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The joys of being acquired by Google, the search behemoth and all-round cash mountain, have worn off quickly for the founders of Dodgeball, the location-based mobile alerts service.
Both Dennis Crowley and Alex Rainert bailed out of Google less than two years after the search giant paid an undisclosed sum to buy their startup.
The reason? Turns out that Google "wasn’t supporting Dodgeball the way we expected,” according to Dennis on his personal blog.
“The whole experience was incredibly frustrating for us - especially as we couldn't convince them that dodgeball was worth engineering resources, leaving us to watch as other startups got to innovate in the mobile + social space. And while it was a tough decision (and really disappointing) to walk away from dodgeball, I'm actually looking forward to getting to work on other projects again.”
If the mobile app wasn’t worth the engineering then why did Google buy it in the first place?
There are all kinds of reasons:
1. Acquire to hire
Google has a serious hunger for quality personnel and good people can be hard to find. When it buys a two-person startup the people are arguably the biggest reason for doing a deal. Dennis and Alex put themselves on the Google HR radar by creating an innovative product.
2. Dip a toe in the water
In May 2005 the search giant was looking closely at mobile, but it wasn’t doing an awful lot with it. Perhaps Dodgeball was an experiment in this regard, with Google hedging its bets that this was one mobile app that would seriously take off. We can assume that it hasn’t, despite rolling out to 22 US cities.
3. Because it can
Google has the cash pile to buy crazy user-generated video sites and major online ad firms. So spending a tiny fraction of its cash on early stage projects isn’t going to pose a problem. And remember too that it only paid $15m in cash for YouTube, with the remainder of the $1.6bn consideration being paid via equity.
4. Bag some groovy technology
As well as acquiring the people, the technologists, Google will have had an eye on Dodgeball’s technology. It may have learned what it needed to learn for its other internal projects. It may repurpose elements of Dodgeball. Or it may permanently cast it adrift.
5. Kill it
This could be filed under ‘Thwart Competitors’. Surely it hasn’t spent $3bn+ on DoubleClick just to close it down, or just to stop Microsoft from mounting a challenge to its dominance in the online advertising sector? Perhaps not, if we’re talking about billions, but a few million dollars is neither here nor there to Google.
6. Make it better, make it popular, make money
I tend to think of acquisitions as opportunities to grow revenue, rather than to hire new people or investigate potentially innovative technology. Perhaps Dodgeball just hasn’t scaled up in line with Google’s expectations? Was uptake too slow? Did it make any money, or lose money? Only Google and the Dodgeball founders will know, and nobody’s saying a great deal.
So which one is it?
Well, we contacted Google and I reckon we can file this under Reason 4. A Google spokesman said:
“Google understands the important role social networking plays in today's mobile ecosystem and we are constantly looking at ways to provide a great user experience in this area. Dodgeball was an early attempt at understanding user needs in this space and we will continue to evolve our thinking and our offerings.”
I guess the takeaway here is that if you sell your company, you cede control and have to revise your expectations accordingly. You cash out. After that you may navigate your way through the earn-out period and maybe end up contracted to work for your acquirer. But the point is, the product - your ‘baby’ - isn’t yours any more. The acquirer calls the shots.
And it doesn’t sound as if the Dodgeball founders, with two years of hindsight, are entirely happy with their lot.
Being acquired by a firm like Google is a dream for many entrepreneurs, but this tale proves that it is not a guaranteed pass to long-term joy and rapture, nor will it ensure that your product evolves in the way you anticipate.
Hat tip to Bobbie Johnson on the Guardian Technology Blog .