The Google black hole: What happens to startups when they're bought by Google?

http://www.slate.com/id/2197434/pagenum/all

by gabrielroth • 18 years ago

103 55 18 years ago

micah63• 18 years ago

I think the google + youtube worked out because they let the community continue unhampered. Even today you can get a youtube account without a google account. That is smart.... We can't pretend to know google's intentions with some aquisitions though, ie measure map getting blended into google analytics.

fallentimes• 18 years ago

And Youtube has a separate office and culture. Hopefully, Google learns their lesson quickly.

jonknee• 18 years ago

Ironically I bet a lot of that is because of all the illegal content on YouTube. They needed it to remain pretty separate for their lawsuit defenses.

tonystubblebine• 18 years ago

Everyone I know at measure map talked like they were happy about the deal and getting incorporated into Google Analytics was completely above board.

josefresco5• 18 years ago

Excellent article, I didn't know that so many startups went to Google just to rot away under mountains of management and infrastructure/policy hell.

If you have any chance of making it on your own, I'd turn down Google money in an instant after reading this.

drewcrawford• 18 years ago

The thing about Google money is that a dollar Google gives you is worth one dollar.

Personally, I would evaluate "Google" money based on the numbers.

ajross• 18 years ago

Indeed. From the perspective of a developer, I can see not wanting your baby to be ignored in a corporate bureaucracy. But investors don't normally think that way. I don't know what founders are "supposed" to think here, but if it were me I'd take the money and find a new baby if I had to.

andreyf3• 18 years ago

to rot away under mountains of management and infrastructure/policy hell.

I missed where exactly the article said this. I imagine if you're looking at a Google acquisition and you care about your service, nobody is stopping you from asking "how will this integrate into Google's MapReduce/BigTable? Where will I be in the Google corp. structure? Will I get engineers working with me on my product, or will I be farmed off to other products?" Weigh the answers to this as part of yoru consideration about whether this acquisition is good or not.

I think the founders are more to blame for not understanding what an acquisition by Google involved, not whoever@Google they were dealing with for not spoon-feeding them.

josefresco5• 18 years ago

I'm sure Google promised these founders all sorts of things once their application was assimilated into the borg that is Google. And with lots of money on the table I'm sure the founders grinned and asked where to sign.

Closing your doors to new signups is practically like suicide. As a founder I would never agree to that if I was taking a smaller buyout in exchange for continuing to work on my application as an employee of Goog.

Now if they backed up the money dump truck and sent me on my way I wouldn't care so much (although I'd probably have thousands of users who'd hate me but probably also wouldn't blame me)

arockwell• 18 years ago

It seems like this type of article shows up at least once a month recently. There's nothing really new here.

I have to ask though, given that most M&A's don't end up working out is google's failure rate really any worse than anyone else's?

trickjarrett• 18 years ago

I remember reading about the infrastructure hell with both Google and Yahoo. I think I've read stories from founders of companies acquired by each. It seems to me Ev (of Blogger.com and now twitter) wrote or spoke about these same issues.

vaksel2• 18 years ago

Yeah you would think Google would learn its lesson by now.

gaius2• 18 years ago

Arguably that's what AppEngine is for.

vaksel2• 18 years ago

not really, its just another case of Google getting into an industry because they see someone else have success in it. If it works? Good. If it doesn't? No biggie, they only lost 2 days of revenue in the investment.

andreyf3• 18 years ago

I'm not sure if it's fair to pick out specific cases with the number of acquisitions Google does ... sure, some aren't going to be perfect - some founders won't understand Google infrastructure, others will lose interest in their products, etc.

fleaflicker2• 18 years ago

It's interesting--Google has the best reputation among techies and AOL probably has the worst reputation.

But so far my experience has been very positive. I still have near-absolute control over the development and creative direction of the site.

biohacker42• 18 years ago

Maybe Google think they know everything and AOL just feels lucky to have found such a beautiful jewel?

fleaflicker2• 18 years ago

That's somewhat true--I've noticed that AOL is very aware of their uncool image and they don't overtly brand their properties with the AOL name (e.g., TMZ, MapQuest, Moviefone, ...).

josefresco5• 18 years ago

Hearing your story brings back painful memories of when AOL bought Winamp and drove that wonderful software into obscurity (and forced guy like Justin Franke to skedaddle)

goodkarma2• 18 years ago

When Google hands over six or seven or eight figures for something, they obviously have a plan for how the technology and team fits into their "master plan".

Why is it surprising that, at least some of the time, they aren't actually interested in the original web site?

webwright2• 18 years ago

"When Google hands over six or seven or eight figures for something, they obviously have a plan for how the technology and team fits into their "master plan"."

I have heard that Google will pay $1m+ per engineer if they like the team and what they've pulled off, even if they are going to dump the technology (or want it rebuilt from the ground up).

I think once you get into eight figures, though-- you're probably right.

netcan2• 18 years ago

It's interesting to consider employee acquisition as a motivator. As far as I could guess there are a few motivations:

1 the technology

2 the product/userbase

3 the employees

4 kill competition

1 & 2 could be 'masterplan' motivations. 3 has a maximum dollar value. 4 is rarely admitted.

It's hard to judge if they messed up without knowing which one it is.

neilk3• 18 years ago

they obviously have a plan

That's not actually true. The thing about giants that acquire startups, is that a) they had the resources to build this thing themselves; b) they didn't.

