Google’s Rules of Acquisition: How to Be an Android, Not an Aardvark

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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.

For acquirers:

• 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.”

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Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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  • Patrick

    Great article but I was looking forward to read about how Google manages the fact that in an acquisition the founders are generally leaders and now multi-millionnaires. I see it presenting many challenges such as position/title, reporting to many people instead of no one, pay scale that might be almost insignificant considering the new wealth, etc.. In your interviews did any information come up regarding those topics?

  • Patrick: That’s an excellent question. I confess I did not ask about it in my interviews. But based on my reporting, I can guess how David Lawee or the other folks I talked to might respond. I think they’d say that the founders who become acquired Googlers still act much like entrepreneurs, but that they no longer have the added worries and responsibilities of keeping a company afloat. They certainly have superiors to report to (hopefully just one or a few though, not many) and if they were really uncomfortable with that they would probably self-select out of being acquired. I can’t imagine that positions or titles are much an issue…Google seems to have a thick layer of engineering managers. As for pay scales, I know Google is competitive but not extravagant, and that stock/options come in the form of RSUs that vest only gradually, with lots of conditions to discourage early departures. The one big question you raise, which I am also curious about, is whether an acquired founder’s newfound wealth (assuming that their ownership portion of their old company was large enough to bring them a multi-million dollar payoff) puts them in a more independent, less teamwork-oriented frame of mind. It may, but I also have the sense that most of these people only join Google because it’s clear to them that they can accomplish more inside the company than on their own.

  • F Libit

    Great article. Makes me wonder though – who was Motorola Mobility’s “sponsor” inside google?