They Don't Have to Admit It: Six Signs a Company's New Business Has Failed

Google+ is a textbook case.

In early 2011, facing a younger Silicon Valley rival that had overtaken it, an American tech giant poured in money and changed its CEO. Four years later, the effort had failed completely.

We don't mean Microsoft, which publicly announced a change of direction and wrote down assets after admitting its challenge to Android had failed. We mean Google, which tried to build its own social network to take on Facebook.

Google still shows no sign of admitting that Google+, the project it threw everything at, is dead.

Yesterday it announced that its other services will no longer require a Google+ account to log in. Even so, Bradley Horowitz, who has run Google+ for just over four months, is still talking about "a more focused social experience," and argues that once "unbundled" from other services, Google+ will soon become a platform for sharing content around interests.

And because Google+ earns little money, Google is under no obligation to report its numbers.

But you don't need a company's admission to judge the health of a flagship project. There are already plenty of signs that Google+, which Google fed with every resource it had for four years, is falling apart:

The name quietly disappears from the annual report

As a listed company, Google uses its annual report to sum up the year, list its operating figures and explain its strategy to investors and analysts. How the report describes a project is a fairly reliable guide to whether the company still backs it.

Google+ finally launched in mid-2011 after long anticipation, and that year's annual report mentioned it four times. It appeared twice in the "highlights" section alone: Google+ itself was a highlight, and so was the decision to make it a priority, listed as the main item under "setting product priorities." It was the highlight of the highlights.

In 2012 Google+ kept its place in the report. Larry Page, nearly a year into his second stint as CEO, also added a letter, "2012 Update from the CEO", to the founders' letter that Google traditionally sends investors. He opened it with a full subsection on Google+, telling investors that a simpler, more intuitive Google experience was his top priority and that Google+ had been built for exactly that purpose.

From then on, Google mentioned Google+ to investors less and less.

A year later, Google+ appeared only once in the 2013 annual report, and it was gone from the "operating highlights." The report simply described the service (users can share different things with different people) and gave one figure: 540 million monthly active users as of October 2013. It was the last user count Google ever published for Google+.

Google's enthusiasm for Google+, as measured by its annual reports, had clearly cooled.

By 2014 the annual report did not mention Google+ at all. Its slide to the margins could no longer be reversed.

An executive says, "I don't want to talk about numbers"

Google+ did not only lose standing with investors, falling faster and faster. Google also grew unwilling to give the public any figures for it, above all the user count that matters most to a social network.

It wasn't always like this. In the second week after launch, while Google+ was still invitation-only, Larry Page eagerly announced that it had passed 10 million users, and said Google's opportunity was bigger than ever.

After registration opened, it was again Larry Page who announced in January 2012 that Google+ had passed 90 million users.

In September 2012, Vic Gundotra, the senior vice president then in charge of Google+, posted on his own Google+ page to celebrate 400 million users.

After that, official updates came more and more slowly, and the 540 million monthly actives in the 2013 report were the last number released. In October 2014, David Besbris, the new head of Google+, was asked about users in an interview with the tech site Recode and replied: "I don't want to talk about numbers." In that year's annual report, Google+ had vanished.

*User numbers of the world's major social networks, March 2015. Source: *Statista

Because Google won't say, analysts can only guess at Google+'s user numbers, much as Apple recently declined to break out Apple Watch sales in its earnings. The silence suggests the numbers are not pretty.

Third-party data do show Google+ shrinking. Statista estimates that it had only 300 million monthly active users in March 2015, more than 200 million fewer than at the end of 2013.

The harshest estimate comes from @dredmorbius, who wrote code to scrape and analyze what Google+ users share. Leaving out comments synced automatically from YouTube, he found that only 9% of Google+'s 2.2 billion accounts with a filled-in profile had ever posted, and that by January 2015 only 6% of that 9% were still posting. He concluded that Google+ has just 4 million to 6 million truly active users.

*Google+'s truly active users, as estimated on dredmorbius's blog. **Source: *Ello

There is another number Google executives never wanted to mention: average time spent on the site, the usual measure of how well a site holds on to its users.

As early as February 2012, the market research firm ComScore reported that Google+ users spent an average of just 3.3 minutes a month on it, next to nothing against Facebook's 7.5 hours. A year later the figure had risen, but only to 6 minutes 47 seconds, still nowhere near Facebook's.

Executives leave, one after another, faster and faster

The real turning point for Google+ came on April 24, 2014. That day Vic Gundotra, the Google senior vice president known as the "father of Google+," suddenly announced he was leaving.

He said his departure had nothing to do with Google+, and Larry Page stressed repeatedly that Google would "continue to build great experiences for the growing number of Google+ fans." Still, people began to doubt Google+'s future.

TechCrunch even argued at the time that his exit gave Google a chance to change strategy and demote Google+. That argument itself shows how much weight Google's leaders had given the project until then.

