During my trip last week I had an opportunity to visit Google's campus. I had never been there before, but as a customer (Adwords), vendor (Adsense) and shareholder I thought I should visit, especially since I was going to be in the area anyway. Like most internet companies, mine is very dependent upon Google. Until recently I thought of my business as serving three constituencies: its users, its advertisers, and its employees. Now it's users, advertisers, employees, and Google. Google impacts us even more than our direct competitors do. Such a business model is dangerous, but Google has consistently smiled on us (mostly because we play by the rules) and so it's worked well for us so far.
Not surprisingly, I was very impressed by the visit. It felt like a college campus, but with much better food in the cafeteria. Not all of their employees are brilliant, but a lot of them are, and the average employee there is probably smarter than at any other large company in the world. If I was just now graduating from college, this is the company I'd want to work at (although with the skills I had straight out of school I don't think I would've made the cut). They offer the types of perks I wish I could offer my employees, but unfortunately my company's annual revenues aren't a million dollars per employee the way Google's are.
Overall, I really like how they run their business. They're innovators not only in their products but also in their approach to running the business. Internal processes are continually improved and become pretty close to optimized. I like how they ignore Wall Street and think long term, not being in any particular hurry to monetize new tools. They do sometimes seem to be moving in a hundred different directions and a lot of their products never catch on, but they've been very careful not to kill their golden goose, search, and indeed they continue to improve it and distance themselves from Yahoo, Microsoft and the other also-rans. The growth will obviously slow in the coming years, and there will certainly be challenges ahead for them, but it's a big world and there's still plenty of room for them to grow. I would be surprised if they weren't much much bigger and more profitable in the future, and if I had to take one guess at what company would have the largest market cap in twenty years, my guess would be Google. (But I'd still put the chances at only about 15%. More likely it will be some company that doesn't exist yet.)
When I first started my company I gravitated toward technology, but in recent years I've come to appreciate why Warren Buffett generally avoids technology when investing. As with everything else, he turned out to be right, and I'd be better off today if I had blindly trusted him rather than having to learn the lessons myself. If I were just starting a company now and my goal was to build an entity with enduring value (as opposed to, for example, wanting to work on cool projects) I probably wouldn't do anything in technology, because it's very hard to build a lasting moat in tech. This is also the reason I don't have much technology in my portfolio, but I've made an exception for Google. With most companies, the closer I look, the less impressed I am. The reverse is true for Google.