Google and YouTube – don’t mess with success

By now, everyone knows about the Google – YouTube deal, $1.65 billion for a leading online destination video site.   There is not much I can add, but I did find this comment interesting from Andrew Ross Sorkin’s NY Times article:

The idea of a deal had been broached a few days earlier. The setting was classic Silicon Valley start-up: a booth at Denny’s near YouTube’s headquarters in San Bruno, Calif. The Google executives threw out an offer of $1.6 billion and autonomy to continue running the business.

As I have written before, alot can happen when your competitors get acquired.  In most cases, your competition ends up spending too much time inwardly focused on integration and synergies and not enough time building their business.  While this problem is more prevalent in the enteprise software world given the nature of what it takes to make an acquisition succesful, (think Oracle-enterprise product integration is much harder and personnel and sales force training can take lots of time) it should not be the case in a lower friction web world.  As we can see, one of the smart things that Rupert Murdoch did was give MySpace autonomy to grow their business instead of stifling them with corporate culture.  I am not exactly sure how EBay has approached the Skype acquisition but I did hear that there is some imposition of EBay culture on Skype.  We all know that history repeats itself and one of the classes I remember from college was one on Literature and the British Empire.  One of the central theses of that class was that one of the reasons the British Empire failed is because they tried to impose their will or culture on others rather than have them slowly buy into it over time.  You can think of the cookie cutter approach – Britain conquers country, Britain installs own government system, Britain installs its own President, and eventually the conquered country revolts. This is what happens many times in acquisitions. What is briliant about Google’s play besides the attractive price is that it is not messing with YouTube’s success, it is giving the YouTube team the autonomy to keep building its business.

UPDATE: What I also forgot to mention is that one of the most important aspects of maintaining autonomy means maintaining product autonomy.  The last thing you want to do is piss off customers and destroy value.  Even small changes in the UI can make a huge difference when it comes to customer satisfaction. 

Published by Ed Sim

founder boldstart ventures, over 20 years experience seeding and leading first rounds in enterprise startups, @boldstartvc, googlization of IT, SaaS 3.0, security, smart data; cherish family time + enjoy lacrosse + hockey

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