Taking Stock / The Google Economy

There is no such thing as "new economy", they said.

The bubble has long burst, Internet stocks collapsed, startups folded in droves, and dot.com became a dirty word.

There is only one economy, one in which revenue is supposed to be greater than expenses, an economy driven by profit and by serious people who get up in the morning and go to work.

Well, let's not argue over terminology, whether it's the old economy or a new one. You decide for yourself how to call this.

On Tuesday night, Google published its results for 2004. The six-year old company founded by two young men in their 20s achieved $3.2 billion revenues and netted $400 million. Now, is that old economy, or new?

Its net is only part of the story. Google also has significant expenses that generate no cash flow, mainly expenses in the form of stock options for workers. Its cash flow report shows that in the fifth year of its existence, the company generated a billion dollars in cash, expanding its kitty to $2.7 billion. Now, is that old economy, or new?

A thousand learned treatises explained that the $30 billion valuation at which Google floated on Nasdaq was excessive. But since then, its share price has risen 90 percent and then some, lifting its market cap to $57 billion, which is more than General Motors and Ford together. Now, is that old economy, or new?

Seven years after its establishment, more than 200 million people use Google. In those seven years, the word has become a verb: "to google" means to search the worldwide web using its search engine. If before a date a friend says, "I googled him," she means "I looked for information about this guy before our date, using Google's website."

Few are the students, businessmen, consumers or readers who haven't googled a name, a company they want to buy or consult, a product they may want to buy. Now, is that old economy, or new?

Once upon a time, if you wanted information on a businessman, you had to ask his friends and acquaintances. Now the mantra is: tell me what links lead the list when your name is googled, and I will tell you who you are. Now, is that old economy, or new?

I googled the dude

Google is a latecomer to the Internet search industry. It followed the Internet explosion by five years, competing with dozens of incumbent search engines. It faced established mammoths like Yahoo! and economic giants such as Microsoft.

Yet even the elephants couldn't stop the mouse from roaring, and, within a few years, becoming a worldwide household name. Google is one of the 10 best-known brands in the world, and one of the 20 biggest companies, in terms of market cap. Now, is that old economy, or new?

Okay, preparing for its initial public offering cost Google a price: Yahoo! and Microsoft are hot on its heels, and even Amazon is trying to pose competition.

But whether or not Google continues to grow at the same astonishing pace, or whether or not it starts to lose market share to the rivals, clearly what stands behind its success is something bigger, something more resilient, something stronger than Google itself.

It is the Internet that day in and day out, changes the way hundreds of millions of people read, learn, communicate, consume, study or merely entertain themselves.

It is the Internet that slashes prices, topples business models, erodes links in the value chain, connects millions of people, hops over boundaries, disseminates information at an eye-blink, mocks censorship, and gives birth to hundreds of new services that never existed before.

You tell me, is that old economy, or new?