Calling someone an "X company" means that they make their money from X. There are aspects of AI in targeted advertising, but not enough to call them an AI company rather than an advertising company. It doesn't really matter where they're going- that's what they aspire to be, not what they are. If you judge companies based on their aspirations, you end up judging them based on their most positive and idealistic version of themselves, rather than what they are, which is much more meaningful.
A much more cynical way to look at it is, judging a company based on its aspirations means judging them based on their marketing rather than their products, services, or actions.
Think of how differently Comcast would be perceived if everyone wanted to talk about the company Comcast wishes it was, rather than company that it is. Or any company you don't like for whatever reason.
>Calling someone an "X company" means that they make their money from X.
It doesn't necessarily mean that.
It's more common to associate "X" with their business competency.
If we always insist on X to be only defined by revenue, we then get the following type of soundbites that we pat ourselves on the back for:
- McDonalds is actually a real estate company and not a hamburger company because they make more money from rent than from food
- General Electric is really a bank because GE Capital has higher revenue than GE Aviation or GE Energy
- Harvard University is really a hedge fund and not a school because the endowment income is greater than the tuition paid by students
- Lebron James is actually an advertising spokesperson instead of a basketball player because he gets most of his money from corporate endorsements instead of the NBA player contract. Same thing can be said for NASCAR drivers and Olympic athletes.
Are the twisted examples above really how we categorize companies/celebrities? We don't label NY Times, National Geographic, and NBC/CBS/ABC/Fox as "ad companies". Instead we respectively call them "newspaper", "magazine", and "tv networks". Being a conduit for ads does not define each of them as an ad company.
It's much more reasonable to think of Google Inc as a AI/search/maps/cloud company that happens to get most of their revenue from ads. They are not an "ad company".
We don't compare McDonalds with Donald Trump development properties. We compare McDonalds with Burger King. We also don't compare Google Inc with Omnicom Group; instead we compare Google Search with MS Bing, and Android vs iPhone, and other technologies.
- McDonalds is a real estate company
- General Electric is really a bank
- Harvard University is really a hedge fund
- Lebron James is actually an advertising spokesperson
Are the twisted examples above really how we categorize companies/celebrities?
Maybe that's not so twisted. Maybe they are how we should really categorize the above, and the common perception is just marketing/how they made their mark initially.
>and the common perception is just marketing/how they made their mark initially.
It makes no sense to categorize McDonalds as a real estate company because its cost structure, hiring policies, marketing efforts, and everything else about the company in no way reflect the components of a traditional marketing company.
If "LeBron James" was a publicly traded company and you categorized him as an advertising spokesperson, would you then take him out of the gym and have him spend 4 years pursing an MBA?
would you then take him out of the gym and have him spend 4 years pursing an MBA?
No. Neither would the shareholders. Also, he's a lot more successful than a lot of MBAs. The whole point is that maybe the preconceived notions and categorizations aren't all there is to it.
I think both forms of categorization are useful and insightful in their own way. If we restrict ourselves to either one form, we are simply closing our minds and restricting our understanding of the matter. Why can't models be valid and valuable at the same time?
> "McDonalds is actually a real estate company and not a hamburger company because they make more money from rent than from food"
I find this interesting. Are McDonalds making most of their revenue from real estate rents from their franchisees and/or those involved in their supply chain, or is the bulk of this land outside their hamburger business?
McDonalds is an interesting case in that they own all (well, almost all) the real estate for all the restaurants. The franchise owners pay rent based on sales which can end up being hefty. Some activist investors are pushing them to spin off that real estate into a REIT so that both sides of the business can be more fairly valued.
Dollars wise McDonalds does make more in rent than in selling food (by about 2x).
Interesting thought, but the business competency is an important component regarding future valuation. If finance for some reason stops being profitable, GE still knows how to manufacture aircraft engines. If real estate becomes worthless, McDonald's can still sell people cheeseburgers for 99 cents.
> Calling someone an "X company" means that they make their money from X.
