Google has a lot of very, well, interesting businesses. And by Google, I mean Alphabet, the parent company of the world's most popular search engine
There’s search, obviously, and tools like Gmail and Google Docs, but there’s also some wacky projects like Google Glass and self-driving cars. In fact, Alphabet’s big “bets,” on everything else — things like Google Fiber, Google Nest Home, those self-driving cars, and even Pixel smartphones — now make up roughly 15 percent of the company’s revenue.
While that still leaves advertising as the most dominant business, is it still the most important? The answer is a bit complicated, but the simple answer is “no.” Which leads to another question: what is Alphabet’s most important business?
That’s because it turns out that Google’s most important business is easily one of its most boring: Google Cloud. Like I said — “boring.”
Boring is good.
Sometimes boring really is good. In fact, often your most important business is going to be boring. We’ll get to that in a minute, but first, let’s look at why advertising isn’t the most important business for Google.
Look, Google make a lot of money from selling targeted ads, and in reality, they’re really good at it. It is still the largest advertising platform anywhere, and it continues to be extremely profitable.
But advertising is a saturated market, and Google has been slowly losing share to competitors like Facebook and even Amazon and overall ad sales have slowed considerably for the company.
Also, while digital advertising continues to be effective, consumers have become much more aware of what goes on behind the scenes to serve up those “relevant” ads that follow them around the internet.
All of that means that while GoogleAds is currently the company’s best business, it’s no longer its most important — at least not in terms of the future of the company. Which brings us back to Google Cloud.
Google Cloud has room to grow.
Google Cloud is a distant third place in terms of cloud-computing market share, but think about it — if you’re Google, there’s huge upside to your most important business being so small relative to the overall market.
And while the company’s cloud-computing service lags behind Amazon’s Web Service and Microsoft’s Azure, it has been growing and now represents about nine percent of the market.
Alphabet has clearly been focusing its efforts on building up its cloud-computing platform, and just last month acquired Looker, a business intelligence and analytics tool that helps businesses make sense of their data, for $2.6 billion.
And Google Cloud is no longer considered a niche product, but has started to be taken more seriously by enterprise customers under CEO Thomas Kurian, as the company has been beefing up its cloud platform offerings.
But an even bigger reason that I think Google Cloud is the company’s most important business is that all of this is true even though the company just hired a head of sales this month. There’s a lot of growth upside to a business that is still this young and immature.
Here’s why this all matters to you.
Your most important business isn’t necessarily the one that pays the bills today. It’s the one that’s going to pay the bills tomorrow. That doesn’t mean you should ignore the cash cow you rode in on, but it does mean you should be figuring out what you’re going to do when that cow gets old, or gets sick, or starts to die.
Okay, cow analogies aren’t the best. How about sports?
Just because your guy threw a no-hitter, doesn’t mean he’ll be able to deliver a 105 mph fastball forever. He’s gonna get old and his arm is gonna get tired. You might want to consider what you’re going to do to replace him. You might want to invest in your farm team and develop a couple of new aces.
By the way, Google, or Alphabet anyway, is very good at this. The company has hundreds of different product ideas in various stages of development, many of which never see the wild. But it also nurtures them so that a few of them will become actual businesses for the company.
A reasonable question is: what are you doing to build your next thing? I know you’re probably super focused on building your first thing, but now is the best time to consider what happens next.
There’s a Chinese proverb that says “the best time to plant an Oak tree was 20 years ago. The second best time is today.” Next to a full grown Oak, that new seedling might not look very exciting, but it’s going to be extremely important some day.
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.
This article is from Inc.com