Google, Microsoft, Stall Points, and Growth
April 7, 2015
When might Google have its Microsoft moment? That is, when will it begin its inexorable decline – as most aging tech companies do when their growth stalls, and as Microsoft did – largely unbeknownst to (and even denied by) most observers? How might we know?
I have a few things I look for when thinking about inflection points in aging technology companies. Not all of these conditions need to be satisfied, but at least some of them do.
There are five major parts of the argument:
1. Stock compensation loses its luster
2. Declining growth
3. No longer hiring for innovation
4. Price & margin pressure in core business
5. Government action
——————————————————————————–
Let’s start:
1) Stock compensation loses its luster
Generally speaking, technology companies retain their best employees with equity compensation more so than with salary. And when that equity...
 Knowing that most of the money is made by being early to prominent tech IPOs, they did the rational thing: They bought earlier. In this case, not just early, but pre-IPO – in late-stage, private markets. One reason we are seeing this incredible rush to buy overpriced companies in private markets is fear of missing out on the appreciation when the companies come public. As a result, the post-IPO price appreciation is happening pre-IPO, making private companies back-door public – except, as Bill Gurley has written, in the ways that matter most, like liquidity, quality of financials...
 Knowing that most of the money is made by being early to prominent tech IPOs, they did the rational thing: They bought earlier. In this case, not just early, but pre-IPO – in late-stage, private markets. One reason we are seeing this incredible rush to buy overpriced companies in private markets is fear of missing out on the appreciation when the companies come public. As a result, the post-IPO price appreciation is happening pre-IPO, making private companies back-door public – except, as Bill Gurley has written, in the ways that matter most, like liquidity, quality of financials...