A long time ago (well, OK, two weeks ago) Fred Wilson wrote out a list of things he was hopeful for in 2009. One of those things was that Google would start "rationalizing their business":
Google can do almost anything they put their mind to because they have the engineering resources, the infrastructure, the balance sheet, and the huge revenue stream to support it. But that doesn't mean they should try to do everything. As a shareholder, as a VC active in the internet market sector, and as a fan of the company, I think Google needs to "rationalize" their business in 2009. I don't know how much cost they could cut if they really tried to get serious about a Jack Welch/GE style business unit analysis, but I know it would be significant. I wish they'd pick five to ten businesses they want to be number one or two in and invest heavily in them and forget about everything else.
This morning the news is out that Google is doing exactly that by scaling back or outright closing Google Video, Notebook, Catalog Search, Jaiku, and Dodgeball. The company is also laying off 100 recruiters and consolidating its engineering offices, including the one in Austin which opened to much fanfare just three months ago.
All of this might presage disappointing Q4 earnings (which will be announced next week). But to me as a GOOG shareholder, it all comes as good news. Google spends a ton of money on projects that are neither revenue-generating nor obviously strategic. Shortly after he joined Google as the company's new CFO Patrick Pichette said that his top priorities include "pushing to make sure all the resources are used efficiently, that you feed the winners, starve the losers".
It looks like Google is doing just that, which gives me even more confidence that they'll continue to succeed, even in the lean years.
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