Every time you turn around, it seems there’s another seemingly wild Google project in the news, from the company’s self-driving cars to its Calico initiative, which is aiming to improve and extend human lives.
In fact, it might seem that Google is spending a material amount of its R&D budget — perhaps too much — on these speculative projects, as an analyst pointed out to Google CEO Larry Page on the company’s earnings conference call this afternoon.
But that’s actually not the case, Page replied. On the contrary, he said, the company should be spending more money on these types of things, not less. Here’s an extended excerpt from his remarks on the call.
My struggle in general is to get people to spend money on long-term R&D. Most companies, even companies that have significant R&D budgets, if you look at that maybe 99 percent of it ends up being really incremental — which is relatively small improvements to your existing businesses, and maybe 1 percent of that ends up being true long-term things like Android was when it got started. I view my job as the opposite thing, to get people to spend on the long-term R&D.
I do think people have a perception that that’s material. That’s not been my experience. It’s very hard to actually spend money on long-term things in any meaningful way. Even the investments we’ve announced on things like Calico, while they’re in absolute numbers significant amounts, they’re not significant for Google. You should actually be asking me to make more significant investments. I wish I knew how to do that. But I think it’s actually very difficult to spend meaningful amounts of money relative to Google’s scale on things that are speculative.
It’s an interesting viewpoint that illustrates a source of tension for many public technology companies, as they try to balance the short-term demands of investors with the long-term need to ensure their own relevance.
Microsoft often faces similar questions about its Microsoft Research unit, which engages in a wide variety of basic research that may or may not ultimately contribute to the company’s products.
Previously: Google beats estimates with $14.9B in quarterly revenue
