Tag Archives: Google

Some Thoughts on Investing from My Recent Interview

In the first few years of this blog I posted occasionally, but still much more than the last few years, on investing and economics. Now I mainly post on those topics on the Curious Cat Investing and Economics blog (see how the name and that practice are in sync with each other?).

I was recently interviewed about investing strategies and thoughts and decided to share that with the readers of this blog. Some excerpts from the interview:

I have maintained a portfolio that I call the sleep well portfolio for 10 years (started April 2005). I hardly have any turnover (under 2% annually I think) and hold stocks I would be comfortable locking in a vault for 10 years. The largest holding there is Apple, followed by Google; I also still really like Google as a long term investment. The stocks in the portfolio for the entire period are: Google, Amazon, Toyota, Intel, Pfizer…

We got out of the “Too Big to Fail” crisis, but have not addressed the core problems – and likely have made them much worse. We didn’t take the opportunity to address the financial system risks created by the actions of “Too Big to Fail” banks. And it seems to me we have left the central banks in a very vulnerable position. They have already played strategies that previously seemed impossible due to the position they were placed in, and if it happens again, what are they going to be able to do? I think the risk of massive economic failure is large enough to consider in an investment portfolio.

How would you suggest an investor guard against the potential for a massive economic disaster?

John Hunter: My main thoughts on that are to greatly value companies that are likely to weather economic calamity greater than any since the great depression. Having tons of cash obviously helps (Apple, Google…). Having a business model that puts a company in a position to make money (even if it is a lot less than they are making today) if the economy does extremely poorly, is also good (Apple, Google, AbbVie…).

It is possible for the economy to be hit so hard Apple, Google, etc. lose money. But if that happens, I believe huge numbers of other companies are going to be out of business, and the economy will be in shambles…

The sleep well portfolio has beaten the S&P 500 by about 220 basis points (on an annual rate of return basis) (see details on how marketocracy calculates returns – they reduce returns by 200 basis points to simulate investment adviser fees). The interview includes much more details as well as links to posts on my investing blog going into more detail.
Continue reading

Out of Touch Executives Damage Companies: Go to the Gemba

When your customer service organization is universally recognized as horrible adding sales requirements to customer service representatives jobs is a really bad practice. Sadly it isn’t at all surprising to learn of management doing just that at our largest companies. Within a system where cash and corruption buys freedom from market forces (see below for more details) such practices can continue.

Such customer hostile practices shouldn’t continue. They shouldn’t be allowed to continue. And even though the company’s cash has bought politically corrupt parties to allow such a system to survive it isn’t even in the selfish interest of the business. They could use the cover provided by bought-and-paid-for-politicians-and-parties to maintain monopolistic pricing (which is wrong ethically and economically but could be seen as in the self interest of a business). But still provide good service (even while you take monopolistic profits allowed with corrupt, though legal, cash payments).

Of course, Adam Smith knew the likely path to corruption of markets made up of people; and he specifically cautioned that a capitalist economic system has to prevent powerful entities efforts to distort markets for individual gain (perfect competition = capitalism, non-competitive markets = what business want, as Adam Smith well knew, but this is precisely not capitalism). Sadly few people taking about the free-market or capitalism understand that their support of cronyist policies are not capitalist (I suppose some people mouthing those words are just preaching false ideas to people known to be idiots, but really most don’t seem to understand capitalism).

Anyway, this class of protected businesses supported by a corrupt political and government (regulators in government) sector is a significant part of the system that allows the customer hostility of those politically connected large businesses to get away with a business model based on customer hostility, but wasn’t really what I meant to write about here.

Comcast executives have to know they are running a company either rated the worst company in the country or close to it year after year. They, along with several others in their industry, as well as the cell phone service providers and too-big-to-fail-banks routinely are the leaders of companies most reviled by customers. Airlines are also up their for treating customer horribly but they are a bit different than the others (political corruption is much less of the reason for their ability to abuse customers for decades than is for the others listed above).

Leaked Comcast employee metrics show what we figured: Sell or perish [Updated]
Training materials explicitly require a “sell” phase, even in support calls.

The company’s choice to transform what is traditionally a non-revenue-generating area—customer service—into a revenue-generating one is playing out with almost hilariously Kafkaesque consequences. It is the nature of large corporations like Comcast to have dozens of layers of management through which leadership instructions and directives are filtered. The bigger the company, the more likely that members of senior leadership (like Tom Karinshak) typically make broad policy and leave specific implementations to lower levels.

Here, what was likely praised in the boardroom as an “innovative” strategy to raise revenue is instead doing much to alienate customers and employees alike. Karinshak’s assurances that he doesn’t want employees to feel pressured to sell in spite of hard evidence that Comcast demands just that are hard to square with the content of the document.

