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BLOGThe Long Game – Google and eBay (updated)

by Randall CraigFiled in: Blog, StrategyTagged as:

Not long after writing about the Long Game with respect to professional success, I was thinking about the same thing at the corporate level.

Of course, with corporations, the Long Game concept is usually called “strategy” and is the result of “Strategic Planning”. Or is it? There are two interesting examples that recently hit the news: the contrasting fortunes of eBay and Google.

eBay: In case you aren’t familiar, a few years ago eBay spent a few billion dollars to acquire Skype, the internet phone company. While analysts generally agreed that the transaction was significantly overvalued, eBay-boosters spoke about the reasons why the transaction made sense:

– It would improve the “community” aspect of eBay by allowing better communication between players.
– It is a pre-emptive, defensive purchase, against Google, Facebook, and others.
– It would provide access to peer-to-peer technology, in the same way that eBay’s earlier purchase of Paypal provided access to payment technology.
– It was a vastly growing segment of the market.

No matter the rationale, after the investment went sour, eBay took a $1.4 Billion write-down. The Long Game didn’t pay off. Or, it was paying off, but not fast enough financially.  Skype was later sold to Microsoft.

Google: Google (or rather, it’s parent Alphabet) has also had a history of growth, funded both through acquisition and internal R&D. Their acquisitions ranged from geographic mapping, to radio advertising software, to YouTube, to Blogger: over 250 companies to 2019. And their engineers have been traditionally told to spend 20% of their time working on projects that interest them. These Long Game activities turned into Gmail, Adsense, Google News, and a full 50% of Google’s new services. (HP in it’s heyday had the same type of rule.)

YouTube is a great example of the Long Game: they now sell “play-before” clips, CNN style overlays, post-clip banners, etc.  And the purchase seems like a bargain compared to the valuations of more recent transactions.
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The toughest question for most CEOs and planners is figuring out how to have your Long Game look more like Google’s than eBay’s – especially given the quarterly pressure of the public markets. If you make no investment (and therefore take no risk), then there will definitely be no return. And worse, you’ll end up scrambling as most of the major platforms did, when TikTok literally came out of nowhere.  If you invest based solely on hunch (or ego), this is also a gamble. In my view, Long Game strategy is simply putting one foot in front of the other – but with your eyes firmly planted on the horizon.

THIS WEEK’S ACTION PLAN

What are your organization’s Long Game activities?  Take that list, and decide whether you should feed it (like Google), or cut it (like eBay).  Don’t have any?  Maybe it’s time to start…

Does this topic resonate? Reach out to Randall: he can present it to your group.  (More presentation topics)
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