Making rain

The following is a slightly edited transcript of a portion of the Critical Path podcast #79. I am reproducing it here for the sake of brevity and focus of discussion.

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I’m going to try to put together an analogy together here that maybe will help us think through the Facebook Home and the Google Fiber issue.

I’ve been thinking a lot about how to illustrate Google’s business model. The problem is that discussion has been polarized: Two camps have formed. One camp suggests that Google is a benevolent entity that does great things and only asks that we indulge their hobby of a business model called advertising. Fundamentally they are about pushing the envelope on technology, making wonderful things happen.

That is one camp. I call them the utopians. It may not be a nice thing to call them but I frame it as being exceedingly idealistic.

The anti-utopian camp is one that suggests that Google is an advertising company primarily, and fundamentally and overwhelmingly. And anything they do technologically is in support of that. The implication is that Google is sinister and manipulative, bent on getting away with as much privacy extraction as possible.

I believe that the anti-utopians dismissing Google as an advertising company sounds a bit incomplete. It’s not incorrect. It’s not erroneous. It’s just not a complete story.

And also the utopian view that they do everything for us out of the goodness of their hearts and that advertising is something that they are reluctant to do, saying in effect, “We only do it because it earns us enough money so that we can do good deeds.” That too is not an accurate picture. Google is a business and its business management team is hard nosed and knows what they’re doing and they are not purely idealistic in that sense.

And so the question could be where across this spectrum does Google lie? Possibly it moves around between these points. Where they are becomes a question of motivation and what they want to become.

But this is only one dimension. It does not help us answer the question of Home, or Fiber or Reader or Blink. Their actions seem contradictory. Holistic or selfless in one case, greedy and capricious in another.

Let’s step out of this spectrum and try to think of different ways which can describe the situation.

I propose a way to think about it as: Google tries to make a business succeed through having a huge amount of _flow_ in terms of data, traffic, queries and information that is indexed. So think about this idea of them tapping into a vast stream. The more volume that is flowing through the system the more revenue they generate.

As so given this very rough analogy I try to sharpen it up by saying: imagine it more as a river. And even more than a river, as a watershed, a river basin. Perhaps a giant basin the size of a continent. The business is, let’s say, capturing fish at the mouth of the biggest river, before it exits into the ocean at its delta.

And so your job (as Google) is to catch fish mostly at one point. It’s the most efficient way to catch fish because you have the most flow of water at that point and building nets is not trivial.

But in order for you to improve your business, to create more opportunity, presumably, you want to essentially have more water flowing.

And so how would you do that? Think of the Mississippi river. If you’ve got a net down at the bottom of the river, the question is how would you engineer, through civil engineering, or shaping the earth itself, a way of catching more fish.

The answer I think, in terms of the way Google might be thinking, is that they want to create more sources of water. So they would look to connect tributaries and lakes. “How about having another river join our river?” Let’s make sure that we have “everything east of the Rockies” flow into our river system.

Now, think of it this way: After you’ve gotten all the tributaries, what are the remaining sources?

First, you’ll want to make sure that no-one can dam or stop the flow of water into your main channels. And so you become extremely anxious about people building dams. That’s the number one concern.

So your strategy becomes one of “how do we avoid dam building”?

That’s one part of your strategy.

The other thing you could do to improve your business would be to make it rain more. So there’s the question in your mind of: If we had more rainfall, then everything will flow more rapidly and we’ll get many more tiny rivers forming and joining together into our main river.

Android and the Fiber business and even Facebook fit into this analogy rather well. In this context more rainfall means more people using the Internet. If you have more people you’ll have more rivers and you’ll have more water and hopefully more fish. Fiber means the water will flow more rapidly: you’re essentially dredging the riverbed.

But the two are very disconnected (rain, dredging and fish). So your strategy amounts to not really worrying about the ratio. You don’t create incentives to people who make rain in the form of fish catch quotas next quarter.

In other words, your performance as a manager of cloud seeding efforts should not be measured in fish.

Leadership should instead simply put out the mandate of “Go out and make it rain”.

So that’s the notion of Google going out on these projects and doing all these “great things” for us. They make it rain. The Internet expands. There is minimal censorship.

By the way, censorship is a dam. Being blocked out of a country is a huge dam. It’s actually more like building a mountain range that diverts water flow away from your watershed.

And so they have these notions of how to prevent these things from happening.

So it sounds like they are doing good things. It sounds like asking for it to rain; they want to make sure that people don’t divert resources; they want to make sure that there are no barriers between the raindrop and getting access to the channel to the ocean.

So it sounds like they’re doing all the good things like a good civil engineer. Like the US Army Corps of Engineers who developed the irrigation, flood control, energy generation and waterway transportation of the United States.

Google seems to be the world’s “internet civil engineer”. They are building all these things to make sure that we have good water (i.e internet) supply. That we have plenty of navigable channels. That’s the analogy.

But let’s not forget that the only reasons those things are happening is because they are catching fish at some point down the Mississippi.

From that point of view you have to ask yourself: do they deserve this concession? Because they are ultimately affecting the environment to such a degree; and the environment is the internet; and the whole scope is how the world operates.

That is where people have to step back and ask themselves: Even a group of civil engineers that have all the best intentions may realize that they didn’t think of all the consequences of their actions. A lot of the criticisms may come decades later. From people who’ll note an effect on the environment. Dams get silted, a lack of floods reduces nutrients to crops which then need fertilizer, which has a whole other set of problems.

That is when you have to reflect more deeply on what is right and what is wrong. So saying, as the City Council of Austin might: thank you for coming and paying for installing broadband for us. Fine, but we just don’t know what the unintended consequences might be. It all _sounds_ good but we don’t know if it _is_ good.

And similarly, in the case of Facebook, there is a subtle hijacking going on where Android creates more rain, and Facebook and Amazon are essentially putting down nets and catching fish upstream. They’re not damming the tributaries. They’re not putting up mountain ranges and saying they’ll make sure the water flows away from the Mississippi. But rather they are putting nets and saying “Thanks for the rain”. They took advantage of what amounts to a public resource. Here the failure of anticipating consequences falls on Google. But they could not have possibly foreseen all that? Or could they?

Then there is the question of measuring success. It’s complicated and hard to measure performance. Even Google’s own performance. We don’t really know if the cloud projects work. We don’t get to run this as an experiment that can be tweaked as data comes in.

Google does not report performance. When they go off on these rain making projects, it’s natural to ask how many fish were caught as a result. Is that incremental new rainfall causing more fish to get caught. And Google won’t say anything about the profitability of rain making. They will never give you a profit and loss statement for all these projects: the dam eradication project, the project dredge a channel, the project to seed clouds. They will say that these are projects that will result in only one thing, which we do measure, which is the number of fish we catch in the delta of the Mississippi down by New Orleans. But so far although rainfall seems to be increasing exponentially there are not that many new fish.

So that’s where we struggle as analysts: is rainmaking good? Is the dam destruction process working? We can’t answer these question. And we don’t even know if Google themselves can. They might think of it as a strategic thing: it’s always better to have more rain than less and more water flowing. End of discussion.

To borrow a phrase from Zuckerberg, it’s above my pay grade to know what all the consequences are. I have opinions as environmentalists have opinions and sometimes they have some data to back up those opinions. For instance whether a dam project is a good thing on balance. But they are bound to have partial answers because the cost/benefit analysis is definitely missing a lot of the costs and missing a lot of the benefits as well. You can’t put a number on a lot of these things.

That’s where we are today. Google and Android are forces which are are very powerful but which are, to a large degree, uncontrolled, even by their own managers.