So what is going on here? Most people can easily see this is likely a horrible practice. It is a practice that a well run company theoretically could pull off without harming customers too much. But for a company like Comcast to do this it is obviously going to be horrible for customers (same for all those too-big to fail banks, cell phone service providers and other ISPs and cable TV providers).

Lets just pretend Comcast’s current leadership executives were all replaced with readers of the Curious Cat Management Improvement blog. And lets say that for now you are suppose to focus on improving the policies in place (while thinking about policy changes for later but not making them yet).

Continue reading

Management Improvement Carnival #127

photo of Cliff Palace at Mesa Verde

Photo of Cliff Palace at Mesa Verde by John Hunter.

The Curious Cat Management blog carnival highlights recent management blog posts 3 times each month. The posts generally focus on the areas I have focused on in the Curious Cat Management Guide since 1996 (Deming, agile software development, systems thinking, lean manufacturing, customer focus…).

Is Google Failing Too Often?

I think Google is extremely successful, but they do seem to consistently have problems adding to their portfolio. They did a great job with gmail. Android has been very successful. Google Maps is great. They did well building YouTube. Chrome is very nice. Automatic translation is very nice (as is the integration with Chrome).

But so many things just don’t go anywhere. I can’t understand why they can’t take something like Google checkout and make it much more successful (there is money even Google cares about waiting for success in this area). Grand Central was great – Google Voice has not built that the way I would hope. Google has an endless stream of very small companies they buy and then the service dies.

It has been long enough now that I am starting to feel more comfortable saying Google is not doing a good job of creating and building new products. There are a few successes. And having failures isn’t a huge deal – taking risks is wise. But they just seem to be succeeding far to little, especially when you look at the talent and resources they have. Of course, some will say the resources they have is a problem. I really think it is more along the lines I see you mentioning above – they have become too rigid in development. I actually support more standardization than maybe people want (there can be big benefits) but I believe you need to then allow for exceptions. It seems to me Google doesn’t allow enough. It is tempting for managers to want to duplicate the same style that has made adwords and search successful. That might not be the answer for every project though.

They also seem to be driving away to many people with a rigid adherence to proving every little thing. Now I think some of this is a significant part of Google’s success. The trick is not to throw out all such efforts, but to find ways to gain the benefits without crushing innovative people’s will to continue.

I continue to own stock in Google and believe the future is very promising. Google does far more right than they do wrong, but they have room to improve.

Related: Why Google can’t build InstagramObservations of a New GooglerGreat Marissa Mayer Webcast on Google InnovationGoogle: Ten Golden RulesEric Schmidt on Management at Google
Continue reading

Observations of a New Googler

Some interesting thoughts from a new Google engineer, Things I’ve learned at Google so far

I would describe Google’s culture as “creative chaos”. There was some confusion about where I was supposed to be when I started. This resulted in the following phone call, “Hello?”, “Hello Ben, this is Conner (that’s my new manager), where are you?” “Mountain View.” “Why are you there?” “Because this is where the recruiter said to go.” “Good answer! Nice of them to tell me. Enjoy your week!” This caused me to ask an experienced Googler, “Is it always this chaotic?” The response I got was, “Yes! Isn’t it wonderful?” That response sums up a lot about Google’s culture. If you’re unable to enjoy that kind of environment, then Google isn’t the place for you.

Paul Buchheit was a software engineer at Google. He didn’t need permission to write something like gmail. Corporate culture says that if you need something like that, you just go ahead and do it. In fact this is enshrined as an official corporate policy – engineers get 20% of their time to do with pretty much as they please, and are judged in part on how they use that time. I found a speech claiming that over half of Google’s applications started as a 20% project. (I’m surprised that the figure is so low.) To get a sense of how much stuff people just do, visit Google Labs. No corporate decision. No central planning.

Sick day policy. Don’t show up when you’re sick and tell people why you’re not showing up. Note what’s missing. There is no limit to how much sick time you get if you need it.

I think he overestimates the lack of central planning, still it is another interesting view of Google.

Related: Eric Schmidt on Management at GoogleGoogle: Ten Golden RulesThe Myth of the Genius Programmer

Eric Schmidt on Google in 2010 and the Economy

CEO Eric Schmidt Reveals ‘Centerpiece’ Of Google’s 2010 Strategy, speaking at the White House jobs summit.

Google is definitely hiring. “We’re hiring a couple thousand people over the next year,” he said.

And looking at the White House summit he said, “The basic message today is that with small business – which is the primary source of jobs – we need to figure out the loan problem. The banks aren’t really lending to them and anything that the government can do to accelerate that, needs to happen right now.”

“Cloud computing is the centerpiece of our strategy. It’s a new model. You basically put all your information on servers and you have fast networks and lots of different kinds of personal computers and mobile phones that can use the applications… it’s a powerful model and it’s where the industry is going. It is the centerpiece of our 2010 strategy.”

