Google Acquisitions: Case Study

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					   Case study :
Google Acquisitions

• Acquisitions by Google

• Company Profiles

• Acquisition History (brief of some companies not covered above)

• Acquisition analysis

• Acquisition Strategy
    • Overview
    • Google the promoter
    • Google the Venture Capitalist

• Possible Acquisition targets

• Key insights for start ups and small growing companies
Companies/Products acquired in 2007
  Date         Company/Product                    Business Area                 Value
Acquired                                                                        (USD)
Feb, 2007   Adscape                    Video game advertising                $23 million
Mar, 2007   Trendanalyzer              Software                              Undisclosed
Apr, 2007   Tonic Systems              Presentation software                 Undisclosed
Apr, 2007   Marratech                  Video conferencing software           Undisclosed
Apr, 2007   DoubleClick                Online Advertising                    $3.1 billion
May,2007    GreenBorder Technologies   Desktop enterprise security           Undisclosed
Jun,2007    Panoramio                  Geospatial Photo-sharing Service      Undisclosed
Jun,2007    FeedBurner                 Online RSS Feeds                      $100 million
Jun,2007    PeakStream                 Parallel Processing                   Undisclosed
Jun,2007    Zenter                     Presentations Software                Undisclosed
Jul,2007    GrandCentral               VOIP Phone Aggregation                $45 million
Jul,2007    ImageAmerica               High resolution aerial cameras        Undisclosed
Jul,2007    Postini                    Communications Security               $625 million
Sep,2007    Zingku                     Mobile social network and             Undisclosed
                                       communication platform
Oct,2007    Jaiku                      Activity stream & presence sharing    Undisclosed
                                       service that works from the Web and
                                       mobile phones
Companies/Products acquired in 2006
  Date       Company/Product                Business Area                      Value
Acquired                                                                       (USD)
Jan, 2006   dMarc Broadcasting   Radio advertising software and platform.   $102 million
Feb, 2006   Measure Map          Blog analysis.                             Undisclosed
Mar, 2006   Upstartle            Writely, online word processing.           Undisclosed
Mar,2006    @Last Software       SketchUp, 3-D modeling.                    Undisclosed
Apr, 2006   Orion                Advanced search method.                    Undisclosed
Aug, 2006   Neven Vision         Computer vision                            Undisclosed
Oct, 2006   JotSpot              Website applications                       Undisclosed
Nov, 2006   YouTube              Video sharing                              $1.65 billion
Dec, 2006   Endoxon              Mapping solutions                          $28 million
Companies/Products acquired in 2005
  Date       Company/Product                     Business Area                Value
Acquired                                                                      (USD)
2005        2Web Technologies        Web-based spreadsheet.                Undisclosed
2005        Phatbits                 Widgets engine.                       Undisclosed
Mar, 2005   Urchin Software          Web analysis.                         Undisclosed
May, 2005   Dodgeball                Social networking.                    $45million
Jul, 2005   Reqwireless              Web browser and Mobile email.         Undisclosed
Jul, 2005   Current Communications   Broadband internet.                   $100 million
            Group                                                          (partial
Aug, 2005   Android                  Software for Handheld devices.        Undisclosed
Nov, 2005   Skia                     Graphics software.                    Undisclosed
Nov, 2005   Akwan Information        Latin American internet operations.   Undisclosed
Dec, 2005   AOL (5% stake)           Internet.                             $1 billion
Company Profiles
Postini Inc.
                       Basic Facts                                        About The Technology
• Entity Name:             Postini, Inc.                           With more than 35,000 businesses worldwide as
• Year Established:        1999                                    customers. Postini processes over 1 billion messages
                                                                   per day, giving the company an incredible pool of
• HQ Location:             959 Skyway Road, Suite 200              intelligence on what is happening on the internet, This
                           San Carlos, CA 9407, U.S.A              enables them to stay ahead of their latest tactics and
• Founder:                 Scott Petry                             to proactively protect their customers from even the
                                                                   most advanced attacks.
• CEO:                     Quentin Gallivan
• Website:                                Postini invented the software as a service (SaaS)
                                                                   approach to providing communications security and
• Acquisition Cost:        $625 million all cash                   compliance, and holds two fundamental patents in the
                                                                   space, with more patents pending.
                  About The Service                                The companies "stateless" architecture and redundant
