Late last month, Michael Arrington of TechCrunch reported that Google was in the final stages of negotiations to purchase Digg, the popular user-vote-counting news site. A few days later, Arrington, citing unnamed sources, posted an update: For unknown reasons, Google had walked away from the deal. Digg's dalliance with Google wasn't much of a surprise—just about every major tech company has flirted with buying Digg in the last few years—but to some of the company's fans, the deal's breakdown represented a real blow. "Google is really the only company I can think of that could actually improve Digg," went one much-dugg comment.
The comment is revealing—among techies, selling to Google has never been considered selling out. In Silicon Valley, Google is seen as an entrepreneurs' paradise, and not just because of the free food and fancy toilets. With its flat organization chart and the freedom employees get to work on creative side projects, Google is said to run much like a start-up: a company that heaps money and engineering resources on restless innovators who want to create the next big thing.
On the other hand, may I present Jaiku. Google purchased the "micro-blogging" company last year—think of it as a rival to Twitter—and then promptly closed it down to new users. Or look at JotSpot, a start-up that built a wiki collaboration tool for office workers. Google bought it in October 2006. Sixteen months later, it relaunched a radically different version of the service, Google Sites, to much criticism from longtime JotSpot users, who felt abandoned and betrayed.
Jaiku and JotSpot are examples of a phenomenon I call the Google black hole. Despite Google's reputation for fostering new companies, many services that nestle into Mountain View's welcoming bosom are never heard from again. The pattern: Company gets bought out. Users rejoice. Company lies fallow for months. Users grow impatient. Company's employees get farmed out to other Google projects. Company lies fallow for more months. Users get even more impatient ...
Consider the fate of Dodgeball, an innovative mobile service that was a predecessor to Twitter, Jaiku, and the many "location-aware" apps that now clog up the iPhone. The company, which launched in 2003, enabled people to send texts indicating where they were hanging out. In response, you'd get texts telling you which of your friends (or friends of friends) were nearby. In 2005, Dodgeball's creators, Dennis Crowley and Alex Rainert, had just finished up grad school at NYU and were looking for investors in their service, which had become popular among techies in Manhattan. Of all the prospective offers they heard, Google's seemed to come with the fewest strings. Google paid Dodgeball a small outlay of cash and stock—the exact terms weren't disclosed—and Crowley and Rainert moved into Google's New York office.
Immediately, Dodgeball's founders saw that their corporate overlords didn't want much to do with the acquisition. It took six months for Google to assign a single software engineer to Dodgeball. After a while, execs began pushing Crowley and Rainert to work on other things. The founders started to believe that Google had bought Dodgeball simply to acquire their savvy in the mobile social-networking business, not for the service they'd built. The pair quit Google in April 2007. The Dodgeball site is still alive, but no one runs it.
In many ways, Google's Dodgeball acquisition was atypical. It was among the first after Google went public, and Crowley stressed to me that the amount of money that changed hands was very, very small. (Google declined to comment on Dodgeball.) But some aspects of the story seem applicable to other Google purchases. One difficulty Dodgeball faced was technical: It took time to move Dodgeball's relatively simple codebase onto Google's complex internal infrastructure—and after the transition, much of the system's code became too complicated for Dodgeball's founders to understand. Moreover, there were bureaucratic hurdles. As a start-up, Dodgeball had grown used to adding new features every week; under Google, the founders were told to get approval from layers of managers (though the Dodgeball crew began sneaking in small feature changes without alerting higher-ups).
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