So ask yourself why didn't they build this thing. It wasn't lack of resources. It wasn't lack of intelligence; they keep tabs on everyone and they go to SXSW too. There were forces that stopped the giant from innovating in this direction. Some of them are technological, but the real issues are usually cultural and political.

Once acquired, the startup is now exposed to all these forces -- with double intensity, since it is an outsider and has few friends in the organization. Unless it's already profitable, has a large userbase, or has big fans among the top execs, it has very little power.

I think these recent articles about how giants "ruin" acquisitions do not take culture and politics into account. The technical issues are not the problem.

hhm• 18 years ago

That's very insightful, thank you very much.

ojbyrne• 18 years ago

And the thing about startups is that there's no reason to think that they would continue running the way they were indefinitely without charging membership fees, or plastering ads all over them, or somehow ruining the experience that their supporters value so much.

They sell for a reason, usually that their funding is running out, founders facing a down round, increasing pressure to become profitable. The fallacy is that the sweetness and light will continue indefinitely.

goodkarma2• 18 years ago

The depth/extent of the plan is surely debatable, but folks like Larry and Sergey and Eric Schmidt would not make the decision to pull the trigger for an acquisition unless they knew what they wanted out of it. They are smarter than that .

In the case of MeasureMap, for instance, they knew they wanted that technology integrated into Google Analytics. They may not have been able to answer the "how" part of "who, what, when, where, why, and how", but surely they knew the "who", "what", and "why".

I understand that the startup built the technology and the acquirer didn't. That's the beauty of how this system is set up - a company like Google with piles of cash and stock can has so much money it can buy anything it wants.

Well then how do they decide which startups to buy (MeasureMap, Feedburner, etc.) and which startups to pass on (Digg)? That's the "master plan"..

aditya• 18 years ago

Interestingly, they don't mention Blogger (which is how the Twitter co-founder went into and came out of Google). Which seems to be doing just fine.

http://siteanalytics.compete.com/blogger.com+livejournal.com...

I don't see the problem, if you start a startup to make a shitload of money and you do make a shitload of money, then, mission accomplished right? (or, as DHH would say: Profit!)

There will always be companies that get screwed up in the acquisition process, just like there will always be companies that don't. But, let's fuel the rumor that Google kills all that it consumes, why not?

josefresco5• 18 years ago

I think the article states that it isn't always a shitload of money. Sure it beats your part-time gig at Starbucks but why sell your app for 5-6 figures when it could be worth 7-8?

If Google is interested in your application now, why wouldn't someone else snatch it up 6 months later when you have more users for a higher price?

Sometimes winning the buyout lottery is selling yourself short.

litewulf• 18 years ago

And sometimes your hot company flames out and you'll regret not taking the money and running for the rest of your life.

This is what managing risk is all about isn't it? You just plain don't know!

netcan2• 18 years ago

Well it may not be an immediate problem for founders (so long as they have no sentimental attachment to the company), because they've been paid.

But it is a problem for acquirers & by extension a problem for future founders. If acquisitions fail to meet goals, they'll dry up.

rams• 18 years ago

Actually Blogger met with pretty much the same fate as other companies. Check out Evan's blog post about freeing blogger from Google at evhead.com - it must be in the archives.

mickt• 18 years ago

> if you start a startup to make a shitload of money and you do make a shitload of money, then, mission accomplished right

What about the user-base? Don't we have a responsibility to them also? Without them we can't be successful, and we should own them some responsibility to ensure that the tools/product/web-site they've been using remains useful for them.

gregwebs• 18 years ago

There is some prior art on this concept. http://www.paulgraham.com/mit.html

Speaking of cool places to work, there is of course Google. But I notice something slightly frightening about Google: zero startups come out of there. In that respect it's a black hole. People seem to like working at Google too much to leave. So if you hope to start a startup one day, the evidence so far suggests you shouldn't work there.

Raphael• 18 years ago

Friendfeed came from former Google employees.

josefresco5• 18 years ago

Key word being 'former'. Seems the brilliant work comes either from people who aren't yet an employee, or already were and left.

Is Google just a giant Y Combinator?

webwright2• 18 years ago

Huh? Lots of startups come out of there.

http://www.google.com/search?q=ex-googlers

I think two founders in our YC class were Googlers.

ashleyw• 18 years ago

The problem with Google is it has very, very little focus as a whole. This is a good thing internally, they seem to develop and release so much stuff without much bother, but in my opinion, joining Google would FEEL like a black hole. Your working on your own project but also have to concern Google about everything, as well as moving your app to Google technologies (in most cases). How can you continue to innovate in that situation?

The same goes for Delicious too I think, they were doing fine, brought by Yahoo, and then went back to being a stealth app while they rewrote everything in C++/PHP. Would they have done that without Yahoo input? Nope, I dont think so...

wmeredith• 18 years ago

I still use Feedburner. I love it.

snprbob86• 18 years ago

"shut down to new users" just means "taking their sweet time porting to a google backend"

When things are Google products, there is a certain level of reliability, security, and performance that is expect. Google tries harder than anyone to avoid the Fail Whale.

It takes a long time for large software systems to be ported, security reviewed, integrated, and tested with Google's custom stuff.

From what I have seen, being acquired by Google means that you go dark for 18 months and then emerge as a Google product.

kul• 18 years ago

seems like this guy hasn't heard of talent acquisitions, which is what Jaiku was.

fmanjoo• 18 years ago

If it was a "talent acquisition," why'd they pledge to limit the service only for a limited time, and to add a slew of wonderful features?

The Google black hole: What happens to startups when they're bought by Google?

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