Growth is a heady advantage for tech companies, and not because of an ideological commitment to "growth at all costs," but because companies with growth stocks enjoy substantial, material benefits. A growth stock trades at a higher "price to earnings ratio" ("P:E") than a "mature" stock. Because of this, there are a *lot* of actors in the economy who will accept shares in a growing company as though they were cash (indeed, some might *prefer* shares to cash).

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This means that a growing company can outbid their rivals when acquiring other companies and/or hiring key personnel, because they can bid with shares (which they get by typing zeroes into a spreadsheet), while their rivals need cash (which they can only get by selling things or borrowing money).

The problem is that all growth ends. Google has a 90% share of the search market.

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Google isn't going to appreciably increase the number of searchers, short of desperate gambits like raising a billion new humans to maturity and convincing them to become Google users (this is the strategy behind Google Classroom, of course). To continue posting growth, Google needs *gimmicks*.

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For example, in 2019, Google intentionally made Search less accurate so that users would have to run multiple queries (and see multiple rounds of ads) to find the answers to their questions:

wheresyoured.at/the-men-who-ki…

Thanks to Google's monopoly, worsening search perversely resulted in increased earnings, and Wall Street rewarded Google by continuing to trade its stock with that prized high P:E.

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The Man Who Killed Google Search

Wanna listen to this story instead? Check out this week's Better Offline podcast, "The Man That Destroyed Google Search," available on Apple Podcasts, Spotify, and anywhere else you get your podcasts.

^{Edward Zitron (Ed Zitron's Where's Your Ed At)}

But for Google - and other tech giants - the most enduring and convincing growth stories comes from moving into adjacent lines of business, which is why we've lived through so many hype bubbles: metaverse, web3, cryptocurrency, and now, of course, AI.

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For a company like Google, the promise of these bubbles is that it will be able to double or triple in size, by dominating an entirely new sector. With that promise comes peril: growth must eventually stop ("anything that can't go on forever eventually stops"). When that happens, the company's stock instantaneously goes from being a "growth stock" to being a "mature stock" which means that its P:E is way too high.

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Anyone holding growth stock knows that there will come a day when those stocks will transition, in an eyeblink, from being undervalued to being grossly *overvalued*, and that when that day comes, there will be a mass sell-off. If you're still holding the stock when that happens, you stand to lose bigtime:

pluralistic.net/2025/03/06/pri…

So everyone holding a growth stock sleeps with one eye open and their fists poised over the "sell" button.

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Managers of growth companies know how jittery their investors are, and they do everything they can to keep the growth story alive, as a matter of life and death.

But mass sell-offs aren't just bad for the company - it's also *very* bad for the company's key employees, that is, anyone who's been given stock in addition to their salary.

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Those people's portfolios are extremely heavy on their employer's shares, and they stand to disproportionately lose in the event of a selloff. So they are *personally* motivated to keep the growth story alive.

That's where these growth-at-all-stakes maneuvers bent on capturing an adjacent sector come from.

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If you remember the Google Plus days, you'll remember that every Google service you interacted with had some important functionality ripped out of it and replaced with a G+-based service. To make sure that happened, Google's bosses decreed that the company's bonuses would be tied to the amount of G+ activity each division generated. In companies where bonuses can amount to 90% of your annual salary or more, this was a powerful motivator.

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