When Google was about to buy Skype, senior exec Wesley Chan torpedoed the deal with political manoeuvring worthy of a Romulan.Steven Levy’s book on the inside of Google In The Plex tells the story, via AllThingsD’s Liz Gannes.
Chan, who was running Google Voice at the time, wanted to scupper the deal. Levy reports that Chan thought the deal would be a disaster because of antitrust and intellectual property issues.
There is still a good case to be made that Skype could have been a good buy for Google. It’s a huge network effects business that would be a very nice complement to Google’s business. Even today Google works very hard to compete with Skype.
But what’s interesting is less the merits than how Chan killed the deal. In Chan’s own phrase, he did it by “laying grenades,” with the help of Google co-founder Sergey Brin. Chan told the execs pushing for it that he supported the deal and worked with them on presenting it. Then in the meeting to approve the deal with Brin and CEO Eric Schmidt, Chan turned on his fellow execs, arguing against it.
Then another exec declined to lead the integration because he had two kids in school and didn’t want to be travelling to Estonia, where Skype is based.
Google’s leaders decided against the deal, with Brin saying “this is the dumbest s–t I’ve ever seen”.
Chan is now a partner at Google Ventures, the company’s venture capital arm, certainly not the worst gig in the world.
There’s so much to unpack here:
- It’s startling to see that even in 2005, when Google was still relatively young, this is how decisions were reached. This is the kind of manoeuvring by executives to get their way that you expect to see at Microsoft or IBM, not a Silicon Valley rocketship like Google, which prides itself on reaching decisions through data.
- What top exec at a top company doesn’t want to lead a deal because he might have to be travelling a lot? How is that a valid argument at a company that’s less than a hundred years old?
- It’s also startling to see that Google’s leaders didn’t see through a fairly obvious ruse. When someone comes in to pitch a deal and suddenly turns against it, something is up. Brin dismissed the deal out of hand because of a bad meeting, not because of the fundamentals.
This story makes us understand new CEO Larry Page’s big reorg of the company much better. It seems like Google was, and probably still is, rife with this kind of political, decision by committee process. Page’s drastic reorg wants to create more accountability and speed by putting each division under a single head. It seems that it’s sorely needed.