There’s a reason why cocky Silicon Valley startups fancy themselves the “The Next Google.” The search giant embodies Silicon Valley at its best: product developed by nerds in a Stanford dorm room; humbled venture capitalists who turned down the chance to invest, declaring Web search “done;” now-defunct companies such as Excite that refused to buy Google for peanuts when they had the chance; and of course, a storied initial public offering, stellar balance sheet, market dominance, and entrenched, multiyear position as the tech stock darling. In a downturn that’s ravaged every industry and most companies, Google is holding up quite well.
Turn back the clock to the last recession, and you could have said almost all of those things about another company: eBay. But I bet in a few years Google doesn’t want to look anything like eBay does now: a company with a solid core business whose growth is nonetheless slowing rapidly and has little to pick up the slack, despite billions of dollars spent on acquisitions. I’d also wager Google’s shareholders don’t want their stock to drop more than 80 percent, suffering the same fate as eBay investors in the years since that stock peaked in December 2004.
No one says Google is headed for a rapid descent any time soon. It commands 63.5 percent of Web search and none of its rivals has been able to mount a credible threat for years. Yet this do-no-wrong tech darling can’t afford complacency, especially when some of its best and brightest are heading for the exits. As venture capitalist Peter Thiel explains, the further a startup gets from its initial share sale, the more quickly it loses star employees — one of the main reasons even the best newcomers don’t stay on top for long.
In the interest of avoiding eBay’s fate, let…