Google’s Rules of Acquisition: How to Be an Android, Not an Aardvark
(Page 5 of 5)
those shifts. “Product strategy changes, the markets change, something happens where an inconsistency arises between the company’s goals and the prospects for the product,” says Lawee.
That’s what happened to Aardvark. The way Ventilla explains it, the San Francisco-based startup hadn’t yet perfected its own product—a kind of knowledge market that connected users with people in their social networks to get personal questions answered—when Google came calling. For one thing, the founders felt the service would be far more useful if they could tap into an existing search index. “We felt like we were a significant pivot away from finding something compelling, and we believed we were going to have to reimagine the product in terms of how it worked with a partner, whether we stayed independent or were acquired,” Ventilla says.
That’s why the idea of continuing the work inside Google was so attractive. But by the time Aardvark’s engineers arrived in Mountain View, the company had embarked on a massive effort to catch up in the social-networking arena—the push that would ultimately result in Google+. “What ended up happening was that there was much more underway in social than we had predicted from the outside, so it just made a tremendous amount of sense to embrace that and, in some sense, hitch our ride to that wagon,” says Ventilla.
So while Aardvark may have been put down, Ventilla, Horowitz, and their team are still busy “working on ways to create a more socialized and unified user experience within Google,” which could ultimately lead to “a much bigger win” than if the team had continued to focus solely on social search, Ventilla says. He hastens to add that “the last chapter on Aardvark is certainly not written, as long as Damon and the key folks who started the company continue work on things in that space.”
The sunsetting of a product, in and of itself, does not mean an acquisition has failed, says Butler. Lawee agrees: “We chalk [Aardvark] up as a loss. But the people on the team are having a massive impact on Google. They are working on, literally, the most important strategic priority.”
13 Rules for M&A
There’s an idea in the intellectual air—stirred up most recently by Malcolm Gladwell’s book Outliers—that excellence is the product of practice more than innate genius. If that’s true, then it makes sense that Google would be getting pretty good at the M&A process.
But companies that aren’t as acquisitive as Google may still be able to learn from the search sovereign’s successes. To close, here are a few of the bullet points I’ve discerned.
• Look for near-perfect alignment between the target company’s product vision and your own.
• Delegate scouting to the business divisions—only they know what skills and assets will be useful.
• Make sure every acquired team has a sponsor and a home within the company.
• Put former entrepreneurs in charge of M&A.
• Spend extra to smooth the transition, so the acquired team doesn’t have to sweat the details.
• Shun “acqui-hiring,” unless you’ve got a specific job in mind for the team.
• Look for headstrong personalities who will nonetheless function well inside a large organization.
• Keep teams together, at least at first.
• Provide extra orientation and networking opportunities for newly acquired employees.
• If the technology part of an acquisition doesn’t work out, make sure there’s a good place for the people to land.
For the acquired:
• Spend time getting to know your new company and its needs. Start your homework even before the acquisition closes.
• Keep taking risks. You’ve got a pre-assembled team to work with—that’s a valuable asset.
• Be humble and flexible. Your skills might be best applied to a product you haven’t even thought of yet.
Lawee is clearly proud of Google’s self-reported two-thirds success rate. Interestingly, though, he says he isn’t obsessed with pushing this rate even higher. If the company got too careful about the M&A process, he says, it might forget to keep thinking big.
“The return on our acquisition dollars has been extraordinary. Keyhole, Android, YouTube—all of these things are part of the franchise. So I don’t know if we can do better. I don’t think we are really striving to do better. We want to continue to take risks. And we expect that sometimes they’re not going to work out.”