Sure, but even so (except for the way some people treat Google), we typically call companies that make their money by placing ads in a service or media offering an "X company" where X describes the service or media offering, not "advertising".
From that perspective, Google is an online services company, with AI playing an important role in some of its services.
Google did most of what they do now ten years ago, before their activity had much arguable "intelligence". They have used AI to enhance various existing services but the improvements hardly seem earth shattering to me [insert earth-shattering counter example HERE]. Google's more pure AI product such as the Google Car are so-far vaporware at best.
Calling Google an "AI company" seems like calling Ford in 1962 "a streamlining company" - which is does violence to the concept even if Ford in 1962 maybe some money with streamlined cars.
I think there's a dramatic difference in search 10 years ago compared to now, due to better natural language understanding, which is very much an "AI" technology IMHO.
I've had to un-learn my search query habits from the past. I used to attempt to express queries in ways that I thought would help the search engine (limit it to keywords, suppress keywords that are likely to produce false positives, etc.). Now, it seems better to put in sentence fragments, and the old way of a few specific thought out keywords is actually worse at producing the result I want.
The difference is small to the average HN user (most of us are just as capable of expressing queries both ways, and we'll find what we're looking for) but the latter kind of query is far more accessible to the average person.
The stock price of a company is based on predicting future earnings, so talking about the future of a company is pretty much unavoidable in this sort of discussion. You can ignore what management says and predict the future in some other way if you prefer, but ignoring the future entirely isn't possible. (Assuming that nothing will change is also a prediction.)
I don't know how you can call their self-driving cars anything BUT AI. We live in a pretty jaded world if you don't think that constitutes artificial intelligence. While it may not be a source of revenue yet, we are VERY close to it being one.
> Calling someone an "X company" means that they make their money from X. There are aspects of AI in targeted advertising, but not enough to call them an AI company rather than an advertising company.
eh, either way Google is described it's just trying to be a cute soundbite with next to no information.
You can call them an advertising company, but they create the products that most of their ads are seen in, so really they're an advertising company and a software company. They build the data centers all that software runs on or comes from, so they're also a data center company. And if they're using AI in most of their products these days (no idea), you could fairly add AI company on there too.
So what is the X in "they're an X company"? A better question is why does it matter what the X is? You don't gain any insight by filling it in.
Instead we could go crazy and use like two, even three sentences to describe what a company does, what its incentives are and where its constrained.
Data centers are just the modern version of what used to be called plant and machinery, and Google is just an updated industrial corp in the tradition of other former and current household names, but with a slightly more colourful logo.
The business focus matters because the ad market is in trouble, and unless Alphabet has something in the pipeline to replace ads, five to ten years from now the company is going to be where Yahoo is today.
This seems hard to imagine now, but no one expected DEC to fail, or HP to turn into that thing it turned into, or Microsoft to sit on a grenade labelled "Windows", or IBM to drift off to the margins of the web - and so on.
> The business focus matters because the ad market is in trouble, and unless Alphabet has something in the pipeline to replace ads, five to ten years from now the company is going to be where Yahoo is today.
What evidence shows the ad business in trouble? Alphabet recorded revenue and profit in the quarter.
> This seems hard to imagine now, but no one expected DEC to fail, or HP to turn into that thing it turned into, or Microsoft to sit on a grenade labelled "Windows", or IBM to drift off to the margins of the web - and so on.
Sure, but for every unexpected floundering there are many more predictions of failure that never occurred. I'm not sure how unexpected failures in general give any insight beyond that they exist.
How about "Alphabet/Google is trying to position itself as an AI company" instead of "is an AI company". That direction is still important to explain why it is valued like it is: investors are betting that it has good chances of succeeding in becoming an AI company.
A much more cynical way to look at it is, judging a company based on its aspirations means judging them based on their marketing rather than their products, services, or actions.
Think of how differently Comcast would be perceived if everyone wanted to talk about the company Comcast wishes it was, rather than company that it is. Or any company you don't like for whatever reason.