
Google keeps ex-Googlers close by investing in their startups - subpar
http://www.recode.net/2016/8/22/12587644/google-investing-startups-orkut
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twblalock
I think this kind of thing is good for the industry. It may be a good way to
avoid the innovator's dilemma.

Big companies often can't take risks developing a new business or product line
internally. These startups take on the risk, and get the reward if they
succeed -- just like any other startups. The acquiring company gets to
innovate without taking risk, which the board of directors might be leery of
taking on. It's a win-win for everyone. More innovation happens than would
have happened otherwise.

Cisco and Adobe have been known for doing this.

I'm not sure why anyone would object to this. Even if one wants the tech
industry to be a perfect meritocracy, one must recognize that even in a
meritocracy, people make use of personal connections to get ahead, because
connections can be earned through merit. Not all connections are just
accidents of birth or other circumstances. If someone gets a job at Google
through merit, and succeeds through merit, it is entirely reasonable and just
for Google to enter into a spin-in arrangement with him or her.

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trhway
>These startups take on the risk, and get the reward if they succeed

i see a reward, yet i don't see a risk in such situation.

>I'm not sure why anyone would object to this.

may be because of such a tilted board? why for example some people object when
somebody is cheating on an exam?

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twblalock
The risk is the risk of failure. They won't get spun back in if they fail.
They will go out of business, like any other startup.

I don't see how this is anything like cheating on an exam. The founders of
spin-in startups are good at what they do -- if they weren't, they wouldn't
get such an arrangement in the first place, and even if they did, they
wouldn't be acquired if they failed.

Meritocracy is not undermined when people with merit are identified and
elevated -- in fact, that's the raison d'etre of meritocracy.

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trhway
it would be in the black and white world. In the real world an additional easy
financing and/or acquihire later makes a failure less so.

again, you describe an ideal world where abuse of any situation by the
meritocratic ideal people taking ideal decisions just don't happen, the world
where conflict of interest policies, etc... just wouldn't be necessary. In
that world i would wanted to live and would agree with you 110%.

~~~
twblalock
So what? Lots of startups that deserve to fail and don't have this kind of
arrangement also manage to get more financing, or get acquired or acquihired.
That kind of thing is not unique to spin-ins.

I also never claimed the world was a perfect meritocracy. I was saying that if
it was, this kind of thing would not undermine it. It seems that we agree on
that point. I brought it up in anticipation of counter-arguments that spin-ins
subvert meritocracy.

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chollida1
Cisco's former CEO John Chambers, made famous a concept called the "spin-in".

The concept is similar to employee's leaving to start their own company but
their former employer funds the endeavor and often has a right of first
refusal for a sale.

[http://www.businessinsider.com/why-cisco-showered-three-
men-...](http://www.businessinsider.com/why-cisco-showered-three-men-with-
billions-2014-9)

This acquisition driven R&D worked well for Cisco, it doesn't always, see
former Canadian company Nortel for the down side of acquisition driven growth.

As a side note, check out John Chambers some time. Common wisdom is that the
CEO of a tech company should be a technologist. He is the exception to this
rule. He was an amazing CEO who didn't have a strong technical background. In
my opinion, one of the more impressive tech CEO's of the 90's and 2000's.

[http://www.mckinsey.com/industries/high-tech/our-
insights/ci...](http://www.mckinsey.com/industries/high-tech/our-
insights/ciscos-john-chambers-on-the-digital-era)

~~~
bhaumik
Jack Ma from Alibaba is another great. example of a successful CEO without a
technical background. An early exec there wrote a book profiling the company's
early growth, great anecdotes on Ma in there:
[https://www.amazon.com/Alibabas-World-Remarkable-Changing-
Bu...](https://www.amazon.com/Alibabas-World-Remarkable-Changing-
Business/dp/1250069874).

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LukaAl
It seems a really smart move to me. At the stage they are investing, the
quality of the people and their reputation is more important than the idea
itself as a success predictor. Ex-Googlers have on average a good reputation
and they know how they were performing. So it makes a lot of sense to put a
small amount in convertible notes early on that could easily result in a lot
of money down the road.

And if the idea doesn't work out, well, they are closer to them than any other
company, much more easy to hire them with all the economical advantages of re-
hiring someone you like and trust. I think that, from an economical point of
view, there are few downsides and a lot of upsides...

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nibs
Larry Ellison does this too. Netsuite (Nelson) and Salesforce (Benioff) are
seen as two major cloud computing titans.

Both were Ellison proteges who were given enough money to safely work on
growing the new generation of the same business.

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trjordan
Heaven forbid?

Many other VC firms want to invest in ex-Googlers and their startups,
especially one with previous success. It seems reasonable that they'd continue
to invest in people they have high confidence in.

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arcanus
"Keep your friends close, and your enemies closer."

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HillaryBriss
> _It’s unlikely Google is deploying these funds to dig back into social media
> or generate massive returns. Instead, these deals seem mostly about Google’s
> ongoing attempt to keep familiar engineers close to the company fold._

It kind of looks like an expensive way to keep the expertise of these
employees available and friendly to Google.

