It’s a common fact that people respond to incentives, but the real power of incentives is often unrecognized and underestimated. Incentives influence at the subconscious level, and thus it’s the main culprit behind the immoral behaviour.
2006 was a great year for Google. Two years after its IPO, earnings were growing at 35 percent per year. The company had just bought YouTube for $1.5 billion, and Gmail was quickly becoming the most popular email service in the world. The stock was up almost five times since the IPO and Wall Street loved Google.
However, in its data-center operations, some serious issues were brewing up. Google had not yet perfected the ability to seamlessly scale up and power multiple products that it would later become famous for. Teams struggled to get resources in the data centers.
Sam Schillace, co-founder of the Docs predecessor Writely, described the situation after Google acquired his company as – “They had this crazy hand-cobbled system where there was one guy in the middle doing the planning — it was, like, put a bottle of vodka on his desk, and you’d get your machines for the service.”
Want to Read More? This content is exclusive for members of Value Investing Almanack. Login to read if you are a member. Else, click here to subscribe.
- Spotlight: Big ideas from Value Investing and why applying them in your investment decision making will be a great deal
- InvestorInsights: Interviews with experienced value investors, learners, and deep thinkers
- StockTalk: Thorough analysis of business models of companies (without any recommendations)
- Behaviouronomics: Deep analysis of human behaviour and how it impacts investment decision making
- BookWorm: Reviews of the best books on Value Investing and related subjects
- Free Course – Financial Statement Analysis for Smart People (otherwise priced at Rs 5,900)
- Archives: Instant access to our huge archive from the past three years
Leave a Reply