Google's Acquhire Binge

35 Comments

What do collaboration toolmaker AppJet, social search manager Aardvark and email search appmaker reMail have in common? A trio of little startups, they were all recently acquired by Google (s GOOG) after being founded by former Google employees. So now those founders are returning to the nest — to work on similar projects, with generous re-signing bonuses in their pockets. These are multimillion-dollar acquhires.

More than 10 years after Google was founded, and five years after it went public, it’s a given that employees are going to leave, and new fresh faces will seem like better opportunities. In a time when Google is busy launching massive products like browsers and phones, folks with cool little ideas may well be better off exploring and testing them outside the company. It certainly would have been more convenient for its HR department had Google managed to keep these people employed by offering them opportunities internally — but then again you can’t feel bad for a company with $24.5 billion cash on hand when it has to go out and spend a few mil to recruit from the office park down the road.

Ex-Googlers also tend to be either comfortable financially, and able to fund their own projects off the ground, or at the very least well-résuméd enough to secure backing. (Others find financial security more relaxing than emboldening, and head off to retirement because they are rich beyond belief.)

It seems that Aardvark may be the only one of this trio of acquisitions whose product survives intact; the social search engine is now in Google Labs. Aardvark’s team had previously worked on Google projects such as AdSense, News, Firefox and machine learning. Meanwhile, the AppJet folks (who’d previously worked on Google products such as Search and Health) are teaming up with Google Wave, and reMail founder Gabor Cselle (who formerly was a Gmail intern) will be a Gmail product manager.

None of those startup products were able to find Google-like scale on their own, but they were all nicely designed and engineered and served a purpose. Development without Google’s global scale may have actually been a benefit; the missteps of last week’s Google Buzz launch showed that a new web product from within the company would have been better suited to a more modest rollout.

If the acquhire binge continues, who might be some of Google’s next targets? Some other ex-Googler web startups include Ooyala, TellApart, Red Beacon, MyLikes, OpTrip, Cuil, imo.im, Chai Labs and Howcast. Other acquirers have also taken a liking to Google offspring; for instance Facebook bought FriendFeed and Twitter bought Mixer Labs.

A history note via Om: Google’s not the first tech company to try to rejuvenate itself with old blood; Cisco pioneered the concept of a “spin-in,” which often involved investments in former employees’ startups and options to buy them.

Related content from GigaOM Pro (sub. req’d): What the VC Industry Upheaval Means For Startups

Image via Flickr user mikebaird.

35 Comments

Ziyad Dadabhoy

I think this will be good for Google because in certain aspects they have been stagnant. Gmail is still amazing but is basically the same as it came out. Plus Google has a problem called “Too Much Vertical Integration!” (Made Up Problem). But basically what i am saying is that Google’s products cooperate amazingly…with each other. Google needs to expand its services and integrate with other services to make it more open and less of a choose Google or choose something else.

binfire

This means that Google in house innovations are slowing down and to keep up Google needs to buy what it can’t innovate.

davidu

Om / Liz,

One important element you’re forgetting is the employee side of things. This strategy is a net-positive for nearly all involved. At Cisco, the Spin-In is/was not just a corporate strategy, but an employee career growth strategy, too.

It’s very difficult to make big leaps and moves internally at Cisco or at Google and employees leave, start-up, and ultimately get acquhired back so that they can jump up a few notches on the ladder and/or move to entirely different parts of the organization and come back in with a leadership role. Staying inside and accomplishing the same is often very very difficult.

Om Malik

David

you make good points. I agree with you on the fact that Google has a big company disease right now and as a result this leaving-the-nest is going to be a common behavior for people who are “agitators.”

Tuneup Vista

It’s nice to know that ex Google employee are also doing their own projects. I hope they will continue come up a better one. :)

Dave C

I think you hit the nail right on the head. I’ve been an Aardvarker for a while and you can tell the product had some real solid engineering behind it. Spending time away from the Borg is probably good for morale.

I’m surprised you mention RedBeacon, though. In the local services space it seems like Thumbtack.com has the obvious edge. Maybe I’m missing something though.

Liz Gannes

I didn’t realize Thumbtack had Google founders as well? Will have to look into them. I need to do a comparison of all those human service provider sites.

rms

Utter nonsense. Cisco used this mechanism as a way to acquire products in some sense “off book.” Google appears to be be wildly trying to recapture lost talent.

Om Malik

rms

it was later that it turned into an acquisition strategy, but in the early days it was meant to keep its key folks close to the company. It later turned into a whole spin-in strategy including off the books developments. If I remember correctly, The New York Post did a whole expose on that topic, but hard to find that report.

PXLated

Back before Cisco and “spin-in”, Control Data had “spin-out”. Employees had an idea or technology and wanted to start their own companies, Bill Norris (CDC Chairman) was supportive and more often than not, funded them. Before Cisco, the biggest name in networking was Network Systems, a “spin-out” and almost all former CDC employees. Others I recall were in the disk drive business in some form or fashion. I don’t recall any of these ever being spun back in.

COP
  • Brizzly/Things Labs
  • ChartBeat (<= this IMO is more likely to get gobbled up soon by Google for its “real time” analytics)

Also it might lead to an “exo-indus effect”[1] of top talent from Google to only come back. wealthier.

[1] I just coined this word, please don’t bother Googling.

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