What business is Google really in? Of course, it’s in the search business; that’s why we go there. But it doesn’t profit from licensing its search. It is also in the service business, providing us with everything from email to document management to mapping to publishing tools to social networks to telephone directory assistance to video distribution. But it charges us for none of that. It is not in the stuff business, moving things or selling them (though it has not fully escaped the tyranny of matter; it buys a lot of atoms in the form of computers, and it has to spend a lot on charged atoms to power them). It is also not in the content business; apart from its collaborative, Wikipedia-like Knol, it doesn’t create or control original content but instead prefers to organise others’ (owning content would put Google in competition with the businesses whose content it exploits). Ultimately, Google is in the organisation and knowledge businesses. Google knows more about what we know and want to know and what we do with that than any other institution. But its profit doesn’t come from that either. Google’s profit comes from advertising, which it dominates because it is so good at search and has so many of us using its services and knows so much that it can target ads efficiently. Google knows what it is.
AOL thought it was in the content business, which is why Time Warner, a content company, made the disastrous mistake of combining with AOL. In reality, AOL was in the community business (its chats and forums were pioneering and popular, long before Facebook or MySpace) and the service business (“you’ve got mail” on AOL way before you’ve gotten it from Gmail). AOL didn’t ask the right question: What business are we really in?
Poor Yahoo thought it, too, was in the content business; that is why it hired a Hollywood studio exec, Terry Semel, to be its CEO. He tried to turn it into a digital movie studio. But Yahoo could have owned search as the pioneer in web directories; it handed that to Google. It could have owned search advertising as a pioneer there, too, but it ceded leadership in automated advertising as well to Google. What business is Yahoo really in? I think it never decided.
What business are you really in?
Many companies worry that they can’t make the transition to bits: analog to digital, physical to virtual, 1.0 to 2.0. Some are nearer than they think. Kodak is a classic case of a company said to be making the transition from atoms to bits—physical film to digital images, sales to service. If it had realised soon enough that it was in the image and memories business — if it hadn’t defined itself by the atoms it pushed and processed — it should have beaten Yahoo to the punch and bought the photo and community service Flickr. When I think of pictures today, the first brand that comes to my mind is Flickr. Others think of Google’s Picassa. I also think of my Nokia camera phone. Who now thinks of Kodak (or Polaroid, which stopped making instant film cameras in 2008)? No one.
Airlines are the ultimate atomic enterprises, moving our own molecules from place to place and burning lots more molecules in the process. But even airlines could be relationship and knowledge companies. Are cable companies pipe managers, or should they be hosts for our digital creations? Are doctors’ offices sickness companies or health companies? Are insurance companies arbitrageurs of risk or guarantors of safety? Are grocery stores stuff companies or knowledge factories? Are restaurants kitchens or communities? We’ll examine such upside-down views of these industries and more in the next section of this book.
You should be asking: Am I a knowledge company? A data company? A community company? A platform? A network? Where is your value and where is your revenue? Remember that they might not be in the same place; the money may come in through a side door.
It’s time for your identity crisis.