YOU can beat Google the way Amazon does. Here’s how.

as the notorious big said more money more problems and if that's the case no one has more problems than google they've got so much money they don't know what to do with it 135 billion dollars to be exact here's a clip of peter thiel confronting ceo at the time eric schmidt about that very issue in 2012. google is a great company it has thirty thousand people they have you know twenty thousand whatever the numbers they have pretty safe jobs on the other hand you know google also has 30 40 50 billion in cash it has no idea how to invest that money in technology effectively and so it prefers getting zero percent interest from mr bernanke effectively the cash sort of gets burned away over time through inflation because there are no ideas that google has to spend the money i have news for you google is not a tech company anymore it's a tech holding company with 135 billion dollars worth of cash and not a lot of ideas in this video i'm going to explain why this is and how we're actually living in the most growth mindset era in history and as a founder and future founder you've got a role to play in that world they might be out of ideas but we aren't let's get into it 135 billion dollars that's how much money google has in the bank right now why it's simple it's a big company and there are limits to how much risk a big company can take before it turns that just into waste what you discover in running these companies is that there are limits that are not cash and there are limits of recruiting limits of real estate limits of regulatory limits as peter points out there are many many such limits and this is why i don't like working at big companies the bureaucracy the drama the politics when you're google you have a real thing to protect you've got revenue real cash flow real modes and maybe a monopoly anyway it's hard to build teams and manage people managing resources is damn hard here's the former ceo of waze who sold this startup to google for a billion dollars and this is what he said when he finally quit his job at google the amount of time and effort spent on legal policy privacy on features that have not shipped to users yet meant a significant waste of resources and focus i'm not saying this is not important but this has zero value to our users an ever increasing percent of our time went to non-user value creation tasks and that changes the dna of the company quickly from customer focused to corporate guidelines focused notice what he said the focus was on corporate things not actually creating value for users link in the description for the full post by gnome and that's where a small startup can be even the largest companies on the planet you care a lot more you can hire better you can deliver a better product eric schmidt at the time or any big company ceo has to spend most of their time just trying to keep all the plates spinning you as a founder or creator you only have to spend one plate really well i think it's one of the real reasons why smart people should consider starting companies and it's one of the big reasons why those very smart people seem to avoid it they think they have to beat the big guys like google and that's impossible right i'm here to tell you you can the big companies aren't invincible they are usually way too big and too slow to really get anything done and that's why you shouldn't always be afraid to take them on they might have infinite resources but as eric mentioned there isn't a way for them to properly harness those resources but there is a company that is as big as google that has done it right jeff bezos and amazon but before we get to that i wanted to quickly tell you about an awesome portfolio company of mine burbix it's the fastest most accurate way to integrate identity checks into your app or site and i thought that instead of me telling you about it i'll let a real burbex customer tell you their story weed maps for example doesn't ask you for your real name when you sign up for an account like that's that's not going to be good enough for us to be compliant and record that order and actually know that we're sending our driver to a safe delivery so we quickly implemented burbex across all of our channels because um we had a few maybe two driver incidents let's call them when we hadn't verified the customer's identity and so now that we are doing it across all channels that problem has essentially gone away that was george dursee of sf weed delivery startup amuse who uses them for validating deliveries without losing any customers to the id check process and that's a big thing with pure software you can check ids without losing conversions instantly just in the flow it's safer for drivers it's better for everyone you know what those other id check guys do they send it to a mechanical turk-like system for some human being to look at it kind of like a bouncer and bouncers are not very accurate they're slow as hell too so there are billions of dollars worth of new transactions that can't exist now because burbix this software exists and it couldn't exist without it maybe one of your startups will be enabled by it burbex is great they've built the best software by far and if you want to learn more check it out link in the description below now back to what we can learn from jeff bezos in a sea of companies with 12 figure cash stacks there is one whale that doesn't seem to swim the same amazon founded in 1997 amazon barely turned a profit for almost 20 years despite growing revenue every year this is what a company that reinvests profits looks like amazon has consistently invested this time and money and it shows they are now 50 percent of all e-commerce in the united states walmart sells one-fifth of what they do online but what's even more impressive this bookseller now owns 32 percent of the cloud infra business out there these are servers that power not just amazon but netflix coinbase nasa facebook comcast and more you name it and they probably pay amazon for servers amazon is dominating it all and with so much profit going back and reinvesting that's exactly how they've built the business they've built and all the while google instead of reinvesting their revenue just kept getting more and more profitable 5 to 20 billion dollars per year in profit that they actually couldn't figure out what to do with it's not a picture that is building the future in an aggressive way don't be too mad at them they're having a hard time which is crazy you know it's it's funny to feel sorry for a company that is that profitable but that's what you can call innovation complacency why aren't there more companies doing what amazon is doing jeff bezos actually talked about this in 2014.

