sinovels Chapter 135 Google's Financial Situation
Chapter 135 Google's Financial Situation
Chapter 135 Google's Financial Situation
As I left Google's Tunes headquarters, dusk had already painted the Mountain View skyline like melting ink.
Ernst gazed at the rapidly receding street scene outside the car window, while Sergei Brin, who had been sitting beside him, remained silent since getting into the car.
The quiet inside the carriage carried a certain invisible pressure. The gentle breeze from the air conditioning vents circulated repeatedly in the enclosed space, lifting a few stray strands of hair from Sergei's head.
Ernst knew he had figured it out: the problem with Google Tunes was actually a problem with his management skills.
He managed a Google search with ease, but once the projects became numerous and complex, Sergei Brin experienced the feeling of being overwhelmed.
After a long while, as the car was about to arrive, Sergei Brin suddenly straightened his back, as if he had finally made up his mind, and broke the silence after his Adam's apple bobbed twice.
"Google is still growing rapidly, and there will likely be more and more projects in the future... I think it's time to find a competent CEO for Google."
Ernst had a strange expression on his face, and he had a feeling that the other person was cursing him.
What makes a competent CEO? Isn't the current Google CEO himself?
However, Ernst knew that he definitely didn't mean it that way. After getting to know him over such a long period of time, he knew that Ernst was a guy who would never express his dissatisfaction in a roundabout way.
This is Sergei Brin's self-criticism; he was referring to himself.
"What are your thoughts?" Ernst's tone remained calm, but his eyes were watching the other person's reaction.
As a veteran who had been with him since the beginning of the company, it would be best if the other party could figure things out on their own. However, as a long-time loyalist, Ernst certainly couldn't let the other party down, otherwise who would still follow him to build the empire in the future?
Sergei Brin turned his head, and the streetlights that were already on cast interplay of light and shadow on his angular face.
"If possible, I hope to focus on the search engine business." He spoke quickly, with an undeniable certainty, but his tone unconsciously softened at the end of the sentence.
"From the initial development of the PageRank algorithm to the evolution of each iteration, whether it's business or technology, my understanding of Google's search engine is second to none. I believe I can take on this role and I'm sure I can do it well."
Ernst did not respond immediately, but simply gave a soft "hmm".
He gazed at the road sign illuminated by the car headlights ahead, already having his own ideas.
Silence fell in the carriage again, but this time it was less sluggish than before.
As the car turned into the familiar streets of Mountain View, Ernst suddenly asked, "How long can our funds last?"
Having just raised over seven hundred million dollars, they immediately turned their attention to Google's financial situation, which shows just how much money the internet industry burns.
"First, a portion of the funds will be diverted to repay the bank's debts that are about to mature."
Google has debt; otherwise, how would it have gotten the $600 million loss it was reported to be making this year?
Wells Fargo's investment in Ernst has finally paid off. Google's first and only loan to date is a three-year, $200 million debt agreement with Wells Fargo.
The loan will be repaid in six installments, one installment every six months, totaling $2.28 million in principal and interest, with an annualized interest rate of less than 4.7%, far lower than the average financing cost of 6.5% for corporate financing.
This interest rate is already very low. Besides the promising prospects shown by Google itself, the fact that it was able to obtain this rate also reflects the deliberate efforts of wealthy countries to cultivate good relations with it.
For banks, giant corporations are cash cows. Even if these companies are very wealthy and have a lot of cash on hand, they are still destined to borrow money.
Because credit is a crucial element in the financial system.
Not having any debt means that a person or company has no credit, and when they urgently need money, the amount of funds they can borrow is pitifully small.
Many people who use online loans know that as you borrow more and more money and repay on time, your loan amount will also increase.
This is the change brought about by credit. Every time you make an on-time payment, your credit limit will increase. The higher your credit limit, the larger the loan amount you can get, until you reach the designed limit.
