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Summary:

Gary Price alerted me to the news about Google buying ReqWireless of Waterloo, Canada. I followed the news trail and ended up on Techfinance.ca, a website that has more details on the deal. Mark Evans has more details here. This led me this nugget of information… […]

Gary Price alerted me to the news about Google buying ReqWireless of Waterloo, Canada. I followed the news trail and ended up on Techfinance.ca, a website that has more details on the deal. Mark Evans has more details here.

google acquireThis led me this nugget of information… all told, Google spent about $22.5 million on three companies: Reqwireless, Akwan Information Technologies of Brazil, and Android. Not much from Google’s perspective – roughly speaking $7.5 million each.

Gary Will says that Reqwireless had about $400,000 in seed funding. These deals, and most of the companies Google has bought (of course with a few exceptions) did not get much venture capital. Google’s strategy is pretty clear, as I had reported in Business 2.0 recently.

By encouraging entrepreneurs to pitch Google first, the company can shell out a nominal amount of cash for cutting-edge technologies and top-notch people. “These acquisitions are about talent,” says Christopher Sacca, a principal for new business development at Google.

Some call this trend, “Acq-hire.” Why do I bring this up? I read recently that there was a new venture fund being set-up with the explicit intention of starting and flipping start-ups to The GYM Gang. (Sure throw in others for good measure!) That who scheme seems fraught with risk, despite whatever assertions the backers made.

Paul Kedrosky calls the silliness GYM put and explains: Every time a revenue-less del.icio.us, or equivalent, is taken out by Google-Yahoo-Microsoft (GYM), it emboldens venture investors, especially first-tier sorts, to think that the lower bound for the return on their investment is $25mm-ish. Paul might be too optimistic – its not $25 million-ish! Instead, it is about $7.5 million as per latest Google data.

  1. om,
    i broke this story in the national post – thanks to some help from gary will. you can find it here.
    http://www.canada.com/nationalpost/financialpost/story.html?id=c4f6f084-d72f-43ea-8a82-affe38df3830&k=58579

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  2. Om,
    I am trying to find the same on http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001288776&owner=include

    Unable to find it. Do you mind sharing the SEC link?

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  3. [...] Om Malik thinks the deal is in line with Google’s strategy; scooping up talent cheaply through buyouts, or “Acq-hire”: By encouraging entrepreneurs to pitch Google first, the company can shell out a nominal amount of cash for cutting-edge technologies and top-notch people. “These acquisitions are about talent,” says Christopher Sacca, a principal for new business development at Google. “We want the people who are building the products.” 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. Sacca, for his part, says Google isn’t trying to compete with VCs. “If your product is really a small feature, and if you are eventually going to be acquired, come to us early,” he says. [...]

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  4. a little secret in the industry, anyone who pitches google also goes to yahoo and msn, and if google steps up, the other two start a bidding war, price flares up, all back out leaving the startup holdin the bag.

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  5. mark updated a link to your story.

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  6. CES cyclopaedia (and robotic reptile)

    In today’s IT Blogwatch, we take a final, lingering look at the madness that was CES 2006. Not to mention some clever slithering robots…
    » Engadget has a special CES section. A quick sample: "Toshiba was showing off that concept laptop …..

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  7. Paul Graham wrote in favor of this trend last year: http://paulgraham.com/hiring.html

    How about a preview button, Om?

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  8. [...] An interesting article from Om Malik on trends in Google’s acquisition. [...]

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  9. [...] Today’s edition looks at all the buzz around selling out to larger competitors, and is titled, When to sell out. This is in many ways extension of what I wrote earlier for Business 2.0, Google Vs. The VCs. Yahoo is also taking a similar tact, and going down what some have dubbed, Acuhire! Also read, What do Google’s Deals Really Say? [...]

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  10. [...] Google is buying many young emerging technology companies even before they get much if any venture funding, 12 since 2003 and 5 in the last 6 months. As important as the business ideas and concepts that these young companies bring is the skill and foresight of the founding employees. [...]

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