                                                                   global data centers are backed by certifications such
Postini provides On-demand services (software as a service) for    as SAS 70 Type II, WebTrust, and the Department of
Communications Security, Compliance, and Productivity.             Commerce/UE Safe Harbor. The Postini Message
Listed below are the major features and differentiators:           Center is available in 14 languages, with service and
• Email, IM, and web threat protection; and policy enforcement     support available 24x7 worldwide, and proven
• Electronic message archiving and recovery                        99.999% reliability.
• Message encryption (automatic or on-demand)
• Web content filtering and policy enforcement                     As an on-demand service, there is no software or
• Business continuity                                              hardware to buy, install, maintain, or upgrade.
• 99.999% reliability                                              Administrators use standard web browsers to manage
• Communications security and compliance platform                  the system, and users seamlessly continue to use their
• Nothing to install or maintain                                   existing email, IM, and web software. This delivery
• Controlled and predictable costs for protection and compliance   model helps Postini customers save as much as 90%
• Patented, real-time processing                                   compared to hardware or software solutions.
• Postini Threat Identification Network (PTIN)®
                                                       About The Company
The company grew from a small and relatively obscure service with perhaps a couple hundred customers to a significant company with international
operations and multiple data centers supporting over ten million users across 35,000 businesses. Postini's scale is impressive; their servers block a
billion spams a day while processing as many as two billion SMTP connections every 24 hours. Postini is a great example of a company that
managed to grow and prosper during the "nuclear winter" in the technology and venture capital industry following the bursting of the bubble in
2000/2001. Postini's founder Scott Petry and then-CEO Shinya Akamine on the morning of September 11th 2001 negotiated the term sheet for
Mobius' investment in the company with Ryan McIntyre, a Postini board member and former principal at backer Mobius Venture Capital .
What attracted Mobius most to Postini was Scott Petry's vision of building out a true platform company built around the simple notion that email had
become more important to corporate America than the telephone. A company that could build a suite of services around messaging would have the
potential to harness a huge customer base given the broad horizontal nature of email. The total addressable market was every email address in the
Equally important was Postini's architecture and deployment model. Postini was a SaaS company well before SaaS was cool, and probably even
before the acronym of SaaS had been coined. Mobius loved the ease of deployment (just a change to the MX record in DNS) and the recurring
revenue subscription model. And while the most notable SaaS companies to date have been built around specific vertical business applications,
Postini is arguably among the first SaaS infrastructure companies.
 The main concern for investors early on was whether enterprise customers would buy an outsourced security service for email that ran "in the cloud".
Happily, Postini's choice to focus on anti-spam and anti-virus as the initial applications to deploy on their elegant and highly efficient message-
processing architecture proved to be prescient, and when the spam problem exploded in 2002 and 2003, Postini's revenues ramped prodigiously. Of
course, the CAN-SPAM act of 2003 did nothing to put a dent in the spam problem, and Postini's growth continued unabated. Today, Postini's
customers range from ISPs and small and medium sized enterprises with minimal or non-existent IT staff, all the way up to big companies with
sophisticated and demanding IT departments such as Merrill Lynch, Business Objects, Cooley Godward, Johnson Controls, Mitsubishi Motors and
United Technologies, to name but a few.
By late 2005, Postini had grown substantially and the company managed to attract Quentin Gallivan (formerly an executive at Netscape and then
Verisign) to join the company as CEO. Under Quentin's able leadership, the company's growth accelerated further and began to fulfill Scott Petry's
original platform vision when Postini released a series of new products for instant messaging and archiving that have seen great uptake within
Postini's existing customer base and have also served to bring many new customers into the Postini fold.
Right at the onset of 2007, Postini began to prepare for an IPO. At the same time, in February of this year, the company announced a partnership
with Google to provide their messaging security services to customers of Google Apps Premier Edition. As often happens, following the early success
of this initial partnership, deeper discussions with Google about a more strategic relationship began. As the management teams of both companies
got to know one another, it became clear that Google and Postini shared a common vision around the power and potential of email as the most
important communications platform in the enterprise and the value and leverage that Postini's communications suite could bring to Google's broader
enterprise vision. While the company had been pretty far down the IPO path, Google was the one M&A suitor Postini had encountered that was
compelling enough to divert the company from a public offering.
           About the VC Funding                             Milestones

