How Google Is Becoming a Startup Incubator
Name a Web company that can have its employees leave, create new products, and then the company buys them out when they realize those employees were on to something.
Google, that's who! Just look at Google's last two acquisitions of Aardvark and AppJet, which have more in common than starting with the letter "A."
Aardvark, which Google grabbed last week, is a social search engine startup whose founders include CEO Max Ventilla, who focused on corporate development for Google's AdSense and Web applications, and Nathan Stoll, who once ran Google News.
And now these guys are back at Google, working on the Vark.com search engine under the auspices of Google Labs and anxious to leverage the company's $25 billion in on-hand cash. As Ventilla put it:
We have spent the past two years carefully designing and building Aardvark, combining our own vision with a rigorous user-driven development process. This acquisition represents an incredible opportunity to accelerate this development, working with some of the most amazing folks in the industry to offer a new kind of search to hundreds of millions of people.
AppJet, which Google bought in December, makes a really cool live document editing tool called EtherPad.
EtherPad's capabilities will be used to boost the real-time collaboration capabilities of Google Wave. Lots of EtherPad users were upset by this buy-out, so much so that AppJet was forced to open source EtherPad.
While Aardvark's crew seemed excited about their deal, AppJet may have been reluctant sellers. Paul Graham, partner for AppJet investor Y Combinator, wrote:
The reason they decided to go with Google was that they were literally overwhelmed by Wave: after meeting the Wave guys, they were so impressed that they (a) wanted to work on Wave themselves, and (b) didn't want to compete with it. After watching the Appjets tough it out for the past two years, I knew they weren't simply being cowards.
AppJet was run by CEO Aaron Iba, who previously worked at Google writing algorithms for improving search quality; CTO J.D. Zamfirescu, who built backend systems for Google Health; and COO Daniel Clemens, who worked as an associate product manager at Google.
Aardvark and AppJet may have sold to Google for different reasons, but the bottom line is that Google is sending a message that if you leave Google and build something cool for the Web, the search engine may buy you out.
This, I believe, is an offshoot of Google Creep.
This idea explores how Google is entering both broad areas of the Web, such as the social arena with Buzz, and selling smartphones online (soon to be e-commerce, too?), as well as smaller niche areas such as Web calling with Google Voice and real-time search.
So where there is opportunity to grab users and/or make money online, Google is ready and willing to shell out millions to buy cool products.
Google won't buy every cool product on the Web, but it should take care not to buy too much and then watch them flounder.
Google doesn't want to end up like Yahoo, which is quickly becoming a Web also-ran, if it hasn't gotten there already.
There are number of other ex-Googlers out there with intriguing startups. It will be interesting to see whether Google consumes them if and when they enter the Google Creep orbit.
It must be nice for talented programmers and CEO-types to know that when they leave Google they can incubate something and then come back to either: A) leverage the mothership's assets to grow (Aardvark) or B) sell out to work on a similar product to your own, thereby avoiding extinction by the Googlebot (AppJet).
It's like graduating from a university and coming back for graduate school smarter and a lot richer. Cool.
Postscript: Liz Gannes over at GigaOm has a nice supporting piece about this, noting that Cisco pioneered this notion of spin-in, reaching out to buy former employees' startups.
P.S. II: Google bought reMail, run by Gabor Cselle, a former Google internist.