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In 2011 Google Spent $1.9 Billion Acquiring 79 Companies (flarevine.com)
44 points by profitbaron 1157 days ago | 28 comments



To save someone else a few seconds with a calculator, that's an average of just over 24 million per acquisition. Not that each was acquired for an equal amount.

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And when you factor out just the ITA acquisition, as it was pointed out in the article, it drops to just over 15 million per acquisition.

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What about Motorola Mobile that Google took over? Is that part of this $1.9 bilion?

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The $1.9 Billion Google spent on acquistions excludes the Motorola deal. As the Motorola deal is expected to close sometime in 2012, so their $12.5 Billion acquistion would be included in the 2012 numbers - of course this is still up for regulatory approval.

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Here's why acq-hiring is a disaster. Let's say FatFrog is the acquirer and BuzzFly is the acquired.

BuzzFly's founders usually have earnouts ("golden handcuffs") and thus have an incentive to stay, but merging them with FatFrog's executive hierarchy is difficult and rocky. They tend to be resented, especially if there's an age difference (i.e. the BuzzFly founders are 25 and FatFrog execs are 40+). The executive merging is difficult in acq-hires because no one will take orders from a 26-year-old whose IUsedThisToilet virtual bathroom graffiti app just got bought for $87 million.

BuzzFly's top programmers, who are by this point the vitality of the organization, don't have the huge amounts of stock that would be incentive to stay. Their company also just got acquired so this is a great time to go for a major external promotion, especially since titles in a soon-to-be-eaten company are pretty easy to self-upgrade. So the top engineers face the "decision" between (a) use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company, or (b) become some subordinate Software Engineer, Level 4.B.ii at FatFrog while watching their original work (whatever remains of BuzzFly) goes into maintenance mode... and has to be rewritten in C++.

The weakest engineers, who never could have gotten jobs at FatFrog, but were able to get onto the BuzzFly train when Buzz was desperate, stay along.

So the actual result of an acq-hire is that the execs are rejected like a bad transplant, the best engineers bolt, and the worst ones stay on board.

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Here's why your post is a disaster in terms of faulty assumptions.

* Most acquired founders aren't made execs. Most end up as Product Managers or team leaders.

* The weak engineers from acquired companies can't sneak into google. They must go through the typical Google interview process.

use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company

* ^ Sorry but this is just unheard of. Getting VP-level role at top companies is very hard and if a developer of an acquired company could score a VP-level role elsewhere after the acquisition, he could probably do so before the acquisition. It's got little to do with acquisition. The guy must just be good.

no one will take orders from a 26-year-old whose IUsedThisToilet

* ^ You are using the most extreme stereotype of what is acquired. Now, I understand that your example of IUsedThisToilet wasn't mean to be taken literally but I question why you'd make up a name than use one of many examples from an actual acquisition. Of course, making up a name like IUsedThisToilet helps you with your argument. Only it is not rooted in reality.

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Getting VP-level role at top companies is very hard and if a developer of an acquired company could score a VP-level role elsewhere after the acquisition, he could probably do so before the acquisition

The scenario is not "I was engineer #3 at a startup which was just acquired by Google. I'll take a corner office at Facebook now, please." It is "I was engineer #3 at a startup which was just acquired by Google. Hello, Mr. VC. Sure, I'll join that company you just funded as VP of Engineering."

This second one, ahem, does not strike me as supremely implausible.

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Even in that case, I am not aware of many instances where a developer being part of an acquisition helped him significantly in acquiring a VP position at a start-up.

Any start-up worth their salt is very deliberate in hiring. Now, if you don't care about where you are working and are merely chasing titles, I'd argue you can get a VP position without needing to be part of an acquisition.

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Also, VP is not an engineering title at Google. And, each engineering title has a list of responsibilities that is expected from someone with that title. So it's easy to find out where acquired engineers belong.

Really, all the problems that the OP lists are nonexistent at Google. The only big problem I can think of is integrating the acquired codebase into Google's.

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VP is an engineering title at Google, albeit not one handed out like candy as it is in companies who charge for expertise (management consultants for example).

Max Levchin acquired the title after Slide's acquisition.

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"VP of Engineering" (his title at Google, according to Wikipedia) is a management title.

