Why sell to Google?

Douglas MacMillan
Bloomberg Businessweek
You'd think David Lawee has it easy. He's the mergers-and-acquisitions chief for Google, a company with $33.4 billion in cash and a willingness to spend it. The search giant's pay is good and its perks are legendary, so persuading scrappy startups to sell for multimillion-dollar sums should be a cinch. But Google's stock is past its days of heady growth, and hotter rivals like Facebook are making deals of their own, so Lawee still has to work hard. Entrepreneurs want to know: Why sell to Google? And why stick around once the check clears?
 
Google has stepped up its dealmaking this year, spending $1.6 billion on more than 20 companies through September. In an interview earlier this month, Lawee said he sees "more large opportunities" for purchases on the order of YouTube and DoubleClick, Google's two largest deals. Google now is in talks to acquire social shopping site Groupon in a deal that could be the search company's most expensive acquisition ever, say two people with knowledge of the matter.
 
As it makes deals, Google is seeking more than just advanced technology. The company also hopes to add to its ranks seasoned entrepreneurs who can be molded into star executives. Recently, some of those would-be stars have blinked out. Omar Hamoui, founder of mobile-ad startup AdMob, left Google in late October, just five months after the roughly $700 million purchase of his company was completed. YouTube founder Chad Hurley and Lars Rasmussen, whose Where 2 Technologies was acquired in 2004 and became the basis for Google Maps, both announced their departures in the past month. (Hamoui, Hurley, and Rasmussen all were unavailable or declined to comment for this story.) Rasmussen told the Sydney Morning Herald in November that "it can be very challenging to be working in a company the size of Google."
 
Lawee says such high-profile departures are not indicative of Google's track record. Two-thirds of the founders of startups acquired by Google remain with the company, he says. Joshua Schachter, a serial entrepreneur who sold a company to Yahoo! in 2005 and then worked at Google until June of this year, says the search company's retention rate compares favorably with that of many of its competitors. "Elsewhere, I've seen that entrepreneurs tend to bail because the things that drive [them] are at odds with the way companies are run," he says.
 
Google also faces a challenge in winning over founders in the first place. Competitors like Facebook and Apple are in acquisitive moods as well. The social networking site has made eight deals so far in 2010. Apple Chief Executive Officer Steve Jobs said in October that he's reserving his company's $51 billion in cash and investments for "one or more very strategic opportunities [that] may come along."

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