Google's Rules of Acquisition

waderoush writes "For many startup entrepreneurs, getting acquired by Google is the dream exit. But these days Google is getting a lot more discriminating about what kinds of companies it buys — and a lot more careful about how it integrates newly acquired teams. This article offers an in-depth look at how Google achieves a two-thirds success rate with acquisitions, and why things still occasionally go south. 'The return on our acquisition dollars has been extraordinary,' says vice president of business development David Lawee, Google's M&A czar. But Google insiders say it still takes a lot of work to make sure acquired startups go the way of Android (the mobile operating system, acquired in 2005) and not Aardvark (the social search site, acquired in 2010 and shut down in 2011)."

Comments

Aardvark the extension

[macraig]

And apparently when Google acquired the company Aardvark they also swung the wrecking ball at the lone developer of the Aardvark extension for Firefox. So in the process of acquiring a lame duck and trying to protect its trademark Google also destroyed one of the best extensions for Firefox.

Thanks, Google.

Re:Aardvark the extension

[LordLucless]

True innovation is rare and exceptional, and no company can truly rely on being "innovative" except in their marketing catalogues.

Yes, Google's search and email were iterative improvements on previous designs - but so are smartphones, microprocessors, display technologies, storage mediums, and pretty much any other tech initiative. Please list one thing that MS Research has produced that wasn't an iterative improvement on existing technology - and no, kinnect and surface don't count. Both motion capture (kinnect) and touch-screen (surface) are pre-existing technologies that were just done "a little better" than their predecessors.

Re:Aardvark the extension

[EdIII]

You seem to be very confused.

Can we please put a stop to this FUD? You're just repeating Microsoft talking points.

Just because it may be Microsoft talking points does not mean that those points are incorrect, or that they are merely intended as FUD.

Google does not own you. The only way they get access to your eyeballs is with your consent.

Most people never imply that when they say that consumers are the "product". Google is not the only company that does this. There are a ton of other companies out there which provide lead generation services and sell existing databases of leads and demographics.

In that context, the consumer is the product. Specifically, the information about them. Some people don't like the privacy implications about that, which is why every business generally has a privacy policy now. Instead of it just being unsaid, it needs to be said now.

The average user of Google services is the product, the advertisers are the consumer.

The advertisers are not customers, they are suppliers.............The advertiser is willing to pay a penny for you to consume an ad.

That is a contradiction. Which is it? Customers pay money. That's how it works. Otherwise they are not customers. You have buyers and sellers, products, and end users. You can tell which is which by following the money.

Your mental and semantic gymnastics aside, suppliers don't typically pay retail stores. That is like Walmart charging Chinese companies and manufacturers for the privilege of selling their product. That is not how it works (kickbacks aside). Walmart pays for the product from the suppliers, and then delivers it to the consumer in their retail stores.

How does Google operate?

They charge advertisers to put advertisements in front of users. In addition, to a host of other marketing products in which, the people are not charged, but the marketers and advertisers are charged.

This is not FUD, but merely a fact of how Google operates.

The reason why it is always brought up, is because corporations act in the best interests of themselves of the shareholders. Who are they going to satisfy first and foremost (within reason)? The Advertisers because that is where the money comes from one way or the other. Saying otherwise is just strange.

There are extremely few products that a regular consumer can purchase from Google that does not have to do with advertising . Google docs is one that I can think of. Perhaps they may sell mail services too, although I really could not say.

So in the end, people really are the product that Google sells. We don't need hyperbole to imply slavery, loss of freedom, etc. It simply means that Google sells data about you (anonymized or not), and makes its business by putting advertisements in front of you.

To think they put your best interests ahead of their own, or their customers (the advertisers), is just being naive. Do I think they will go too far and jeopardize their relationship with their users to make more money? Perhaps, but unlikely anytime soon. It's a fine line between complete loss of privacy, and giving marketers everything they want. Google will pay attention to what the average user expects for privacy and act accordingly, and will act within the laws that apply to them. A difficult task considering they are a global company and need to operate in some pretty freedom unfriendly countries.

In order for me to buy into your post I would need to believe that Google is going to ignore the people giving them the money to favor people that do not. Sorry, but that makes no sense.

Re:Aardvark the extension

[Sneeka2]

I love knee-jerk responses just as much as the next guy, but please slowly read again what I wrote.

Does Google make any money from letting you search the web for free? No.
Does Google make shitloads of money from displaying ads next to those free search results? Hell yeah.

So which one is their business?

What statistics

[MushMouth]

the 2/3rds quote was what Google said they achieve, but there is nothing in the article which actually quantitates it, so I'm going to go with the M&A exec blowing smoke.

Re:What statistics

[icebike]

On the other hand, how does the Wharton School really know what does or does not "create value", and is that the real measurement?

Acquiring a business that runs a real risk of eating your lunch may not actually create any value at the visible level, but you may gain things (patents, customers) that my not appear or may not be visible to outsiders for years. Acquisition is a preventative measure in many cases. Business schools are not in the best position to judge what might have happened had not the merger taken place.

(Actually nobody really is in a good position to judge this, its the experiment not run to completion).

It seldom as simple as adding the net worth of two companies separately and then comparing that to the value after the merger.