Best Of The Web: Google’s secret investment algorithm

Google has been in the spotlight recently, and with good reason. It recently posted some better than expected profits, and by all accounts its new social network is beginning to pick up traction and may even have 18 million users – perhaps the first big challenger for Facebook.

But a new story about the search giant reveals an interesting approach. With millions in tech investments floating around, sparking debates over whether the current market is a bubble or not, Google has decided to get in on the action as well.

But according to this story in the New York Times, it’s taking a different route – Google is actually using algorithms to determine which investments will produce the best result. In fact, it’s plunged $US200 million into its venture arm to test out its theory.

“Google says the algorithms have taught it valuable lessons, from obvious ones (entrepreneurs who have started successful companies are more likely to do it again) to less obvious ones (start-ups located far from the venture capitalist’s office are more likely to be successful, probably because the firm has to go out of its way to finance the start-up.)”

The story also points out that employees are able to claim $10,000 if they recommend a company that receives an investment. And those employees may end up coming back to the Googleplex – three ex-employees have started companies, only to be acquired back by Google.

Every tech investor is looking for the next big thing. But with its top-of-the-line algorithm, Google may have an edge.

An inside look at the hiring process

Speaking of Google, much has been written about the length to which potential employees are grilled before they’re given a post at the world’s largest search company. Reports of strange questions and even stranger interview procedures have flooded the internet for years.

This story in the Wall Street Journal, written by Google’s brand manager Douglas Edwards, explains how in 1999 the first interview process involved some unconventional techniques.

One particularly unusual procedure was that Larry Page would ask every interviewee to explain something in detail that he didn’t know about – Edwards spoke about a particular marketing theory.

“He seemed to be paying attention, and I began enjoying myself. We were developing a special rapport! Clearly, he wanted to hear what I had to say and valued my opinions.”

“Later I found out that Sergey did this with everyone he interviewed. An hour wasted with an unqualified candidate wasn’t a total loss if Sergey gained insight into something he didn’t already know.”

The piece gives an interesting insight into the way Page, along with Google’s executives,  think about the hiring process.

Upset about unemployment? Blame Microsoft

There’s no question that employment prospects in the United States are poor. National unemployment is above 9% and in some areas is edging closer to 20%. The country is in the grips of a crippling recession and a recovery is likely to take several years.

But Gene Marks, writing for Forbes, has a different view. He says that GDP growth in the US is now above pre-GFC levels, and that manufacturing capacity has grown even though that sector has shed jobs.

He believes the economy simply doesn’t need as many people to perform the same amount of tasks. And Microsoft, along with other technology providers, are to blame for allowing more processes to be outsourced.

“As a business owner it’s a no-brainer to me that if I can profit from your skills I may very well be persuaded to hire you. What expertise can you bring to me that a machine can’t do for much less?”

“I have to meet that challenge with my own customers. That’s the challenge that we all face.”

Apple – the biggest company in the world

There’s been a lot of talk about Facebook lately, planning an IPO next year that could be worth as much as $US100 billion.

But there’s another tech giant that deserves just as much attention – if not more. A new piece on TechCrunch examines the possibility that Apple could soon become the most valuable company in the world.

The piece is timely. Apple just released its best quarter ever, with profits up a staggering 125%. With more products scheduled for this year and the iCloud suite coming as well, Apple doesn’t show any sign of slowing down – a far cry from the near-bankruptcy days of the late 1990s.

“When we predicted that Apple would pass Microsoft in value in March 2010, many people were up in arms, thinking it wouldn’t happen. It took just two months,” writes MG Seigler.

Apple is now worth more than HP, Dell and Microsoft combined. Becoming the world’s most valuable company isn’t much of a stretch.