Karma Bitchslaps GOOG
Posted by boedicca on July 18, 2008
GOOG shares are down over 9% today, (and 36% from it’s 52 week peak). GOOG management is blaming the economy for a slowdown in clicks. Yes, the economy is taking a toll – a large portion of ad volume in the past was real estate and mortgage related; the bubble has burst on that sector as a growth engine for GOOG. But there are worse things under the covers.
As noted at FuckedGoogle, GOOG has manipulated earnings via adjustments to the quarterly tax rate. Spending has been out of control on wistful thinking, poorly run initiatives with no resulting revenue. And finally, the issue of high rates of click fraud has still not flushed out of the system.
At bottom, GOOG is a search engine with ads that has built an entitlement oriented (on the part of overpaid senior management), low productivity culture (as evidenced by the low hit rate of new initiatives), which is going to accelerate the downward spiral. Just check out the recent Day Care Fracas:
Two months ago, Google held a series of secret focus groups with employees who have children in Google’s day care facilities. The purpose was to gauge their reaction to the company’s plan to raise the amount it charged for in-house day care by 75 percent.
Parents who had been paying $1,425 a month for infant care would see their costs rise to nearly $2,500 — well above the market rate. For parents with toddlers and preschoolers, who were charged less, the price increases were equally eye-popping. Under the new plan, parents with two kids in Google day care would most likely see their annual day care bill grow to more than $57,000 from around $33,000.
At the first of the three focus groups, parents wept openly. As word leaked out about the company’s plan, the Google parents began to fight back. They came up with ideas to save money, used the company’s T.G.I.F. sessions — a weekly meeting for anyone who wanted to ask questions of Google’s top executives — to plead their case, and conducted surveys showing that most parents with children in Google day care would have to leave Google’s facilities and find less expensive child care.
Do you think you know how this story ends? You’re probably guessing that because it involves “do no evil” Google, Fortune magazine’s “Best Company to Work For” the past two years, this is a heart-warming tale of a good company reversing a dumb decision.
If only. Although Google is rolling back its price increase slightly and is phasing in the higher price over five quarters, the outline of the original decision remains largely unchanged. At a T.G.I.F. in June, the Google co-founder Sergey Brin said he had no sympathy for the parents, and that he was tired of “Googlers” who felt entitled to perks like “bottled water and M&Ms,” according to several people in the meeting. (A Google spokesman denies that Mr. Brin made that comment.) On Monday, Google began the first phase of its new day care plan, letting go of the outside day care firm it had been using.
How telling. To equate parents’ concern for the welfare of their children with free treats. Yep, that certainly fits the “Don’t Be Evul” meme.
