Catching the eye of Google
- 17 April, 2012 03:33
Google's man in charge of acquisitions - vice-president of corporate development David Lawee - was in Auckland recently, but he was keeping quiet on whether any Kiwi businesses were on his radar.
Lawee's job is to buy start-ups that fit with Google's mission statement to "Organise the world's information and make it universally accessible and useful." He was in town to speak at the CEO Summit: Better by Design, hosted by New Zealand Trade and Enterprise.
Lawee says he agreed to speak because he is a fan of Icebreaker clothing and he had met with its CEO, Jeremy Moon - who also heads the Better by Design committee - and who then invited him to the conference.
Lawee says that he gets leads for potential acquisitions from Google's own executives. "The product managers know their business domain pretty well, and we learn about things and work with the product managers to understand what their roadmaps are and see if something they're doing could be accelerated by an acquisition."
In four years of leading acquisitions Lawee has looked at 1000 companies. After being vetted by Google, his recommendations have resulted in 120 acquisitions. Of those, two-thirds can be counted as a success (that is they met financial or technology targets).
Lawee says that over 800 start-ups in Silicon Valley are financed every year but seven out of ten will fail. The companies acquired by Google don't necessarily have to move there, but "software development is definitely easier when you're co-located."
He meets with entrepreneurs all over the world and says he looks for start-ups that are willing and able to "scale their vision" with Google's resources.
An area that Lawee noted as of interest to Google is video, citing the acquisition of digital rights management firm Widevine in 2010.
"The goal is to usher in the next generation of entertainment and we think of it as a third wave. There was broadcast, cable and now online video and the types of experiences should be fundamentally different," he says.
The Widevine acquisition is expected to bear fruit in 2013. A similar three-year gestation at Google occurred with Android. The seven-person start-up was acquired in 2005 and the first device featuring the operating system was launched in 2008. Lawee says that without Google's investment it's unlikely Android could have achieved such a massive global reach.
Lawee was involved in four start-ups before joining Google in 2004. The first investment was DirectHit, a search engine in competition with Google during the late 1990s. It was started by MIT engineers, and the company's founder set the mission of making US$500 million in 500 days. The company achieved this by selling out to AskJeeves for US$521 million in 1999.
Lawee says Google could ape the success of General Electric which had "70 to 80 years of innovation" and has stayed in the Fortune 500 list for 110 years.
Lawee's wife Lorna Borenstein also spoke at the NZTE event. Her resume includes high profile stints at Yahoo and eBay and she provided some insights into online marketing.
The people to look to are the generation known as the millennials, she says. They are aged between 11 and 29 and in the US they make up 22 percent of the population but 39 percent of smartphone usage.
She says this generation don't read for content, rather they scan information across multiple screens. Coupled with being the first generation to grow up surrounded with technology, they are also the first to have been "coddled" and made to think their opinions and ideas matter. As a consequence, Borenstein says, this generation is not afraid -- indeed expects -- to be able to express their views.
"They think they are awesome," Borenstein said.
Furthermore, Borenstein says the expectations of the millennials are spreading to older generations. She points out that the hobby social media site Pinterest -- in which users can pin items of interest, such as photos or links to news stories, into boards organised by topic - has become a huge hit with women aged over 35years old. However there is a site that predates it called Polyvore, but when that started only the editors could create boards, not users.
"Pinterest gets that it's about allowing you to get other people's collections and share your own. You are very much a part of it, whether you collect, broadcast your own - you're part of the mechanism."
Borenstein says that there are two ways to make money online.
The first is to provide unique value, which is why niche subscription sites are doing well. "It's got to be something that they can't easily get elsewhere, so it's got to be something that speaks to you."
The second is helping users find the content they want. "If you can help me find the premium content to that speaks to what I care for I'm going to pay for it time and time again."
She says that old way of marketing a product - placing a TV advert here, a print advert there - is over and companies need to rethink their business models.
"Why don't you figure out what people want?" she asks. "Stop selling what you have."
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