Google’s CEO will not join other public companies and project their income every quarter. Here’s why: (“quarterly guidance” below is Wall St parlance for projecting next quarter’s income.)
“We don’t want it to get in the way of running the business,” Schmidt said. “If we started giving quarterly guidance, all of a sudden the whole company would start focusing on the quarter rather than trying to change the world.”
Schmidt knows that once he says “we’re on target to earn X next quarter” two bad things happen: 1)The entire company’s focus is on hitting those numbers, including doing things like pre-selling stuff, or making deep discounts, (things that you cannot sustain in a healthy business) and 2) the observers (analysts for them, neighbors and friends for you) use the actual results to judge you and your business.
In case your knee jerk reaction is, “Well of course, Google has so much money they can afford not to focus on the money,” know this: When Google first started, they were like a church. Doing something good that people wanted (good search) and not charging for it (they still don’t charge you for using search).
They didn’t even have ads for their first year.
“Google looked a lot like a charity in the beginning. They didn’t have ads for over a year. At year 1, Google was indistinguishable from a nonprofit. If a nonprofit or government organization had started a project to index the web, Google at year 1 is the limit of what they’d have produced.” See here.
They continue to focus on providing useful information we never had access to before. Free. To us, the users.
Think we could create such a business model?
P.S. Register for the Customer Savvy Program starting this weekend here. (Auditor spots only left, sorry. At least they’re only $97.) Get your free “If My Product’s So Great, How Come I Can’t Sell It?” eBook with sign-up until Monday night, August 18.