Take a Number: Why I Would Think Twice Before Selling to Google

By Sarah Lacy , written on September 17, 2012

From The News Desk

The Verge has a long story today that digs into Google's torrid acquisition pace: 79 companies last year if I understand the lead right. (It's a bit confusing.) That compares to ten last year acquired by Facebook, and Apple, Amazon and Microsoft each only bought three. Google has done a "mere" eleven so far this year.

I've seen a few people on Twitter touting Google's David Lawee as some sort of acquisition God. Yeah, I'm just not buying it. The story puts an insanely pro-Google spin on the strategy. But as someone who went through a company sale a few years ago and have seen more integrations botched (almost all) than not (maybe a dozen) in my time as a reporter, I had a different reaction. "79 companies? What are the odds they give a shit about most of them? Why would anyone who has worked hard to build something ever sell to them after reading this?"

Ok, there's one group of entrepreneurs who would sell. People who have thrown in the towel and just want to return capital to investors and get a new job. After all, the article does paint Google as a pretty good place to work, once they've killed your product.

But as for the acquisition itself, the story makes plain that Google is only buying you as a hedge. This is basically a game of numbers. It totally expects many of those deals to fail. There's no real value, accountability or skin in the game in making your team and product fit. They'll "Slide it" without a moment's hesitation. Concerns about how poorly Dodgeball did within the company are brushed off as, Oh they were just in the wrong division. Yeah, that's sort of my point. When you are acquiring more than 70 companies, you probably can't take the time to get the integration right on the vast majority of them.

Still, The Verge's post argues Google has the best track record of implementing deals, touting DoubleClick and AdSense as major revenue drivers for the company. I'm not saying Google's M&A team hasn't had their moments. Just last week, I called YouTube one of the best consumer Internet acquisitions in the history of the Web.

But-- call me too pro-entrepreneur or pro-user here-- if you destroy far more companies than you integrate, that's not success in my book. (Oh, hey Sparrow.) At least when eBay whiffed on Skype, StumbleUpon and Butterfields, it didn't destroy the products. It spun them back out.

Reading between the "PRAISE GOOGLE!" lines of this post, the picture I get from Google's acquisition strategy is very different from the Facebook acquisition playbook. Facebook has historically courted-- and won-- companies by romancing them and trying to show them  how special they are. Founder and CEO Mark Zuckerberg personally has done most of the pitching, and the standard line is that Facebook has one of the lowest ratios of engineer to user in the tech world. The message: You are important and you can have a huge impact.

While Facebook kills most of the actual products it acquires-- it's upfront about that. And many of the founders have stayed to make huge contributions to the site, particularly Friendfeed's Bret Taylor who was CTO until recently. (I have no idea if this dedication to each founder is still going on with larger IPO distractions and the uptick in Facebook's acqui-hire pace. I'd doubt it, but historically it was a big differentiator.)

And Google? Well, it's been well reported that one of the reasons Twitter has always balked at selling to Google was the lousy experiences of its founders and current CEO had when they sold previous companies to Google. Ditto Foursquare's Dennis Crowley. When you lose major deals because people had such a bad experience the last time they sold, let's at least admit Google's had a mixed track record, shall we?

The Verge article coos that two-thirds of the founders of Google acquired companies are still there. But what I'd love to know is how much of that is due to lockups. Look at the chart on the Verge story that shows deals over time and note the glut of deals that happened in the last year. It's hard to imagine that's not artificially boosting those retention numbers.