Evil Diaries: Google Hits Trouble

I have a chum, Nick Mordin, who is an extremely intelligent fellow and resident in Hong Kong where he judges horserace form quite extraordinarily effectively. He drew my attention to problems at Alphabet or Google as was – ticker code GOOG – and it seems that GOOG is in big trouble. Apparently if AI pushes GOOG aside, GOOG ‘s earnings collapse. This is clear sell at $136 and probably a short down to $100 in the short term.

I found a useful explainer on Google’s problems and they seem to revolve around the CEO, Sundar Pichai. Turns out he just stumbled into the job by blind chance. Investors allowed him to take control because they were keen to avoid the risks the founders had taken by vigorously pursuing new product ideas. (I didn’t know a lot of this).

Sundar Pichai has fulfilled the job specs. He hasn’t launched a single notable product in all his years of being in charge. But then along came AI and investors started pushing hard for Google to enter this domain (not surprising because they had come up with the breakthrough – Transformers – that enabled it).

To keep investors happy Pichai rushed Google’s first AI, Bard, to market, instead of putting it through the usual one year training period needed to iron out all the bugs. The result was that it gave a string of wrong answers in its launch demo. Worse still, Google then smashed together a promotional video where it made further errors that they failed to pick up. Bard basically flatlined and never gained significant market share, prompting a 100 billion drop in the share price of Google’s parent company, Alphabet. You’d think Pichai would have learned but nope, he went and repeated the exact same error with their next AI, leading to another 100 billion loss for Alphabet.

This preference of investors for a ‘safe pair of hands’ reminds me of how Control Data ousted their founder, Seymour Cray. Cray was responsible for some of the greatest innovations in the history of computing but investors didn’t like how unpredictable he was. So out he goes. And voila, Cray starts Cray Computing which competes directly with Control Data and soon puts them out of business.

The parallel with today is even stronger than it seems because Google parted company with a whole slew of innovative people who were fed up with their aversion to risk taking. And it is these people who started or helped to start all the AI companies now eating away at Google’s market share in every area of its business.

It’s all rather reminiscent of the parable of the talents, which explains why God loves gambling.