In sterile conference halls across the country, you hear talk of fresh young disruptors, but what the industry really wants to hear about is Google, writes new guest columnist Joe Haslam

The scare-the-pants-off-them presentation on ‘disruption innovation’ goes as follows. Managers at Nokia and Blackberry knew what Apple and Android were up to even before their customers did. In response, they did all the things you would expect. They prioritised relationships with their biggest accounts; they weren’t lazy or stupid. Yet these once great companies are now shadows of their former selves, and it will happen again unless you start to understand the new business models being created out there in the startup world.

When I give this presentation, the two examples I use of these difficult-to-compete-against companies are Uber and Airbnb. Although still private, both companies share data on their blogs about how the companies are doing. And at recent valuations of $17 billion and $10 billion respectively, there must be already a hell of a lot of rides given and nights booked. Yet even after telling these stories, as well as stories from other industries where incumbents have been displaced by disruptors, the reaction is still one of curiosity rather than alarm. It’s only recently that I uncovered that it is a different name that invokes every manager’s Voldemort complex.

To get a heated debate going, a frisson of excitement in an otherwise sterile conference room, the name you need to invoke is one that is commonplace, yet at the same time mysterious and elusive. Even if you want to talk about Uber or Airbnb, what the industry is really interested in is Google. 

Why every business needs a Google watcher

At the time of the dot.com boom in the late nineties, it was quite common to say that a bricks and mortar company had been ‘amazoned’, that customers had migrated from visiting physical retail locations to buying online. On earnings calls, analysts routinely asked: how do you plan to compete with Amazon.com?

The more recent equivalent of this takes place in venture capital offices where every entrepreneur with a business plan is asked: ‘could Google enter your industry and how would you respond?’

Although more than 90% of Google’s revenue comes from advertising (AdWords and AdSense), Larry Page loves ‘moon shots’ and they have $58 billion of cash on hand to enter any industry they want to. So everyone from General Motors (self-driving cars) to AT&T (Google Fiber) needs to have an internal group of Google watchers. These though are separate business units and may one day be nothing more than Wikipedia entries under Google Discontinued Products and Services.

But hang on a minute. Google has the world’s biggest search engine, biggest web browser, biggest video platform, biggest email service and biggest mobile operating system. Right now these serve to attract eyeballs that then click on ads. But what if diversification acquisitions like Nest (which makes smart devices) turn out to be like Motorola (which they sold to Lenovo at a loss)? Will there be pressure to sell products and services directly to their users? To go into fulfilment, not just search?

In a sense, they already do. Google Flights and Google Hotel Finder are quietly gathering pace and starting to compete directly with some of their best customers. Google Flights is a product of the 2011 acquisition of ITA Software.

The deal took eight months to get through antitrust and was opposed by Fairsearch, a group of OTAs concerned Google would de-emphasise search results to favour Google’s new flight search tools. The US Justice Department imposed conditions and Google itself stated it would play fair or indicate accordingly. Fairsearch has now extended its number to seventeen web and technology companies and hired lobbyists to counter Google’s considerable lobbying weight. Fairsearch’s members say Google makes inferior products that they are happy to compete with but no one likes losing and the more a product fails, the more temptation there will be to ‘be evil’.

Google Hotel Finder has been around since August 2011 but did a significant licensing deal with hotel-booking software startup Room 77 in April 2014. Part ‘acquhire’ and, yes, some of the engineering team has moved down the road to Google, and part Trojan Horse (some hotels had issues interfacing directly with Google’s technology requirements), the search experience is starting to look more and more like Priceline and Expedia.

So what is Google’s next step? And what are others doing in defence? Don’t miss Part 11 tomorrow: Are startups the new patents?

Joe Haslam is chairman of Hot Hotels, a same day, mobile only hotel booking app based in Spain. See hot.co.uk or follow on Twitter at @hot_app. Tomorrow