Postini an e-mail security service provider delivered a
huge payback for VCs last week when Google bought
the company for $625 million.
Google, which began using Postini's technology in
February to provide messaging security services,
announced last week that it would pay cash to acquire
the company.
Prior to the deal, the San Carlos, Calif.-based company
was planning to file for an IPO, However, after Google
and Postini began working together earlier this year, the
two companies began to draw up acquisition plans.
Six years later since Mobius invested in the company in
2001, the purchase is providing a profitable exit for
Mobius and a half-dozen other venture backers, who
invested just over $26 million in Postini between 2001
and 2006, according to Thomson Financial (publisher of
PE Week).
In addition to Mobius, backers include August Capital
Management, Sun Microsystems and Summit
Accelerator Fund, all three of which participated in a $6
million round in 2001. Pacifica Fund, AltoTech Ventures
and Mobius took part in a $10 million Series C round in
2003. Bessemer Ventures funded a $10 million follow-on
round in 2005, while Mobius was the sole backer of a
$94,000 Series D in July 2005 and a $356,000 Series E
in September 2006.
                                                              Why Postini
Postini was a natural fit for Google, which had already been licensing the company's e-mail tools for its $50-a-year Premium version of
Google Apps.
The deal underscores Google's ambitions to become a serious player in the business of selling software to companies and organizations,
in competition with Microsoft and others. Google, which earns the vast majority of its profits from selling ads it places next to search results
and on sites across the Web, has increasingly emphasized its small but rapidly growing software business. This year, Google's chief
executive, Eric E. Schmidt, said the company's strategy had three components: ''search, ads and apps,'' or applications, meaning software.
As part of that strategy, Google has been trying to persuade businesses to replace existing e-mail systems and other programs with the
company's own package of business software. That package, called Google Apps, includes the Gmail service, an online calendar and
programs that can read and edit documents created with the Word and Excel programs from Microsoft. But many businesses -- especially
large ones -- remain leery of moving some critical functions like e-mail to Google's programs, which, unlike traditional business software
that resides on corporate networks, are delivered as services over the Web and are considered less secure.
The acquisition of Postini -- a private company whose products allow businesses to control spam and viruses and help them to monitor and
preserve e-mail messages to comply with regulations -- is an effort by Google to allay some of those concerns. ''In bigger businesses,
security and compliance requirements are a must,'' said Dave Girouard, Google's vice president and general manager for enterprise.
The Postini purchase allows Google to fuse security with its typical user-centric, simple and manageable approach to products, Dave
Girouard, vice president and general manager of the Google Enterprise division, said today in a conference call. Before now, Google was
relying on partnerships to safeguard its software offerings.
Girouard said the merger, will allow Google to bring on more large enterprise customers who may have been initially leery of using Google
Apps because of significant business and regulatory requirements, such as e-discovery.
"Google is definitely looking to strengthen all angles for their enterprise Apps," Chenxi Wang, a principal analyst with Forrester Research,
told today in an email. "Enterprise customers typically have stringent demands on security, reliability, performance, etc.
Google has the other operational aspects well covered with the exception of security.“
The deal will allow Google to better compete with Microsoft over hosted enterprise email offerings, Joe Fisher, vice president of product
management at Tumbleweed Communications, told today. Google will hope to transition Postini customers over to
Google Apps.
"It's an arms race between those guys for eyeballs and seats," Fisher said. "(Google) is trying to figure out how to monetize on the Gmail
piece. Gmail is significantly lacking in capabilities [for the enterprise]. Google really doesn't have enterprise selling DNA.“
                                           Revenue Model & Future
Google and other companies say that software will increasingly move to the Web and will often be free and supported by
advertising. Over the last year, Google has pursued that vision with efforts to turn some of its Web programs, which are
popular with consumers, into business tools.

