The Internet Giant Is Too Big & Bloated

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Nov 21 2006
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In an internal memo written by a Yahoo (Nasdaq : YHOO) senior executive which later distributed over the Internet last weekend, it was claimed that “The Internet giant is too big, too bloated and is losing its way“. If what this senior executive’s claim in true, then does it reflects on Google as well ?

Yahoo Senior Vice President Brad Garlinghouse commented the lack of focus and decisiveness at the company and a lack of accountability for executives. He further called for headcount reductions of 15% to 20% to the company’s 10,000-strong staff, divestiture of underperforming units and cancellations of redundant products.

Meanwhile at Google (Nasdaq : GOOG), Chris Sacca, who joined Google in 2003 and the head of special initiatives expressed his greatest fear is that Google could become a big company (not just in terms of headcount). He fears Google’s increased bureaucracy and unnecessary layers of management might backfire sooner or later. He proclaimed “These are the enemies of innovation“.

He has seen a few mid-level bosses evoke the traditions of Japanese management and schedule “pre-meetings” to plan, discuss, and approve what will be planned, discussed and approved at the actual meeting itself.

But Google’s culture of letting engineers and product specialists’ freedom in building great & cool stuff that user’s want might be the differentiator between Google and Yahoo. Yahoo has over 9,800 staffs while Google has over 5,600 staffs.

According to research group Nielsen/NetRatings, Google share of U.S. Web searches slipped slightly to 49.6% (3 billion searches) from 50% in September. Yahoo follows with 23.9%, up from 23.4% while Microsoft Corp.’s MSN and Windows Live, Time Warner Inc.’s AOL, and IAC/InterActive Corp.’s Ask.com search engines stayed put at third, fourth and fifth in the rankings.
Google stock price has climb steadily after the recent quarter earning announcement of which many analysts are optimistic of hitting $500 very soon.

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