[ DISCLAIMER: I don't own, and have never owned, any Google stock. I put my money in bonds and bet big in the company I run. ]

That’s an insane prediction I was told, after I made it in front of a half dozen of the most important public market investors in the tech world at a conference recently (think the largest shareholders in Yahoo and Google). It was midnight and folks were on their second or third Macallan 25*, but folks immediately sobered up.

How on earth would Google raise their US market share 20 points in one year–that’s impossible one person replied. The perfect storm recently arrived, and after all Google (according to Compete, see chart below) jumped 10% over the last year.

Frankly, I don’t see why the Google marketshare train wouldn’t accelerate, given the following factors:

1. Ask.com has thrown in the towel conceding four percent market share
2. AOL threw in the towel when they ripped out their innovative 3D-esque search called Full View (dropping it was a big mistake according to many)
3. Microsoft and Yahoo are stuck in meetings for at least the next 12-24 months–it’s hard to innovate when you have to deliberate.
4. Google’s invested massively in talent and infrastructure over the past two years–Yahoo laid folks off.
5. Many folks have internal stats are showing 80% marketshare already–Comscore/Compete/etc. are probably trailing internal logs by 5-10%.
6. Crawling the web is getting harder and harder, making Google infrastructure investment more and more leverage-able
7. Google has been investing in the user experience by reducing the number of advertisements

As you would suspect folks had some objections to my position:

1. “No one has had 90% marketshare in search before.” Actually, Google has 90% marketshare in many other markets–it’s not impossible to imagine that would happen here. Yahoo has had 90% marketshare in non-US markets before.
2. “Aren’t the smart folks leaving Google to start new companies?” Sure, some smart folks are leaving , but Google has added thousands of employees over the past three quarters (while telling Wall Street they were slowing down on hiring–yeah right!). Google has the smartest minds in search performing at an extremely high-level right now, losing some big brains isn’t going to slow the train. Additionally, the really smart folks who’ve left are not building startups to take on Google’s core search business–doesn’t that tell you something? These folks know Google’s search train isn’t going to be slowed so they are building companies that thrive in the Google ecosystem.
3. “Doesn’t Google’s dependency on advertising make them very susceptible to the massive recession we’re facing?” Actually, no. The recession is going to *benefit* Google because

   (a) If Google has more inventory they can lower the cost per click creating increased value for suffering marketers.
   (b) Google could easily add more advertising as their marketshare increases. Right now Google has 60-70% of the advertising space of their competitors. They could add 20-30% more advertising and *still* be perceived as a better user experience

The current price of Google’s stock is probably the last historic chance to get in on what will be a juggernaut–recession or no recession. Google’s management team is very content with their net worth I’m sure, and given my (limited) interactions with senior Google folks I get the sense that they care much more about their legacy, the thrill of solving big problems, and the quality of their products and organization than they do about short term stock prices.

People who win big in life are typically not driven by financial gain, they are driven by an internal spark that makes them want to win, compete, and solve problems with a community of like minded people. That’s the exact description of the people who “work” at Google (and Apple).

Google will invest heavily during the recession–as smart folks do–and they will add 20% to their already impressive marketshare in the US.

Yahoo and Microsoft might be players in the market, but it’s going to take them a long time to turn it around–like a decade. Yahoo and Microsoft are looking at a marketshare battle similar to the one Steve Jobs has been doing for the better part of decade. **

The winner does, indeed, take all***.

* Tip for folks new to the conference grind: the best discussions take place after 11PM when 80% of the bar has left, typically at the table drinking the most expensive scotch.
** I do think there is a chance that Microsoft after buying Yahoo could compete with Google and keep Google to 80% marketshare, but historically these combinations of companies take a long time to get results–if they ever do.

*** I’ve been looking for the Microsoft/MSN memo “Google–the winner takes all (and not just search)” — if someone has it can they email it to me at jason at mahalo.com?