The One Mistake Google Keeps Making
(This post originally appeared on Forbes)
Google has brought us innovations- from search and maps to Gmail and collaboration services, that have literally changed our world. And great ideas keep coming from Google. Yet the company continues to make the same mistake. Over and over. I don’t mean the ones that result in product failures (and there have been quite a few over the years). I mean something a little more fundamental.
Take Google Glass. For those that haven’t seen it, it’s a pair of glasses that understands your verbal commands so that it can instantly perform tasks for you, like snapping a photo, taking a video, providing driving directions or searching a database. Glass is a great idea with great technology. It demonstrates the future power of the Internet of Things. There’s just one problem: no one is buying it.
And now there are driverless cars. After 700,000 miles of open road testing, Google last week introduced its “first real build” of its driverless car and it’s pretty amazing. Because of the company’s initiative “17 states including D.C. have considered legislation authorizing self-driving cars.” Driverless cars could have an enormous societal and legal impact, so much that even a personal injury lawyer admits that “the need for my services…will be reduced” because “the issue of lawsuits regarding the cars will, I think, be vastly overwhelmed by a huge reduction in collisions that result from the most common forms of human error. With human error crashes reduced by software that automatically stops or slows the car, the number of broken bodies and cars will be reduced. The number of deaths will be reduced. Your insurance premiums will be (theoretically) reduced.”
These cars are, for now, just prototypes. First builds. A way to show that the technology can and does work. A forward looking investment by a company who has plenty of excess cash to invest. A goldmine of patents and intellectual property rights on technologies that may someday be worth billions. But for now, Google is just making another mistake.
The mistake is the same as with Glass: it’s a product without customers. It’s Google assuming that someday someone will actually buy a driverless car. Not a hobbyist or an eccentric millionaire. But a customer who actually needs or desires a driverless car. Someone who, given the choice of spending $30K on a car that they fully control and can go anywhere they want at any speed they want – or another, likely more expensive buggy that will only travel on certain routes at slower speeds and with less options. Hmm, which car would you buy?
For driverless cars to work, to decrease congestion, increase safety, reduce lawsuits and lower our insurance premiums everyone would have to be driving one. Every road and car in the country would have to accommodate some sort of technology or sensor. The only way this would happen is if the government mandates the technology (similar to the government mandating rear view video cameras in cars starting in 2018). And for the driverless car system to truly work as desired, there would need to be more centralized control over our entire transportation system, from the roads and highways to the cars we’re allowed to use, the speed we’re allowed to travel and the places we’re allowed to go. This, in the very country where the majority of the population fights against government regulations, red tape and bureaucracy. Where people line up at movie theatres to see a two-star comedy about the hypothetical killing of a foreign leader just because it’s an exercise of their free speech. Where people complain about their high taxes and launch national movements against government controlled healthcare and are terrified at their continued loss privacy.
Google’s mistake, which it keeps making, is building great products that no one will soon buy.
But rest assured – Google knows this. They’re not looking for short term profits. They’re not even looking for profits in the next few years. The dreamers behind Google, like the dreamers at Tesla and Virgin Galactic are people who are looking decades ahead. They can do this because they already have profitable revenue streams or capital from other sources to allow themselves to invest in these dreams. Google, for example, spends about $10 billion per year on R&D which is a huge number – yet even after spending this much, the company will earn significantly more than $10 billion this year. They have so much money (about $62 billion in cash at the end of their last quarter) they will likely never run out of it. So even though Google is making the less grievous mistake of building products for customers that don’t exist, they’re not making the fatal mistake of betting the farm on it. And that’s the kind of fatal mistake many entrepreneurs with great ideas do make.
Hopefully, not you.