but will not be easy here to tell you. As you know, since ancient times, such as treasure map, Mystery key, you must pay if you want to get it.
Google Business model:
As we know, Advertising revenues made up 97% of Google total revenues for the three and six months ended June 30, 2008 and 2009. Google derive most of additional revenues from offering internet ad serving and management services to advertisers and ad agencies and the license of our enterprise products, search solutions, and web search technology.
On the other hand, “Google Network members” is another important strategy of advertising revenues. The most of Google AdWords customers pay them on a cost-per-click basis. Google supply AdWords on a cost-per-impression basis that enables advertisers to pay them based on the number of times customer’s ads appear on Google web sites and Google Network members’ web sites as specified by the advertiser.
Google Financial Analysis:
After thoroughly analyzing the revenue model, we progressed to the income statement. The key formula for the income statement is revenues (sales) – expenses = net income (profit).
First, we analyzed Google’s profitability. There has been a consistent increase in net income.
Real data, as of June 30, 2009
The company is growing exponentially. One factor is its increase in total revenue from $5,367.21 million to $5,522.90 million during last year. Also, it has been able to reduce the portion of sales devoted to cost of goods sold (variable costs) from $2,147.57 million to $2,107.90 million. Google is thus exhibiting strong economies of scale and improvement of the business process.
USA Search Market Share, April 2009
As you see, Google holds 64% market share in USA market. The second one yahoo just holds 20% market share, which is only about one-third of Google.
We are facing a question, what is Google’s greatest (monopoly) advantage? It is software easy to use? Search Engines technical is not very difficult, I have used ASK, Yahoo, Bing etc, they seem similar and greatest advantage is large and loyal user. Now, please consider a subversive problem, how to put the large users into its greatest burden or negative assets? Maybe an answers: when Google have to pay for the each user.
From here, I will talk to my crazy idea. How to subvert Google?
(You can be regarded as a good idea or a joke. Just a Brainstorming)
I envisaged a rich man Mr.Dollar with about 700 million USD, and he would like to donate one of the 600 million dollars and cooperate with me, he hope I can replace Google through some creative and subversive strategies.
I made a complete plan that is I create a free Search Engine Kookle which is very easy to be found, because so many open code Search Engine on Internet. Mr.Dollar launched a “New year, New Engine” activity, the basic elements as follows:
(1) Everyone who has a iGoogle account can get a free iKookle account; (2) If a normal user of search engine MEAN ONLINE TIME more a period of time, he/she can get $100/y in cash from Kookle.inc.
(3) Every advertiser who is using Google advertising allowed a free use Kookle’s service.
(4) Every website that has an account of Google Network members can get a free Kookle Network members account and $1000 Bonus in cash.
Ok, let’s imagine what would happen?
(1) (Usually the least possibility) For Kookle’s activities, Google without any reaction. Under the temptation of money, about 20 million Google users registered Kookle and maintain regular line, and about 1 million Google Network members join Kookle’s Network, and about 20 million Google advertisers joined Kookle. Mr.Dollar spent about 300 million USD one year. In this regard, the capital market responded, Google’s market value of about fallen by 10%, that is about 49 billion USD. At the same time, depend on about 20 million same time active online user and online active user, Kookle submitted the listing application on HKEX / NASDAQ / NYSE, and announce will continue to provide cash to meet the conditions of the account after the financing. Base on the Google size, Kookle plan project financing about 60 billion USD;
(2) (Most likely) Google have made a strong reaction, that is playing the national card which are “protection of national Search Engine industry” , “American use own Search Engine ” and “I love USA, with my Google” and so on. Google promised to pay $100 to each Google’s user in cash like Kookle’s Company. So, Google spent about 60 billion USD one year. The capital market was also made a dramatic response to this, the stock plummeted, the same market value has fallen by about 200 billion;
(3) (the most Crazy) Mr.Dollar come from hedge funds, he short selling of 70 million (or more) about Google stock (local stock short-selling) on the NASDAQ stock market when he is introducing Kookle Search Engine, so even though he missed at the Kookle and comprehensively lose 20 billion, as long as the Google’s stock plummeted, we would still be able to earn 5 billion! Osama bin Laden short-selling a large number of the U.S. stock market before the “911” occurrence, so he earned billions of dollars after the calamity;
(4) (Our expectations), for such a situation on the market, Google’s CEO Eric Schmidt connected with me and made a friendly consultation with me and decided to purchase my Kookle with 10 billion USD. Google thank all of users (Prevent similar incidents) and make a promise that is all Fee-based service free for users in one year.
Base on 300 million USD (Compared with the Google’s market value this is not a very large number) and a subversive idea, Mr.Dollar and I got the positive results:
(1)A market value of 60 billion publicly traded company, or
(2)About 5 billion USD, or
(3)100 million USD, by the way, Mr.Dollar planned to donate his remains later received billions of dollars to the “United Nations Children’s Fund “, he thinks all the monopolies (especially those unreasonable) have an obligation to contribute to the people.
Do you have another more subversive and imaginative creativity? I think so. Welcome to join our brainstorming, basically, you just need a little modification for this play, which can be applied to any company who rely on a large number of loyal user monopoly giants.
Garry.R Oct,2009 HongKong