It not only affects borrowing, but for listed companies, it also affects a company's credit rating.
To put it another way, it affects stock prices.
Therefore, many large companies, even though they are not short of money, still borrow again after one loan matures, letting the bank earn their interest and giving money to the bank for free.
Ernst always felt that this was a scheme devised by Wall Street to exploit all companies for free.
"The biggest expense will definitely be the data center at the new headquarters."
Google expects the construction of this data center to cost a total of around $200 million.
Not just Google's new headquarters, but also those in Europe, South America, and Asia.
According to the initial plan, Google will first build four large data centers around the world, with the new headquarters being the first to be built and put into operation.
"The rest are daily expenses, such as internet fees, labor costs, and water and electricity bills."
These three items also reflect the main daily expenses of Internet companies. With the establishment of Google's iTunes project, regardless of recruitment, Google's employees will soon exceed 500, with an average salary of $47,700 per year.
The reason why the average salary is so high is mainly because Google has a high proportion of engineers, while there is a shortage of administrative positions.
Google now spends over $20 million a year on salaries alone, which is over $2 million a month.
Once the new headquarters is completed and Google significantly expands its workforce, the total number of employees is expected to reach around 1500.
However, with the increase in a large number of administrative positions, the average salary is estimated to drop to around $4.3 a year, at which point the annual salary would be $6500 million.
And that's not the biggest expense; internet and utility bills are even more expensive.
In this era where internet speeds are not as reliable as they used to be, the speed of the internet has become a crucial factor in determining the user experience of a website.
Broadband is the most critical factor in determining the access speed of a host, especially for websites with high traffic, where network speed is particularly important.
Therefore, Google has always been very willing to spend money on internet speed.
The broadband provided by internet companies is different from the home broadband provided by ordinary internet users. Internet companies provide dedicated broadband, with the operating company running fiber directly to your server room, and the rest is distributed by the enterprise itself using switches.
Google's massive user base goes without saying; in fact, after the launch of Gmail, they even added a separate line for it.
These websites are all major consumers of internet fees. The more users they have and the higher their traffic, the higher their broadband costs become.
Google's data centers are currently connected to AT&T's leased fiber optic lines, with the cost of the lines in North America alone reaching $2400 million per month.
This is higher than the total salaries of all employees, not to mention the cross-border bandwidth costs for the European and Asian nodes.
Although Google's user base can't compare to the hundreds of millions or billions of users that internet companies will have in the future, internet fees are still incredibly expensive.
In human history, if there's one thing whose price hasn't increased but has actually decreased, it's probably internet fees.
While internet fees may seem to increase year after year, internet speeds have indeed improved.
Google's monthly utility bills are no better, and are equally alarming.
Cooling down data centers has become a perennial topic in the internet industry.
Whether it's physical or magical, it's all supported by huge expenditures on water and electricity.
The bill he received from finance last month showed that Google's monthly utility bills now exceed eight million dollars.
"The procurement, construction costs, labor, utilities, and internet fees for the new headquarters. If Google only increases its workforce to around 1500 people, our funding will be more than enough to last a year."
Ernst chuckled. How could it be just an increase in the number of employees?
Once Google Tunes goes live, it will be another major player.
As the number of internet users worldwide increases and Google's various services grow, both hardware costs and internet fees (water and electricity) will also increase.
Ernst estimated that it would be good if it could last eight months.
"But it's enough. Given Netscape's current state, it's absolutely impossible for it to last that long."
The latest data shows that Netscape's market share is declining at a rate of 1.2% per week, and their cash flow will last until December at the latest.
Once Netscape falls, Google Chrome launches, and Google's Google services are discontinued, funding will no longer be an obstacle to Google's development.
At that time, birds will soar freely in the sky, rising straight up nine thousand miles.
After returning the item to its owner, Ernst did not linger but instead drove straight to San Jose.
San Jose is only 20 kilometers away from Mountain View, about a 25-minute drive.