On April 4, 2011, Eric Schmidt stepped down after nearly ten years as Google's CEO, and Larry Page returned to the job. Facebook already had 500 million users and was the world's largest social network, and Google felt threatened.

In his first week, Page wrote in a memo to the whole company that Google's strategy was to "integrate relationships, sharing and identity across all our products," and announced that employee bonuses would depend on the company's success in social.

He also reorganized senior management and named Vic Gundotra senior vice president for social. Gundotra had joined Microsoft in 1991 and spent 16 years there before moving to Google. Before Google+, he ran Google's maps business and developer relations. He brought route planning to Google Maps and was known for organizing Google I/O, the company's developer conference.

Once he took over social, Gundotra was seen as the driving force behind Google+. So when he left, Google+ lost its bearings and went through two leaders in a year.

His successor, David Besbris, achieved nothing. In his October 2014 interview with Recode, he mentioned few concrete product improvements. Mostly he repeated that Google was committed to Google+ as a long-term strategy, as if still trying to quiet doubts about whether it would die.

In March 2015 Besbris left, less than a year after taking the job. His successor, Bradley Horowitz, began breaking Google+ apart and reshaping what remained.

The business starts to be broken up

In fact, Horowitz's job was no longer the old "vice president in charge of Google+." What he actually runs is Google's Photos and Streams products.

On the day Horowitz took over, Sundar Pichai, Google's senior vice president for products, hinted at Mobile World Congress that Google+ would be split into photos and communications, with Hangouts becoming a standalone product.

That was only the first step. At Google I/O in May, the photo business was split off and relaunched as a standalone app, Google Photos.

The newly launched Google Photos

By now the original Google+ exists in name only. Horowitz says the split puts features "where they belong," and what is left of Google+ will keep a single core function: sharing around interests.

This is Google+'s creation run in reverse. Google+ was first assembled by merging these three sets of features, and Hangouts itself, under Google+, combined several products, including Google Talk, Google+ Messenger and Google Voice.

A product is still growing only if new features keep being folded into it. When its services are stripped away one by one, it is being pushed aside and will gradually be abandoned. That is true of any product, Google+ included.

It can no longer hire

The clearest sign of a product's decline, of course, is where the staff go.

In late April 2014, just after Gundotra announced his departure, Larry Page was still trying to convince everyone that Google would keep investing in Google+. But TechCrunch reported that Google had already moved 1,000 to 1,200 core developers from the Google+ team to other projects.

This July, The Wall Street Journal reported that as Google cut costs, the Google+ project had been restricted from hiring since last year. Nest, the team at the heart of Google's smart-home business, was meanwhile given more room to hire.

Back when Gundotra was driving Google+, even Google Reader, a hugely popular RSS reader, was shut down. Years later, a former Google Reader product manager explained that the Reader team had been seen as "the only people at Google who understood social," so Gundotra, ignoring public criticism, folded the Reader team into his own.

Google employees have also revealed that the Google+ team had its own cafeteria, called "Cloud." It was no big deal, but it shows how well the team was treated at its peak.

It loses the backing of other departments

Google did more than concentrate staff on Google+. To promote it, the company mobilized almost every resource it had to send traffic its way. From the day Google+ was born, whichever Google product people opened, a red Google+ icon sat in the top right corner asking them to log in, and once they did, an unread-notification count flickered beside it.

Google even tuned its search results for Google+. With the Google Authorship markup tool, users could make content from their Google+ pages stand out in search results. Friends you followed on Google+ and posts you had liked were also ranked higher.

An experiment by Moz, a blog that studies search optimization, found that when users searched Google while logged in to Google+, as many as 27 of the top 100 results came from Google+.

*Breakdown of the top 100 Google search results when logged in to Google+**, source: Moz*

In the "Will Google+ die?" debate that erupted when Gundotra left last April, Forbes even argued that if Google kept boosting the search rankings of Google+ content, it might still get further in social.

Google's bigger weapon, though, was to force YouTube, a video platform with more than 1 billion users, onto Google+ accounts. It went so far as to sync users' comments on YouTube videos directly to their Google+ pages.

The policy, enforced from 2013, caused an immediate uproar. One user set up a petition demanding an end to the forced link between YouTube and Google+, and according to The Guardian, it gathered 180,000 signatures in 11 days.

For the sake of its social ambitions, Google held firm against the pressure. To this day, most of the posts on Google+ are synced YouTube comments, and the "hundreds of millions of active users" Google has long claimed were largely padded out this way.

This week, YouTube stopped requiring users to link their accounts to Google+. Most other Google services will also stop requiring a Google+ login and go back to the original Gmail-based Google Account.

It is like the death of Jon Snow in Game of Thrones: viewers never saw the final blow, so they keep asking, "Is he really dead?"

But as Game of Thrones director David Nutter put it, Google+ is now "deader than dead."

Cover image sources: SocialMediaToday, BrandMarketGrow, FastCompany, New Mobile Life