Hacker News Reader

Comment by diego | Hacker News Reader

The same could be said about Google. For the most part, it sells advertising.

I think sachinag is trying to say that consulting companies are services companies, whereas startups and silicon valley seem to revolve around product companies. The semantics of the distinction are around scalability of the business. You could also look at revenue per employee or P/E ratios as other indicators.

Personally I agree that scalability is a better metric for enterprise attractiveness than raw size. Investors agree. CSC has a P/E ratio of 5.8, whereas Microsoft's is 12.9.

The list also just feels mistaken, but that might be my misguided sense of enthusiasm for shiny companies. Fiserv is a $6B company that I had never heard of. I'd probably rather go long on Facebook or Twitter, but a savvy investor might disagree.

Google's fascinating when it comes to categorization. I think it's pretty clear that they make software. What's awesome is that they, as you say, don't monetize that s/w by selling it (like 37signals or whatever other internet company); they do so through the sale of advertising space. They're the biggest dichotomy between core competencies (software engineering) and monetization (ads) that I can think of, perhaps in history.

GE: Core competency = training middle management. Monetization = jet engines, locomotives, formerly household appliances, etc.

Berkshire Hathaway: Core competencies = Warren Buffett, AAA credit rating, willingness to keep former owners on as managers. Monetization = insurance, furniture, candy.

WalMart: Core competency: Logistics management, supplier bargaining power. Monetization: every household good imaginable.

Nike: Core competency = advertising. Monetization = sneakers & sportswear.

Actually, seems like companies with wildly disparate core competencies and monetization schemes tend to do pretty well. Or maybe it's selection bias, and the ones that do well do really well but the rest fail miserably. Either way, I'm waiting for some company to close the Google -> Nike loop by leveraging their expertise in sneakers and sportswear to sell lots of software.

Looking at it in a slightly different way, Nike+ uses expertise with shoes and expertise with interaction design to sell a decent amount of hardware.

Reply on news.ycombinator.com