Last year, the company began to offer companies, academic institutions and nonprofit organizations a version of Gmail and
other business applications at no charge. In February, Google packaged a broader set of business programs, including a
word processor and spreadsheet, into Google Apps and began charging businesses $50 a user annually for a version that
includes customer support.

By comparison, the market research firm Gartner estimates that businesses pay on average about $225 a person annually
for Microsoft Office, which includes Word and Excel, and for Exchange, the widely used corporate e-mail program.

Microsoft, for its part, has sketched out a future in which business programs are likely to become a hybrid of desktop
software and Web services. Moving in that direction, Microsoft acquired FrontBridge Technologies, a Postini competitor, in
2005, and offers that company's products as Web services. And while its core e-mail Exchange products are still programs
that it sells and that customers must install on their networks, some Microsoft partners offer Exchange as a Web service.
Microsoft played down the notion that Google's acquisition of Postini would create more competition for Exchange and other
Microsoft applications. ''What we are hearing from our customers is that they are looking for an experienced solutions
provider,'' said Roger Murff, director of marketing for unified communications services at Microsoft. The deal is ''further
validation that we are doing the right thing and have been doing the right thing for several years,'' Mr. Murff said.

For now, Google's efforts to make inroads into the $2.5 billion corporate e-mail business remain just that. The company said
more than 100,000 businesses are using Google Apps, but it will not say how many of them are using the pay version.
Microsoft's e-mail products are used by 62 percent of corporate users, and I.B.M.'s by 26 percent, according to Gartner.

Web e-mail services like Gmail will not be a significant force in the corporate market until 2010, when they are likely to
become the first choice of 8 percent of corporate users, according to a Gartner forecast in January.
''Google has a long ways to go before they become a strong competitor to Microsoft'' in business software, said Chenxi
Wang, a principal analyst with Forrester Research.
      Revenue Model &                                                 Founders Profile
       Future- contd.
                                            Scott Petry, Founder, CTO & EVP Product Devlopment
                                            Scott Petry founded Postini and has served as a director since 2000. Helping
Google plans to continue offering
                                            define and deliver Postini products and services, Scott has a wealth of
Postini's services, which customers
                                            experience in product marketing and product development.
pay for, to users of other e-mail
systems, Mr. Girouard said. But he           Prior to Postini, he held general manager and VP positions at Cygnus Solutions
added that Google intended to make it       (acquired by Redhat), director of advanced messaging products at SkyTel, and
easy for Postini's customers to ''test      product manager positions at Apple Computer in the Newton Group and the
drive'' Google Apps. Mr. Girouard also      Networking and Communications group. Scott holds a B.S. degree from San
said Google had not decided which of        Diego State University and was a member of the 1987 US National Rowing
those services would be integrated into     Team.
the free and paid versions of Google
                                            Quentin Gallivan , CEO & President
Postini has 35,000 business customers
that delivered its services to 10 million   Quentin Gallivan joined Postini as Chief Executive Officer in November of 2005.
users worldwide. More than 60 percent       Quentin brings to Postini over two decades of global executive leadership
of those customers use Microsoft            experience in the high technology industry. Prior to joining Postini, Quentin
Exchange, the company said.                 spent 8 years with VeriSign, a pioneer in On-Demand services, as executive
                                            vice president of Worldwide Sales and Service. At VeriSign, Quentin was
Google may continue its security            instrumental in scaling the company from $13M in revenues in 1997 to over a
purchases with a buy in the information     billion in revenues in 2004.
leak prevention space, Wang                  Prior to joining VeriSign, Quentin was Vice President and General Manager of
predicted. But it is unlikely Google will   the Asia Pacific Region for Netscape Communications Corporation. Quentin
stretch its scope beyond firms that can     also spent over 12 years with the General Electric Company, including
protect its Apps offerings.                 executive leadership roles as Vice President of Asia Pacific, based in Hong
                                            Kong for a GE business unit and Vice President of North America for a GE
                                            business unit based in Maryland.
Grand Central Communications
                        Basic Facts                                                About The Service
• Entity Name:             Grand Central Communications               GrandCentral Communications is a next- generation
• Year Established:        2005                                       personal communications company.

• HQ Location:             48389 Fremont Blvd., Suite #110            The company provides consumers with One
                           Fremont CA 94538, U.S.A                    Number…for Life™ by integrating all existing phones,
                                                                      numbers, and voicemail boxes into one. The company
• Founder:                 Craig Walker & Vincent Paquet              gives subscribers unprecedented control over how
• CTO:                     XXXX                                       incoming calls are managed through a simple web-
• Website:                              based interface.

• Acquisition Cost:        $45 million                                In short GrandCentral is an internet service that uses
                                                                      VoIP to link customers' phone numbers together.

