When Google buys a company, it’s up to the entrepreneurs behind it to make it a success, said David Lawee, vice president of corporate development at the search giant.
Android Inc., the wireless-software startup founded by Andy Rubin, was a leading example, he said, calling it Google’s “best deal ever.”
Google quietly acquired Android in 2005 for an undisclosed price which has been estimated at $50 million. (Google’s annual report for 2005 says the company spent a total of $130 million on acquisitions that year.)
Lawee made the remarks at a panel at the 16th annual Stanford Accel Symposium, a conference organised by the university and venture-capital firm Accel Partners.
“I saw this guy in my building for two years, walking his dog, and I was like, ‘I hope this guy does something,'” said Lawee.
Despite Lawee’s initial scepticism, Rubin stayed at Google to champion the development of Android as an open-source operating system. It is now one of the top platforms for high-end smartphones, competing successfully with Apple’s iPhone.
Rubin’s quiet efforts paid off, and Lawee can now hold up Android as an example of a successful deal because of it.
“It’s obvious when the deal doesn’t work out because the people leave,” said Lawee. “That’s the key metric: Is the technology being used? A lot of it depends on the perseverance of the team coming in.”
Although Google does not charge for operating system itself, the company profits from mobile ads displayed on Android phones. In a recent earnings call with investors, Google executives said mobile ads are now a $1 billion annual business for Google.
Of course, much of that business comes from AdMob, a mobile-advertising startup whose acquisition Google completed earlier this year. Google paid $750 million for AdMob, though, so the return on investment may not have been as strong as for the relatively small amount it spent on Android.