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So engineering has no managers or engineers can't be managers?

In most companies, VP of Engineering is inside the Engineering department. The idea that management is its own department is rather odd.

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Most acquired founders aren't made execs. Most end up as Product Managers or team leaders.

Perhaps not in title, but no one with serious ambitions is going to give up his business without expectation of high-level clout, unless he's dumping it because he thinks it's a dog. You don't sell off your dream to end up in the middle of some rusty hierarchy.

The weak engineers from acquired companies can't sneak into google. They must go through the typical Google interview process.

I was talking about acq-hiring in general, not Google in particular. Hence the ludicrous names (FatFrog, IUsedThisToilet).

Getting VP-level role at top companies is very hard and if a developer of an acquired company could score a VP-level role elsewhere after the acquisition, he could probably do so before the acquisition.

It's also hard to get acquired. Not many people out there can say that they "completed an exit".

I'm not saying that it's easy to get that kind of job. I'm saying that after one's company is acquired is one of the best times to vie for an external promotion. You can ride the "star" glow, or you can become a Software Engineer 2.B/middle-division. Your choice.

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You don't sell off your dream to end up in the middle of some rusty hierarchy.

Actually, founders do sell off their dream to end up in the middle of some rusty hierarchy. It happens all the time. Why? You answered it yourself: they are selling their dream. The money from the exit is usually worth the "rusty hierarchy" of the acquiring company.

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And yet that $1.9B is only a fraction of Google's cash reserves. And Apple's is nearly $100B. Corporations are hoarding cash at record levels. As of last January, the top 17 US corporate cash reserves amounted to nearly half a trillion dollars. It's not unreasonable to speculate that corporate hoarding is contributing to our flat economy, when you consider how that cash would be multiplied if it were turned loose. Companies are holding onto cash because they're afraid of slow growth because of high unemployment, which becomes a self-fulfilling prophecy when they don't invest in new business and hire more people.

It also casts doubt on claims that raising corporate taxes will hurt the economy. If companies aren't spending any of the cash they already have, how will giving them more to stuff under the mattress help?

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That headline meme sounds impressive: corporations hoarding cash.

Until you dig deeper and find out that US corporations are accumulating debt at the fastest pace in world history. Their cash is required to continue to offset the massive debt being acquired. If interest rates go up at all in the next ten years, bankruptcies will skyrocket. A lot of companies are being irresponsible with debt right now because they can issue it at hyper low rates.

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Is there a good source for historical data on this? The best I could find goes back to 1996, and while the amounts issued in 2006-2010 are high, they don't show the steep hockey-stick climb that we saw in the mortgage crisis, for instance.

http://webcache.googleusercontent.com/search?q=cache:ksi3L1y...

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And that's only counting the acquisitions that closed...

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Well obviously. You could say the same thing year over year. If we were counting the ones that were started and not yet completed, it would just subtract from the amount of the next year.

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I don't think this will continue into 2012, with the way Larry is focusing on the core products.

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It will continue in 2012 as in the filing Google said, “Acquisitions will also remain an important component of our strategy and use of capital, and we expect our current pace of acquisitions to continue."

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It also spent spent $9.7 million on lobbying in 2011 (http://wapo.st/yanxMo) The powerful is getting even more powerful. Next stop 'too big to fail'.

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2011 was the year that Google gobbled up drop.io, and buried it deep in the room known as "Stuff We'll Never Use, And Neither Will Anyone Else".

NOTE TO SELF: Startup Idea: Create a new drop.io, and combine it with some of the features of MegaUpload. Call it MegaDrop.

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Facebook brought drop.io in October 2010

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HAH!

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Thanks for the correction. I had this nagging feeling that it might have been 2010, as I tend to lose track of time, and I could have sworn that drop.io's announcement said "Google". Anyway, we could use another drop.io, for people who don't want to be tied to Google's ecosystem.

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A new drop.io would be awesome, it was a very good product and I haven't found anything else like it yet. Has anyone found anything similar?

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What were the main features that you liked about it, but haven't found elsewhere? I liked being able to email files directly to the drop. I suggest that we make a short list of awesome features, and maybe someone will take up the cause.

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