               About The Technology
                                                                      Some of the features are listed below:
The backend the company has taken a proprietary soft-switch that      • Check your messages by phone, email, or online
they have enhanced and along with their border controller on it. It
is a highly customizable soft-switch that the company has their       • Keep all your messages online for eternity
layers of applications on top of it. That's where all of the          • Record and store your phone calls (just like
interesting call control features happen.                               voicemail)
                                                                      • Quickly (and secretly) block an annoying caller
On the front end, MySQL, some PostgreSQL, and some Flash,
Ajax and PHP. There is some interesting stuff you can do with         • Click-to-dial from your address book
Flash and Ajax with the way the comapnies player works and it is      • Surprise your callers with a custom voicemail
a powerful combination to put the two of them together.                 greeting
                                                                      • Forward, download, and add notes to your messages
                                                   About The Company
GrandCentral is similar in concept to AT&T TrueConnect 500 service offered in the 1990s. While TrueConnect also offered a single
number that routed to customer selectable phones, GrandCentral is a much more robust offering. TrueConnect required AT&T intervention
to change the phone number list. GrandCentral has the advantage of the internet, where end customers can alter phone setting
GrandCentral was founded in late 2005 by Craig Walker and Vincent Paquet, who had worked closely together for years while running
internet telephony pioneer Dialpad Communications. After being acquired by Internet giant Yahoo! in June 2005, they suspected there
were other problems that could be solved using next-generation communications services and both missed the intensity of the start-up
Craig was fresh off a flight at San Francisco's International Airport when the big idea struck. Back on solid ground (and with better cell
phone reception), Craig muddled his way through three separate voicemail boxes - one for his cell phone, one for his work phone, and one
for his Blackberry. Three numbers to dial, three passwords to enter, three inboxes to check. He knew that millions of people shared his
frustration. And he knew there had to be a better way.
Together, Craig and Vincent laid the plans, hired the team, and started building a new company that would let users roll all their phone
numbers (and voicemail boxes) into one. Company was initially funded by Minor Ventures ($4M) before being purchased by Google on
July 2, 2007.The company formally launched its services in the beta version on September 25, 2006.
During the initial phases in Sep 2006, Co founder Craig Walker said in one of his interviews “Our marketing plans are really focused
around viral marketing growth. We believe that if we do our job right, our users will be our best ambassadors to spread the word that there
is this great service that I use and love and has all these cool features. How can we spread viral growth? We also demo'ed at the DEMO
conference and that generated some good publicity and PR and if you have a service that people like you just need to get the ball rolling
and hopefully they will tell other users and they will tell other users.”
This marketing Plan along with the Demos and wide media coverage got Grand Central midst the spotlight, the company earned
recognitions like FierceVoIP - "Fierce15" VoIP Companies of 2006 , Being named by IDC as One of the Ten Emerging Mobile Players to
Watch in 2007 , First place in the GadgetFest shoot out in 2006, Being named as Top Internet Telephony Company in Silicon Valley's
Emerging Technology Awards in Nov 2006, CNET "Webware 100" Award for Communications in Jun 2007 and finally being named in the
2007 "Pulver 100" .
Project CARE (Communications and Respect for Everybody) is an initiative taken up by GrandCentral to help those in need, to stay
connected by offering individuals a local phone number and voicemail box for life. Through the Project CARE initiative, GrandCentral is
providing, free of charge, a local phone number and voicemail box to members of the homeless community in San Francisco. This project
helped the company garner some media coverage and prove it’s a socially driven, people centric company.
         Business/Revenue Model                                                Founders Profile
Currently the service is in private beta and is accessible by   Craig Walker, Founder and CEO
invitation only; invitations can be obtained from existing
members (though requests from the website's "reserve"            In 2001, Craig became the CEO of Dialpad
request are frequently responded to with an invitation from     Communications, where he led the company out of
the beta team within 24 hrs). With an invitation, a new user    bankruptcy and transformed it into the most profitable
can create an account on the service's website and choose       VoIP company in the industry. When Dialpad was
a central phone number. During the private beta the service     acquired by Yahoo! in 2005, Craig became Senior
is free; before the Google acquisition there were plans to      Director of VoIP and successfully merged the Dialpad
launch a $15 a month premium service (no advertisements,        team with the Yahoo! Messenger group.Prior to Dialpad,
more outgoing calls, more voicemail storage and up to six       Craig was a technology venture investor at Sterling
unified numbers).                                               Payot Capital and a corporate attorney at top tier law
                                                                firms in Silicon Valley, where he represented companies
The cost associated with the ability to forward calls from a    ranging from early stage start-ups to Cisco Systems.
GrandCentral (GC) number to a destination number that is
outside of the local calling area of the GC number is per-      Vincent Paquet, Founder and COO
minute and is currently absorbed by Grand Central. This
                                                                Prior to co-founding GrandCentral with Craig, Vincent
cost also occurs when a call is initiated from the user's
                                                                was Director of Business Development at Yahoo! in the
GrandCentral address book to place a call by selecting the
                                                                voice communications group. He joined Yahoo! when it
destination entry and then selecting a "call from" number
                                                                acquired Dialpad Communications, one of the world's
where the "call from" number and the destination number
                                                                largest VoIP providers. At Dialpad, Vincent was VP of
are not local numbers to each other on the PSTN. If either
                                                                Business Development and Marketing, where he
feature is used beyond the $15 credit (750 minutes) during
                                                                oversaw all revenue-generating activities. He helped lead
beta, a user will be disconnected. When the user again
                                                                the reorganization and turn-around of the company, until
attempts the call, he will be given the option to "recharge"
                                                                its successful acquisition by Yahoo! in 2005. Prior to
his account with additional free credits. Upon recharge, the
                                                                Dialpad, Vincent was a Vice President at Los Angeles-
activity will be allowed again.
                                                                based IFA, the French foreign investment agency. Prior
When the beta testing term is completed, a user will be         to joining IFA, Vincent built and managed a European
able to recharge his account using a credit card or other       distribution network for France-based Microspire, a
payment method                                                  telecom component manufacturer.
                                               Why GrandCentral
Interestingly, Google says they bought GrandCentral because it fits well with their other services that "enhance the
collaborative exchange of information between our users." In other words, this is yet another Web Office play from
In today's increasingly virtual and fragmented workforce, a service such as GrandCentral is an ideal complement to other
Web Office tools such as GTalk, Gmail and Docs&Spreadsheets. The key to a successful distributed team is
communication and GrandCentral is a service that makes telephone communication much easier and gives more control
to the user - e.g. you can set rules as to what calls you accept and when, and even hear why someone is calling before
taking the call.
Analysts think this will also ruffle some feathers at Skype/eBay. One such analyst says “I use Skype a lot - and I have a
Skype-In San Francisco phone number, because even though I live in New Zealand the center of my work existence is
Silicon Valley (and 50% of R/WW readers come from the US, compared to just 0.8% from my home country). Skype-In is
a handy service, although the call quality tends to be poor. But GrandCentral appears to offer a lot of compelling features,
which may in time make my Skype-In number redundant.”

