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Comment by AnthonyMouse | Hacker News Reader

It seems like business schools just don't teach how companies that are that big should be run. They teach all this stuff about externalizing costs and internalizing benefits, but when your company owns the entire market (or even half of it), you don't have to worry that much about how to internalize benefits and prevent free riding because you're going to get the bulk of the benefit from anything good that happens regardless.

So you see these hundred billion dollar companies still doing highly inefficient things to internalize benefits as if they have a hundred competitors because that's what people have been taught, when they should be looking to the classic AT&T monopoly's example with Bell Labs.

You have the cash for a hundred moonshots and you're cutting things that could be the future of the company? Why?

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Because every incremental employee costs the company more. It's like sorting an array. Big companies rarely hit it rich with small people working away on pet projects. The organization slows them down through a number of different ways and they cost the organization far more than their startup counterparts. Occasionally a project will be successful, but usually when that starts (like with Xbox) the rest of the organizations stakeholders will find a way of fucking it up.

It's better to focus resources on things that little startups can't do (like self driving cars) and buy up fast expanding companies, like Google did with Youtube or Facebook did with Instagram.

... because none of them are going to succeed? That's an excellent reason to cut.

Just look at Google's financials. If they "sacrifice the future" and nuke everything other than search and search advertisements, they'd make a LOT more profit.

Apply that retreospectively and Android or YouTube would have never been part of Google. It is reasonable to argue that had that happened, googe's core search business would be under significantly more risk today.

Neither of those examples are apt. YouTube was purchased and Android was a carefully planned, institutionally supported move in order to safeguard existing revenue streams.

The closest thing I can think of happening at Google is Gmail, and that was over a decade ago.

Xerox PARC invented a lot of stuff we now take for granted, network computers, the GUI, object oriented programming, etc. And it wasn't cheap, and almost all of it has nothing to do with the core mission of Xerox.

But one invention that popped out of PARC did---the laser printer. That one invention paid for Xerox PARC many times over (maybe a hundred times over---PARC spent a few million but the laser printer pulled in a few billion).

Fundamental research is expensive in the short term, but it pays off handsomely in the long term (unfortunately, longer than Wall Street will allow it seems).

> maybe a hundred times over---PARC spent a few million but the laser printer pulled in a few billion

Difference being Xerox made billions after spending a few million on research. Alphabet/Google on the other hand have poured in billions into what are now called their 'Other Bets' over the past two years and despite what impact they've made the revenues have been dismal and growth was stagnant last year.

You're looking at it on the wrong timescale. Two years is nothing. This is, again, the failing of modern business school and investor logic. If you spend a billion dollars a year to produce something that will go on to generate ten billion dollars a year in profit forevermore, but produces nothing for the first five or so years, looking at it on a two year timescale is clearly not going to produce an accurate picture of its long-term profitability.

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