Piper Jaffray analyst Gene Munster today said in a note, that by 2016, 78% of Google’s revenue will still be from search. Schmidt agreed.

“My guess is that advertising and search ads will be the lion’s share of our business for quite a long time,” he said. “The reason is, it’s such a large part of our business and it continues to grow quite well.”

I continue to own Google and have it in my 12 stocks for 10 years portfolio.

Related: Google Exceeded Planned Spending on PersonnelEric Schmidt on Management at GoogleMeeting Like GoogleGoogle Should Stay True to Their Management Practices

Statistical Learning as the Ultimate Agile Development Tool by Peter Norvig

Interesting lecture on Statistical Learning as the Ultimate Agile Development Tool by Peter Norvig. The webcast is likely to be of interest to a fairly small segment of readers of this blog. But for geeks it may be interesting. He looks at the advantages of machine learning versus hand programming every case (for example spelling correction).

Google translate does a very good job (for computer based translation) based on machine learning. You can translate any of the pages on this blog into over 30 languages using Google translate (using the widget in the right column).

Via: @seanstickle

Related: Mistakes in Experimental Design and InterpretationDoes the Data Deluge Make the Scientific Method Obsolete?Website DataAn Introduction to Deming’s Management Ideas by Peter Scholtes (webcast)

YouTube Uses Multivariate Experiment To Improve Sign-ups 15%

Google does a great job of using statistical and engineering principles to improve. It is amazing how slow we are to adopt new ideas but because we are it provides big advantages to companies like Google that use concepts like design of experiments, experimenting quickly and often… while others don’t. Look Inside a 1,024 Recipe Multivariate Experiment

A few weeks ago, we ran one of the largest multivariate experiments ever: a 1,024 recipe experiment on 100% of our US-English homepage. Utilizing Google Website Optimizer, we made small changes to three sections on our homepage (see below), with the goal of increasing the number of people who signed up for an account. The results were impressive: the new page performed 15.7% better than the original, resulting in thousands more sign-ups and personalized views to the homepage every day.

While we could have hypothesized which elements result in greater conversions (for example, the color red is more eye-catching), multivariate testing reveals and proves the combinatorial impact of different configurations. Running tests like this also help guide our design process: instead of relying on our own ideas and intuition, you have a big part in steering us in the right direction. In fact, we plan on incorporating many of these elements in future evolutions of our homepage.

via: @hexawiseMy brother has created a software application to provide much better test coverage with far fewer tests using the same factorial designed experiments ideas my father worked with decades ago (and yet still far to few people use).

Related: Combinatorial Testing for SoftwareStatistics for ExperimentersGoogle’s Website Optimizer allows for multivariate testing of your website.Using Design of Experiments

The Myth of the Genius Programmer

Nice talk on fear of looking foolish. The speakers discuss the idea that visibility is good. Don’t hide. Make everything visible and the benefit from many people’s ideas. The talk focuses on software development but is true for any work.

“criticism is not evil” – Very true. “At Google we are not allowed to submit code until there is code review.” At the bottom line they are repeating Deming’s ideas: improve the system – people are not the problem, bad systems are the problem. Iterate quickly.

Related: 10x Productivity Difference in Software DevelopmentThe Software Engineering Manager’s LamentRespect for People, Understanding Psychology

Google Innovates Again with Google Wave

Google Wave is a new tool for communication and collaboration on the web, coming later this year. They are developing this as an open access project. The creative team is lead by the creators for Google Maps (brothers Lars and Jens Rasmussen). A wave is equal parts conversation and document. People can communicate and work together with richly formatted text, photos, videos, maps, and more. You really have to watch to understand what it is.

This is a long webcast (1 hour and 20 minutes) and likely will be best only for those interested in internet technology solutions. But it also provides useful insight into how Google is managing the creation of new tools. But the ideas are not explicit (the demo was meant to present the new product Google Wave, not explain the thought behind producing useful technology solutions), so you have to think about how what they are doing can apply in other situations.

For software developer readers they also highly recommended the Google Web Development Kit, which they used heavily on this project. They also have a very cool context sensitive spell checker that can highlight misspelled words that are another dictionary word but not right in the context used (about 44:30 in the webcast). And they discuss using Wave to manage bug tracking and manage information about dealing with bugs (@ 1 hour 4 min point).

Very cool stuff. The super easy blog interaction is great. And the user experience with notification and collaborative editing seems excellent. The playback feature to view changes seems good though that is still an area I worry about on heavily collaborative work. Hopefully they let you see like all change x person made, search changes…

Related: Eric Schmidt on Management at GoogleJoel Spolsky Webcast on Creating Social Web ResourcesGreat Marissa Mayer Webcast on Google InnovationGoogle Should Stay True to Their Management PracticesAmazon Innovation