Carried Away

Google's Cash Registers Ringing

Heard from CEO Schmidt on the financial analysts' telephone conference, after Google announced profit for the third quarter of $380 million, a 600% increase over a year ago...

The space that we are in [ads] is a very, very, very big space that could offer these kinds of results... I mean opportunities... for years to come.

You could almost hear the cash registers ringing over at the Googleplex. :-)

Ebay Overpaying For VOIP

Ebay is getting into the Voice Over IP game with a purchase of Skype for $2.6 billion plus large performance incentives.  This seems to me to be a huge overpayment for getting into VOIP.

Even though Skype uses novel technology for making phone calls, there's no reason why Google or Yahoo! or any number of other companies could not provide equally good service for free or almost free through other methods.  Indeed, Google put its toe in the water through Google Talk for a paltry sum of money -- probably in the low single-digit millions of dollars.  Through modest investments, Google Talk could turn into a full-featured free or nearly free telephone provider.

Also, as I speculated before, Google Talk plus GoogleNet will mean worldwide free wireless phone calls for something south of $10 billion invested. :-)

Hats Off to Google, Inc.

Why is Google doing so well?  The question is begged, when a small company like Google has profits of $369 million in only one quarter.  That's over $100,000 profit for each employee in only three months and is on track for a Return on Investment of at least 50%.  Google has net profit margins of about 30%, which is much better than the monopolist Microsoft's 22% net profit margins.

The answer to the question is really simple and is two-fold.  First, of the 140 or so hits that I received in the last 24 hours, 92 were new readers referred from Google, or 2/3rds of all of my traffic.  In comparison, Yahoo referred 6 new readers and AOL referred 2 new readers.  In other words, Google has huge amounts of traffic and is crushing its competitors.

Second, it has found a way to turn that traffic into revenue.  While Google doesn't make any money by referring people to Carried Away, it makes a whole lot of money by selling targeted ads that complement referrals to Carried Away.

I see little to stand in the way of jaw-dropping growth for Google for a while.  The worldwide advertising market is gigantic and it would be difficult to accuse Google of being a monopoly, even if Google were to mushroom in size.  Compare to Microsoft as an enterprise resting on sales in the software market, which is a market a whole lot smaller than advertising.  It's clear that even Microsoft is at a rather large disadvantage, if it were to try to compete with Google.

My hat is off to Google for a more than fantastic quarter.  Google is a jewel of American entrepreneurialism.

Google Space

In this month's GQ, there's an article giving some background of the startup of Google.  Some of you may know my respect for Sergey Brin and Larry Page, the founders of Google, for using the rational and ethical Dutch auction process to bring Google public.  Also, they have given more than one nod to Warren Buffett, a student of Benjamin Graham, a hero of mine.  But my eye was caught by a passing mention of the Google founders' interest in commercial space launch.

[Eric Schmidt] found himself frequently occupied with grounding Larry and Sergey’s flights of fancy. There was the time the boys suggested having Google enter the business of low-cost space launchings. And the time Larry reportedly tried to ban telephones from a new Google office building.

I don't particularly like the way this is mentioned by the writer -- a "flight of fancy" rather than merely a difficult thing to do.   Have we lost all imagination in this country for working to set the old order on its head?  But of course I can see where space launch is well outside the core business of Google. ;-)

This gives us another picture on Larry Page's recently-announced involvement in the X-Prize Foundation, but also it demonstrates that there is something of a critical mass of serious independent iconoclasts interested in the problem of extreme U.S. launch costs.  It also heartens me to see this group skewing to my generation of young 30-something Gen X'ers without direct memory of the Apollo Program.  The money that this group potentially brings to the table is important, but I find the fact that these folks didn't earn the bulk of their money from working as a contractor for the government to be of special importance.  (NB:  As I recall, Brin's mother works at the Goddard Modeling and Assimilation Office here in the D.C. area.)

My mom might be interested in knowing that both Page and Brin went to Montessori schools.

First Wikipedia Article

Today, I authored my first Wikipedia article.  I contributed the initial article for SpaceX.  Please check it out and edit it to reflect your knowledge of the company.  I also edited the Armadillo Aerospace entry slightly to reflect recent information and added a lot of information to the Bigelow Aerospace entry.

Wikipedia is a free and open source online encyclopedia that can be edited by anyone at anytime.  I have used Wikipedia a lot in the past and have found it to be a very helpful and balanced reference.  However, it is light in some areas, such as information on space launch vehicles, so I decided to start contributing.