Unfortunately, right now the GrandCentral service is restricted to those who have a U.S. telephone number and also the
service isn't accepting new users at this time. However you can "reserve" a number by submitting your name and email
address. This is the sort of functionality consumers will expect in online telephony services from now on, so Skype needs
to step up to the plate and compete with GrandCentral on features.
What's more, once again Google has positioned itself at the leading edge of innovation in an emerging Web Office market
segment. They did it with wikis (JotSpot), online word processing (Writely), email (Gmail), RSS (Feedburner) and perhaps
with presentation software too (Zenter).
EBay Inc unit Skype, a pioneer in the Internet phone market, has signed up more than 200 million users for its free or low-
cost phone services globally. Newer names in the field include venture-backed firms Jajah, Jangl, Jaxtr and Rebtel, which
together have signed up millions of users in just the past year. The market potential is huge especially considering the
value adds Grandcentral has over the current players.
                       Basic Facts                                             About The Company
 • Entity Name:             Dodgeball                           Dodgeball - was founded in 2000, initially as a city guide
 • Year Established:        2000                                based on user-contributed content. Dodgeball grew out of a
                                                                grad school project started by Crowley and Rainert at New
 • HQ Location:             144 Broadway, 21st Floor            York University’s Interactive Telecommunications Program.
                            New York, NY10018
                                                                It began receiving press coverage back in 2000, when all it
 • Founders:                Dennis Crowley                      did was allow people to exchange information about what
                                                                they thought of various night spots around New York City.
                            Alex Rainert
                                                                By the end of 2003, Dodgeball had upgraded its offerings,
 • Website:                          going from simply a restaurant review service to something
 • Acquisition Cost:        USD 40 MM                           that could “speed up serendipity,” in its owners’ words.
                                                                • Acquired by Google in 2005
               About The Service                                • Re-launched as a Social Network App: 2004
                                                                • Initial Branding: "Friendster For Your Mobile Phone"
Dodgeball uses mobile phones as a social networking
                                                                • Cities: 22
                                                                • Users: About 25,000
Users can alert their circle of friends with text messages if
they are going to be in a certain place or hang-out.
They can also receive text alerts if friends of friends are
going to be in the vicinity.
There's also a "crush' feature that allows users to meet
other Dodgeball users.
          Business/Revenue Model                                               Why Dodgeball
The company is currently earning revenue through            Dodgeball provides Google with a bunch of interesting
sponsored advertising. For example it has a deal with       technologies and use patterns – shortens technology
Absolut Vodka for the sponsorship of a nightlife channel.   development life cycle
The deal involved Absolut getting a special spot in the
                                                            Dodgeball uses the mobile phone as its native platform, an
dodgeball network where people could associate with the
                                                            aGoogle wants to further extend it's reach.
brand as a “friend” in the same way they would with
people they know.                                           Dodgeball does a better job mapping to real-world social
                                                            networks than Orkut, since there's an actual reason *not* to
Dodgeball aims to get advertisers to provide something of
                                                            friend someone in db, namely that you don't want to get
value to their users like sending location-based messages
                                                            spammed with 100 SMSes a night.
containing information on good parties, drinks specials,
etc. that relate to the brand but aren’t solely the brand   Google's mapping work is good at "Where am I?" and "Where
(spam).                                                     is the gas station?" but not so good at the question "Where
                                                            are my friends?" Dodgeball is really good at that.
In the future when the market matures they intend to earn
revenue from premium SMS and downloadable                   Potential explosive market for integrated services of social
applications.                                               networking like Orkut integrated with Dodgeball.
                                                            Given that the core Dodgeball proposition -- we can mix fixed
                                                            information about places and fluid information about people to
                                                            create new value -- improves a) the more information you
                                                            have upfront and b) the more people are using it, the addition
                                                            of db to Google is really good news for db, and will provide a
                                                            really interesting platform for Google to experiment with
                   Founder Profiles                                                       Lessons

