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New Google CEO Larry Page has just made a big reorganization of the company.The big theme is that business units like Android and YouTube will run more independently, with their leaders reporting directly to Page. (The other big theme is that Google is really scared of Facebook.)
But there’s another big goal to the re-org, which owes more to Amazon and its CEO Jeff Bezos: being able to acquire the best companies.
Many of the startups that are threatening Google like Twitter and Foursquare were founded by entrepreneurs whose previous startups were acquired by Google and then left to languish, so that the founders got frustrated, left, and then didn’t want to get acquired when Google came knocking, because they don’t want their grand vision to get ruined.
Amazon is probably the most successful acquirer in the tech industry, precisely because Jeff Bezos leaves most of its acquisitions run independently. The big example is Zappos, where basically the only change is CEO Tony Hsieh, in his words, reporting every quarter to Amazon in Seattle instead of reporting every quarter to VCs in Silicon Valley.
It’s great for Zappos because independence means flexibility, but it’s great for Amazon not just because it’s great for Zappos. It’s great for Amazon because the next time Jeff Bezos wants to buy a big startup by a visionary founder, he can put that founder on the phone with Tony Hsieh who will explain how great it is to be able to accomplish your big vision within Amazon.
Hsieh is a very rich guy. The only reason he shows up to work at Zappos every morning is because he enjoys it. If Amazon messes with Zappos, he’ll quit.
An even more startling example than Zappos is IMDB, which was a one-man company when Amazon bought it in 1998 and is still being run by the same guy out of the same home office in rural England over 10 years later. Other examples include daily deal startup Woot and Diapers.com-owner Quidsi.
Page and Bezos go way back: nowadays Amazon and Google are often rivals, but Bezos was an early angel investor in Google and owes around a billion of his ~$18 billion net worth to Google’s IPO.
Google is a good tech acquirer as well: YouTube and Android are phenomenally successful and came from acquisitions. But it’s hard to believe Page wasn’t paying attention when Amazon bought Zappos and let it run independently.
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