Here's a job i would reject if somebody came up to me and said jeff i want your job to be to drive up the amazon stock price and just manage that directly now this might sound ridiculous to some of you but many companies actually do this they have they actually go out and they try to sell the stock that's kind of the final output now bezos wouldn't take that job but that's exactly the typical kind of job most public ceos actually have bezos goes on to talk about his philosophy for five whys pay attention because this is important what are the inputs to a higher stock price and he says okay well free cash flow and return on invested capital inputs to a higher stock price okay so let's let's keep working backwards what are the inputs to free cash flow and you keep working backwards until you get to something that's controllable now for an established business most people think this means improving the business one or two percent here or there and that's true but there's another way taking big risks on brand new products like aws kindle and alexa amazon has done it both ways so they've pointed the way on how to really put capital to good use now if you take a little bit of risk you can get a little bit of reward that's what most big companies are actually doing even though they have huge resources and capital to do new things they just aren't doing it and in order to do that you've got to think on a much deeper scale than what most people do you can't focus on just the things that are one percent or even five percent better you've got to find things that are 10x better these things are compounding these days we have a computer that's always on with a broadband network that is now everywhere and that computer is now smaller than ever so we get big dislocations what used to be a fragmented and terrible taxi service means uber and lyft which now means cities can be built around people instead of cars and it's happening around us every single day that's the amazing thing it's not a secret steve jobs was talking about this in 1990 more than 30 years ago in the 70s and 80s he created personal computing a pc on every home on every desk but he could already see where computers were going interpersonal computing as an example in an organization we're starting to see that as business conditions change faster and faster with each year we cannot change our management hierarchical organization very fast relative to the changing business conditions we can't have somebody working for a new boss every week we also can't change our geographic organization very fast matter of fact even slower than the management one we can't be moving people around the country every week but we can change an electronic organization like that and what's starting to happen is as we start to link these computers together with sophisticated networks and great user interfaces we're starting to be able to create clusters of people working on a common task in a you know literally in 15 minutes worth of setup and these 15 people can work together extremely efficiently no matter where they are geographically and no matter who they work for hierarchically and these organizations can live for as long as they're needed and then vanish and we're finding we can reorganize our companies electronically very rapidly and that's the only type of organization that can begin to keep pace with the changing business conditions steve was talking about the computer revolution and it is literally what is happening today in every walk of life every big startup you hear about today is somehow connected to this mega trend of computers embedding themselves in every part of our working life remember eric schmidt at the top of this video he was complaining about not being able to hire not being able to harness human capital necessary to properly invest money into new things but it's happening before our very eyes software is creating a new kind of management a new type of hiring a new type of company and a new way to come together to create you know what's the most exciting part we live in an accelerating tech world combined with zero percent interest rates which means technology will yield the largest returns on your investment the type of return nobody has ever seen before in their entire lives and if you're a great engineer if you're a great product person a great builder it is up to you let's go get it if you like this video please be sure to click like subscribe and go to my twitter profile and click follow and if you really really liked it be sure to share this link on twitter facebook linkedin and text it to your friends who want to start companies let's make sure we can all find each other find these builders let's make a community out here on youtube and everywhere we live in absolutely truly astonishing times and i'm super glad just to be able to share this story with you today have a great week be well and i'll see you next week [Music] you

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