Dennis Crowley:                                                       Ensure the right valuation of the company at the time
                                                                      of due diligence.
Dennis Crowley is the founder of Since
2000, Dennis has been experimenting with the ways people use                • Many people consider that price paid by
mobile devices to coordinate social interactions. His work                    Google for this acquisition to be much lesser
focuses on merging location-based services with social networks               than estimated USD 40 MM
to help people connect with the people and places around them.        Have a clear “go-ahead” plan. Frustrated with Google’s
                                                                      plans and lack of focus on dodgeball, the founders of
He has developed and managed mobile applications for Vindigo,         dodgeball quit Google a some time back
MTV Networks and ABC and was previously a member of Jupiter
Research's technology and operations research group.                        • Commitment on future plans, engineering
                                                                      Have a clear business case for the active acquisition
Alex Rainert:
                                                                      area for Google.
Alex Rainert has been working for the past 6 years creating
                                                                            • Hot acquisition domain for Google is mobile
unique, usable and intuitive interfaces for various platforms. Sinc
                                                                              applications nowadays, especially technology
2002, he has been exploring how a spoonful of technology can
                                                                              and applications that could help it in the
truly change the way people act and think socially.
                                                                              advertising space as well.
Recently Alex worked at ECCO design, uniting the user interface
with the physical design of a product, matching form to function.
Prior to working at ECCO, Alex had worked at Razorfish and
R/GA as a Programmer, Information Architect and most recently
as an Interaction Designer. Having been responsible for both the
technology as well as the interface of a project allows him to
create solutions that address both the technical possibilities as
well as the users' needs.
AdScape Media Inc.
                           Basic Facts                                              About The Company
• Entity Name:             AdScape Media Inc.                               AdScapewas formed out of BiDmic which was
• Year Established:        2006 (2002 as BiDmic)                            founded in 2002. The company opened a
                                                                            headquarters in San Francisco in 2006 after being
• HQ Location:             600 Townsend St., Ste. 242E,                     joined by a couple of former very experienced
                           San Francisco, CA, USA                           game industry executives. The executive team
• Founder:                 Dan Willis                                       has more than 100 years of gaming industry
• Website:       
• Acquisition Cost:        $23 Million – All Cash                           Adscape, a startup that launched in February
                                                                            2006 with $3.2 million in funding from Atlanta's
                                                                            HIG Ventures, is behind the other players in the
                      About The Service                                     burgeoning in-game advertising market, which
                                                                            include Microsoft-owned Massive, IGA Worldwide
Adscape Media is the in-game advertising company, and the developer         and Double Fusion.
of the world’s first dynamic in-game advertising technology. Adscape        Founded by former Nortel engineer Dan Willis,
Media’s patented technology, AdverPlay™, allows advertisers and             Adscape hired former Sega executive Bernie
publishers, measurable in-game advertising opportunities. Adscape           Stolar as the company's dean of games. It has not
offers dynamic delivery, plot/storyline integration and truly interactive   announced any game publishers as customers.
marketing opportunities.                                                    The company has 22 published patent
                                                                            applications for Adscape Media, and a number
Adscape Media supports each brand and its message with
                                                                            more (8 patent applications, and 1 granted patent)
demographically targeted campaigns, time targeting, geographical
                                                                            for BiDamic, which show a thoughtful and rich
targeting and auditable reporting of impressions.
                                                                            history of development.
Adscape Media offers the only proprietary Two-Way connection                Adscape Media offers dynamic delivery of
between in-game ads and the real world. RVG enables two-way text,           advertising with plot and storyline integration -
audio and video communication via SMS Text or eMail. RVG                    ways for advertisers to show fresh and
Technology enables the advertiser to send brand messaging, and many         changeable (dynamic) advertisements within
other transactions that are relevant to the game, benefiting both the       video games which can be shown without
advertiser and game publisher by offering exclusive offers/content          interrupting gameplay. This makes its solution an
directly to the game-player without interrupting game-play.                 interactive marketing platform.
                                         About The Company – contd.
