Google’s acquisition of Motorola certainly looks like a disaster.But there’s one thing to keep in mind: Google is probably the best tech company at acquisitions, as our friend Dan Frommer points out at SplatF.
Google is pretty good at talent acquisitions: for all the talk about Facebook poaching from Google, tons of people still want to work for Google and Google is still great at snapping up talented entrepreneurs on the cheap and integrating them.
There have been some screwups, with talented entrepreneurs like Evan Williams and Dennis Crowley getting frustrated at Google bureaucracy and striking out to do their own huge projects. But that’s always going to happen: first of all, Google has acquired more than 100 (!) companies so far so of course there are going to be some duds; second of all, because entrepreneurs are entrepreneurs, there’s always going to be some who aren’t cut out for big company life and will strike out on their own.
Still, on the whole, Google has had many more good talent acquisitions than bad.
Google is also excellent at technology acquisitions. Most of its huge products either come from, or have key technology components that come from acquisitions.
AdSense’s technology came from Applied Semantics, which Google bought for around $100 million and is now a multibillion dollar business.
Google Maps technology came from an Australian startup called Where2 (whose founder went on to make Google Wave and now works at Facebook). GrandCentral became Google Voice, which could disrupt Skype. Writely became the basis for Google Docs. AdMob is a beachhead into the huge mobile advertising market, and $750 million increasingly looks very cheap.
In all these cases, Google took not just a great team but a great technology, “googleified” it and blew it up into a huge product.
And most relevant to Google’s Motorola buy, Google is fantastic at strategic acquisitions, acquisitions where it buys a whole business.
Android is an amazing example. It was really a talent and technology acquisition but given its scale it’s certainly strategic. They took a man, a product and a vision and turned it into one of the fastest-growing, most disruptive businesses in history.
YouTube and DoubleClick are also great examples because at the time everyone thought Google had overspent.
In 2006, Google spent $1.6 billion for YouTube, a year-old company with no revenues to speak of. Everyone thought it was crazy. It was a masterstroke. Regardless of YouTube’s current financials, there’s no doubt that a) if Google were to spin off YouTube now it would be worth many, many times the amount it paid for it, and b) YouTube is the best asset in a market (online video) that’s crucial to Google’s future.
DoubleClick is easier to understand — Google bought its way into display advertising, the biggest online advertising market after search — but at the time people still worried about the price, the integration and whether Google could really succeed in display. Now we know Google got a good price, the integration went well and Google, though not as successful as in search, is still a huge player in display.
So yes, Google-Motorola looks like a disaster in the making. But naysayers should remember that Google has one of the best track records in its industry when it comes to acquisitions. So it’s not like it (usually) doesn’t know what it’s doing.