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Summary:

There has been a lot of talk about Google and Yahoo competing with the VCs. Well, here is my story from the latest issue of Business 2.0: Google versus The VCs. Google’s sales pitch to the startups is simple: Come work for us, score some Google […]

There has been a lot of talk about Google and Yahoo competing with the VCs. Well, here is my story from the latest issue of Business 2.0: Google versus The VCs.

Google’s sales pitch to the startups is simple: Come work for us, score some Google shares, and see your big idea rolled out to more than half a billion users. Yet since it started the practice in 2003, Google has snatched up 12 companies, many of which had raised only small amounts of funding and sometimes no venture capital.

Riya might be the latest one to be taken out by Mandarins of Mountain View.

  1. The strategy is interesting to me because Google is trying to cut the Venture Capitalist out of the picture. This is good in my mind because it might keep the Web 2.0 Community from reaching the bubble danger zone.

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  2. Agree. And, it will at the very least temper the expectations and valuations of the companies. This is a good trend–one that I really hope will lead to a healthy competition between VCs and corporations for deals.

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  3. I actually attended the startup school, and the head of business development from google was there. He said a few interesting things (I am taking it all with a grain of salt mind you):

    -If you have a solution don’t build it on proprietary software, build it on open platforms. Odds are they have to rip it apart and rebuild it in order to scale it.
    -Come to Google with your idea early on, so that the transaction is clean and before you get really corporate. It was said that Google only partially acquires for the technology itself, but mainly acquires for the talent.
    – People at google are compensated for ideas that they come up with internally, so instead of employees leaving to start their own startups, Google will compensate the employees “for fair market value” of the product they built with options.

    So as you can see Google wants to have ALL of the good ideas and people that build those ideas for a myriad of reasons, not just the immediate value that product may bring to the company.

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  4. I actually wrote a pretty detailed post on this trend called, “M&A as R&D.” Give it a read if interested in delving a bit deeper: http://thenetworkgarden.blogs.com/weblog/2005/11/ma_as_rd_google.html

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  5. Humaneering Better Mouse Traps

    It’s even possible to pull in a local law firm and venture group to help position the student business to get funded or acquired as the case needs. Techcrunch even has 10 great ideas for students to begin with and according to Om Malik, Google might …

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  6. More on the Om Malik Google vs the VCs Story

    Marc over at O’Reilly Radar wrote the following in a post titled “Google Does Not Compete with Venture Capitalâ€?:
    “What a false dichotomy! If you take VC funding and put it into your own pocket, that’s called embezzlement, and you can go t…

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  7. Is Google the VC A Good Or Bad Thing?

    There has been talk about how Google and Yahoo are now competing with venture capitalists by buying up small startups before they get VC money and establish their businesses.
    For Google and Yahoo, it’s probably smart if they identify that the tec…

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