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Silicon Valley is leaving knee jerk reactions to Google’s lukewarm quarter to the Wall Street crowd. That was the finding of my reporting yesterday after the search giant reported its earnings. I filed this report for CNN Money, that went live this morning. Though, I never got to quote him for the story, David Hornik of August Capital sent a very succinct message that sums it up nicely. “I suspect that every one of my startups would be thrilled to miss their earnings by *only* making $1.92 Billion in the quarter,” he says. “Google’s performance remains spectacular, so I can’t imagine that it will negatively impact the startup climate.”
Toni Schneider, an entrepreneur who recently left Yahoo to become a partner with San Francisco-based True Ventures, sees parallels between how Google and Yahoo were treated by an over-optimistic Wall Street. “The numbers are pretty good and everything is growing,” says Schneider. “I don’t see any gloom or doom.”
Jeff Clavier, who understands online advertising and search game pretty well pointed out that
Google, which sells ads on its own Web sites as well as ones run by other publishers, is shifting more ad revenues to its own network. According to Clavier, that indicates that Google’s core business of search is improving.
Still, there is school of thought that (public market) investors should tame their expectations, especially because Google has done such a good job in the past. The company some feel has cleaned up in the keyword advertising business, and needs to find new areas of growth. “Size is the enemy of growth,” Scott Potter, a general partner at venture capital firm San Francisco Equity Partners. Google faces the challenge of growing faster than the overall shift of ad-spending toward the Internet. It will be harder since MSN and Yahoo are getting energetic about their own advertising plays. Maybe that’s why the China deal was done – sheer economic pragmatism being put ahead of the ideals of twenty-something founders.
I don’t know about others but there had been a sense of euphoria that had taken over the Google, Yahoo and other stocks. I think that sentiment has broken. Six months ago, China deal would have been hailed by Wall Street and tacked another $50 a share to Google stock price. Similarly, a good (not great) quarter is being viewed as end of the world. That’s the price you pay, when you are priced for perfection – and perfection as we know doesn’t exist.
CNN/Money: Shrugging off Google’s miss