00:28:12 · John Coogan, Jordi Hays
But it doesn't seem like there's some new disruptive chip architecture that's gonna come out and and obviate the need for both Nvidia GPUs and Google TPUs. And so Google's very well positioned as Ben Thompson is writing. So he says this should give them their position that they have an at scale ASIC alternative to NVIDIA GPUs should give them a meaningful cost advantage to that end to the extent that cloud compute becomes commoditized is the extent to which Google actually has a margin advantage. Because if all of the clouds are commoditized, but all of them are on Nvidia, and then Google is taking the Nvidia margin basically from their TPU, they should be in a very good spot. This is to be sure a bit weird. Porat gained these plaudits those plaudits because there was so much waste in Google to cut which was downstream of the company's amazing monopoly and margins and search which hardly seems like the recipe for a structural cost advantage. But here we are. [00:29:11] S0: Sundar is gonna tell every employee, we're cutting your daily massage allowance from three massages down to one. We're deeply sorry, but we need to get fit. [00:29:20] S1: Gotta get fit. And you gotta get on Vanta. Automate compliance, manage risk, improve trust continuously. Vanta's trust management platform takes the manual work out of your security and compliance process and replaces it with continuous automation whether you're pursuing your first framework or managing a [00:29:34] S0: company's framework. Talking with Christina yesterday. She's an absolute dog. [00:29:40] S1: Boardroom general.
00:29:40 · John Coogan, Jordi Hays
[00:29:40] S1: Boardroom general. [00:29:40] S0: Boardroom general. [00:29:41] S1: She put the KPIs in orbit. [00:29:43] S0: She she really has. [00:29:44] S1: She really has. [00:29:45] S0: Did you see that? Did you see that? [00:29:47] S1: It. The Reed shirt. [00:29:49] S0: Yeah. The Reed's chart. She says It's just the Andrew said Christina often talks about stacking rice on the chessboard. Yeah. I didn't see this until after the show but I was like it seems like you guys are just chopping wood. Like Yeah. There like [00:30:03] S1: That's what it is. [00:30:04] S0: Putting in the work.
00:30:04 · John Coogan
[00:30:04] S1: Just you know, a couple percent here, a couple percent here. Just very consistent growth, very consistent growth, very smooth growth curve into a monster of business. So, congrats to everyone over at Vanta on the new round. And we will go back to Google. So, more broadly, the way in which Google seems to have flipped the switch in terms of going all in on AI along with Meta's spending on AI talent really does strongly suggest that AI in the end is a sustaining technology that favors the incumbents most of all. Both see a line of sight to new revenue streams and critically, both can fund AI from profits, not speculative investment or debt. And of course, both have distribution including search. Sometimes the Empire Strikes Back. I love that. So there were other takes from from search. You'll have to subscribe to Stratechery to get the full analysis. You gotta go and subscribe to Stratechery. If you're not subscribed, what are you doing? But the interesting takeaway from from search is that there it seems like Google's being a little squishy about hey, we don't want to report certain KPIs anymore. So they used to report paid clicks, and now the chief business officer, Philip Schindler, is saying and and on your paid click question, look, to be very clear, I think we said this before, we manage the business to drive great outcomes for our users and attract attractive ROI for our advertisers. We don't We actually don't manage to pay clicks or CPC targets which is fair and good, but it's funny because Ben Thompson is like, but I want that data. That would be helpful to me.
00:31:35 · Jordi Hays, John Coogan
[00:31:35] S0: I mean, when a business has a metric that they tell you is important for a long time and then they suddenly tell you it's not important. [00:31:42] S1: Don't worry about it. [00:31:42] S0: You gotta But [00:31:43] S1: it does make sense. They're a huge business. They've moved on to to bigger and like higher levels of abstract. [00:31:48] S0: Just look at the growth in tokens. Yeah. Yeah. But Don't worry about anything else. [00:31:52] S1: What what he says is that there are there are product changes and policy changes that actually drive better monetization but at the expense of paid clicks and that's probably AI searches and stuff like that. You'll see in the 10 Q paid clicks were up 4% year on year, but a number of factors affecting this these metrics from quarter to quarter such as advertiser spending, product changes, policy changes, user engagement. So it's really important when it comes to pay clicks and CPC to avoid drawing overly broad conclusions solely based on these metrics. Don't put me in the truth zone on this, he says. So Ben Thompson, this is exactly what you said. I don't even think you pre read this but you basically have Ben Thompson working in your head because [00:32:32] S0: This is what I said when Ben Thompson came on the show. Was like, I think your way of thinking has been so ingrained into my mind Yep. That I I think that I have an original thought and you've already thought it.
00:32:32 · Jordi Hays, John Coogan
[00:32:32] S0: This is what I said when Ben Thompson came on the show. Was like, I think your way of thinking has been so ingrained into my mind Yep. That I I think that I have an original thought and you've already thought it. [00:32:42] S1: Okay. So this is what he says and it's literally I haven't read just the article. It says, the more that management tells me not to pay attention to paid click rates, the more I want to pay attention, which is exactly what you just said. Regardless, once again, the fact that paid clips, paid click pay clicks were up 4% and search revenue was up 12% makes it clear that search growth is primarily being driven by higher prices. And so the actual number of clicks is up 4%, but revenue is up 12. That means that they're monetizing each click better. But people are obviously gonna read into, oh, paid clicks aren't growing that fast. Like the actual pie isn't growing that fast. They're just getting like It's basically like, you know, once Instagram reels is is popular, everyone's watching it, then you just gotta put more ads in the feed. Right? And that's kind of that seems like what they're doing and that's what's driving search revenue up 12%. AI overviews is another question. This is a funny one where basically the the chief business officer Philip Schindler at Google says basically says that AI overviews are monetizing as well as other Google searches. And Ben Thompson says, given the fact that the vast majority of Google searches don't monetize at all because people just click on the link
00:33:59 · Jordi Hays, John Coogan
[00:33:59] S0: That's what I'm that's asking. Oftentimes the if you're searching for information that you can have very low purchase intent. Right? Like, how many times a day do I search for a specific fact? Yep. And never would have you could show me the best ad in the world, I wouldn't click through because I'm just looking for a fact. [00:34:17] S1: Yep. So if you're looking for something like, you know, Hulk Hogan's age, that's not a that's not a purchase intent. If that comes from an AI overview or it comes from a you know how they used to have those, like, knowledge boxes or, like, we would pull from Wikipedia. Or if you click on Wikipedia, none of that is making Google any money. So it really doesn't matter the UI or the actual underlying technology to get you that answer. And then Gemini is on absolute tear. Really remarkable. How how many monthly active users do you think the Gemini app has? These are MAUs, not DUs. [00:34:52] S0: On the mobile app? Web app? [00:34:54] S1: Gemini app. Combined? Yep. I think this is probably across mobile web and desktop but I would assume mobile. [00:35:01] S0: 520,000,000. [00:35:03] S1: Oof. Big. Right? And [00:35:05] S0: it And that's signed like, I guess I get I mean, they kind of get the it's kind of a they cheat code because everybody already has a Google account so they're like Yep. Signed in. Yep. But in in term I I don't know.