Photo: Business Insider / Matthew Lynley
David Lawee, vice president of corporate development and chief M&A boss, had a lot of things to say about Pinterest and Instagram when we tracked him down last week.He also spoke on stage at the DEMO conference — where he broke down what it takes to have your company acquired by Google.
Here’s basically what it comes down to: if you want to be acquired by Google, you have to have a vision that aligns with Google.
That means one of two things:
- Be an entrepreneur that is working on a problem Google wants to solve. Google is attacking a lot of heavy-duty problems, but often it doesn’t have the right teams or people in place. That’s why Google does its acqu-hires, where it buys companies solely for talent. One example is Kevin Rose at Milk, who was brought in for Google+.
- Actually have a product that Google will want to feed resources. Here, the example is YouTube and Android — which have thrived with Google’s resources. Andy Rubin had a similar vision to Google (an open operating system) but simply didn’t have the same resources. Android was seen by Larry Page and Sergey Brin as one solution to Google’s overall mission: getting its apps on a bunch of phones.
Seems simple enough. Here’s a lightly edited transcript of the talk:
What’s Google’s M&A culture like?
The approach has evolved over time but we’ve gone with what’s worked. There’s a spectrum in which people approach these, on one end they have a distribution and sales channel and they’re buying companies and stuffing it down the channel. A lot of people have executed on that strategy, they have a sales force and they can sell the product.
On the other end, we have a great product strategy, we need talent people — let’s buy the company, forget what they’re doing and redeploy them on this. We try and find entrepreneurs which have a vision that is aligned with something consistent but not something we’re doing today — but big, that we can get behind. The majority of these acquisitions are these kinds of things — Writely, YouTube. These were extraordinary entrepreneurs that had a huge vision and with Google they were able to achieve it.
Has the culture changed with Larry Page in charge now?
Larry and Sergei have been working with things all along, they’ve been pretty active in the company. Larry and Sergey were instrumental in the Keyhole and Android acquisitions, they spearheaded it, it was their vision. It aligned with Andy’s vision when he came in, with Android.
We started with a challenge of, we want to distribute our apps, our apps are on 300 phones, going to 500 or 1000 types of phones and different configurations. Our challenge was, how can we make our apps work across all phones, and Andy came in with a vision of an open source operating system. We said yes, that could work, our applications would work across all devices, it could be better. It was an alignment of a vision, it wasn’t like ‘we need to build an open source operating system’ but when we met someone who could do that, we said yes, we could do that.
How tight does that alignment have to be?
In a web environment, things are pretty dynamic. Google is making strategic decisions every day, the company is run by entrepreneurs. The whole management team are people that started companies or people who started Google. Things are going to change all the time, if we don’t change our services, no one is going to use it. If you take that mindset, you’re taking strategic decisions every day. Gmail is a good example, email is a huge component of all the world’s information, and going to Docs is just a step away from that. Acquisitions are a good time to have good, tangible, strategic decisions.
How do you keep entrepreneurs engaged over time? What about Dodgeball?
Two-thirds of acquisitions succeed at Google, which is extraordinary. I don’t know of any company that even has 50 per cent, in tech I’d say it’s dramatically lower. Right now we’re batting at an extraordinary level.
In the case of Dennis Crowley, there just wasn’t enough mindset behind what he was really doing. He was really ahead of his time and he was ahead of us in terms of allocation of resources.
Every acquisition has its own goal. With Writely, we had a goal of a certain number of users moving on to Google Docs. A lot of our acquisitions have user metrics, we wanted the founders to be a part of the future of the product. The founder is still with the company today. There’s sometimes with more mature acquisitions, there’ll be an array of goals. One year goals, six month goals, in the case of ITA (a flight search service) there was a 9-month goal.
For example, the Instagram acquisition by Facebook, how did Google react to that?
Instagram was started by a guy who I worked with for three years very closely at Google, he worked through marketing and elevated him up to working on chief of staff on my team and I brought him over to corporate development.
When I think of Instagram I’m delighted for Kevin. A lot of people describe that acquisition as being analogous to YouTube — we’ll see. What was amazing about YouTube was how long those founders stayed with the company. Fundamentally they had a different vision that we did, we were thinking about it from a user-centric view. They were looking at it from a content creation uploader point of view. Their vision was better, what Google’s lesson was, when you acquire these companies and have visionary founders, you either believe in them or don’t. You want to put all the resources you can behind that vision. For people like Andy Rubin who would have had a hard time achieving their vision without the aid of Google, that’s intoxicating.
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