Is Google Drinking Your Milkshake?

A recent Atlantic Monthly article points to growing evidence that we are becoming a short-attention-span society. While "Is Google Making Us Stupid?" is a bit light on hard science, the article got me thinking.

Is our ultrawired culture creating moat compression, similar to the age-compression phenomenon, in which advertisers need to market products to "kids getting older younger"? Ubiquitous information appears to be leading us into an era in which competition taps into market leadership much more quickly than in the past.

There's been no better example of this theory than the fragmentation and accelerated decline of traditional media franchises. Ignoring this shift has proven quite costly for many investors:


% Decrease*


Idearc (NYSE: IAR  )


Yellow pages

Blockbuster (NYSE: BBI  )


Movie rentals

Gannett (NYSE: GCI  )





Broadcast (TV, radio)

Barnes & Noble (NYSE: BKS  )



*Versus 10-year highlights.

While Google (Nasdaq: GOOG  ) tends to serve as the poster child for the entire Internet revolution, the explosion of web 2.0 businesses, including Facebook, News Corp.'s (NYSE: NWS  ) MySpace, and Twitter, are leading the next wave of competitive-advantage destroyers.

I'm talking drainage
Every value investor has been taught to seek companies with defensible moats. However, competitive barriers are increasingly rare, and far more fleeting than ever. Overnight, a seemingly impressive moat filled with crocodile-infested water can be quickly reduced to an innocuous puddle of tadpoles.

Say goodbye to the days of castles, moats, and war metaphors. Get the imagery of the fierce medieval invaders galloping toward your competitive castle out of your head. Moats have been reduced to milkshakes. Yes, milkshakes.

Many of today's competitive advantages are sugar-filled desserts of fat profits. These excess margins are savory and delicious while you have them, but they're quickly being devoured. The new competitors threatening your companies are, and I mean this with the utmost respect, freckle-faced 17-year-old kids in their rooms with giant silicon straws, intent on drinking up your milkshake.

How is this relevant to Fools?
While value investors classically take a bottom-up approach, it would be naive and reckless not to understand the evolving world in which your stocks exist. One of the most important elements of valuing a business is the ability to, with a reasonable degree of certainty, predict the reliability of that company's future cash flows.

A shorter-attention-span society, fueled by rapidly changing technology, will continue to challenge the stability of many modern franchises, across a number of industries. Gone are the days of decade-long runs of unchallenged excess profits.

The intelligent investor needs to know the difference between normal economic cycles and secular societal shifts, and how that difference affects future earning power.

Will there be blood?
I'm not saying you need to be a futurist or get into the prediction business. But you will need to do some lateral thinking if you're going to outperform the market. You must understand how society progresses, and how to identify Rule Breakers who capitalize on these anthropological shifts, for good or for bad.

They're out there, they're hungry, and if you don't watch out, they're gonna drink your milkshake.

More Foolishness:

Google is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Andy Louis-Charles owns shares in Google, and while it never drank his milkshake, the search engine did help him find a local TCBY the other day. Look, Ma, no Yellow Pages! The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 696420, ~/Articles/ArticleHandler.aspx, 10/24/2016 6:51:34 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:02 PM
BKS $10.75 Down +0.00 +0.00%
Barnes and Noble CAPS Rating: *
BLOKA.DL $0.19 Up +0.01 +0.00%
Blockbuster, Inc. CAPS Rating: *
CBS $57.66 Up +1.17 +2.07%
CBS CAPS Rating: ***
FOX $25.91 Up +0.55 +2.17%
Twenty-First Centu… CAPS Rating: ***
GCI $10.43 Up +0.07 +0.68%
Gannett CAPS Rating: *****
GOOGL $824.06 Up +2.43 +0.30%
Alphabet (A shares… CAPS Rating: *****
IAR $0.02 Down +0.00 +0.00%
Idearc CAPS Rating: ***