Adscape Media is the developer of the world’s first dynamic in-game advertising technology. Adscape Media’s patented technology,
AdverPlay™, allows advertisers and publishers measurable in-game advertising opportunities. AdverPlay uses Real World/Virtual World
Gateway™ Technology (RVG™) to provide a two-way connection between in-game ads and the real world. RVG technology controls the
delivery of ads and many other transactions based on game genre, gamer demographics, time of day, and geographic location.
In late 2004, Adscape needed to accelerate the delivery of the first production release of AdverPlay. As a start-up company, they needed
to engage publishers and studios to incorporate AdverPlay into their next generation games. To support that effort, they also needed to
obtain the commitment of advertisers to prime the advertising network. These business imperatives required a robust, demonstrable ad
delivery platform.
“GDC and E3 are the key events in the games industry for engaging publishers and studios,” states Dan Willis, Adscape Media co-
founder and CTO. “They were being held in early 2005 and we needed to publicly demonstrate a commercial product at those
conferences. If we missed that window, it would be a full year before we had another opportunity. We had the in-house skills to finish
production but at that time we simply didn’t have the capacity or established development process to get it done with the level of quality
we needed within that tight timeframe.”
To accelerate the delivery of AdverPlay, Adscape engaged HeadGames, the game technology division of bitHeads. “I needed a partner
that could ramp-up quickly and provide the project leadership needed to get the job done right,” adds Willis. “I knew of the track record of
bitHeads and was confident they could deliver.” A HeadGames team was immediately deployed to work along side Adscape Media staff
to productize the architecture and take more responsibility for project management, software development, and unit and integration
testing of the AdverPlay release.
“HeadGames worked truly hand-in-hand with our in-house team,” states Willis. “They dealt with the uncertainty of bleeding edge
technology, helped finalize the design, defined the project plan, then delivered a high quality product to schedule. We could not have
achieved that with other consultants or outsourcers who typically require detailed specifications and project plans and close management
With the timely delivery of the first production version of AdverPlay, Adscape Media was able to conduct a critical public demonstration at
E3 in early 2005. That led to successful engagements with initial publishers, studios and investors.
“Also, by having HeadGames take responsibility for the final production of the first release, our in-house team was free to focus on the
research to advance our core intellectual property within the AdverPlay engine,” concludes Willis. “By hitting that first launch window with
HeadGames help, we were able to focus on core IP for the entire following year. That IP is our main differentiator in the market today and
the driver of our shareholder value.”
         Business/Revenue Model                                                         Future
                                                                Adscape Media is a small in-game advertising company.
Over the past few years, the video game experience has          In-game ad revenue is expected to reach $200 million
become richer and more interactive. We think this rich          this year and as much as $700 million by 2010,
environment is a perfect medium to deliver relevant,            according to Parks Associates and Yankee Group
                                                                Research, respectively.
targeted advertising that ultimately benefits the user, the
video game publisher and the advertiser.                        Recent developments show that the future of in-game
                                                                advertising transcends relatively simple bill boarding.
As more and more people spend time playing video games,         Adscape’s interactive RVG technology brings a new level
                                                                of interactivity and bi-directional communication
we think we can create opportunities for advertisers to reach
                                                                opportunities into and out of the game.
their target audiences while maintaining a high quality,
engaging user experience. That said, we will test ways of       Hurdles Google could face:
successfully implementing this form of advertising and          Google's biggest hurdle will be Microsoft, which last year
Adscape's technology will be instrumental in those tests.       acquired Massive, one of the largest in-game ad
                                                                providers. In this area Microsoft has a rare advertising
Ad platform is an organic part of any business that relies on   advantage over Google, thanks to thriving sales of its
revenues from ads. Since it wasn’t that expensive and time      Xbox 360 gaming console and a long list of gaming titles,
                                                                according to analysts.
to market is very important
                                                                Other rivals, such as IGA Worldwide and Double Fusion,
                                                                are bigger and have more venture capital backing and,
                                                                thus, would have been more expensive to buy, analysts
                                                                AdScape "has a technology, but not much of a market
                                                                presence, so the price will be significantly lower" than it
                                                                would have been for one of the other companies
                                                   Why Adscape
Buying AdScape will allow Google to serve ads to yet another market, the fast-growing video and Internet game industry.
Ownership of Adscape gives Google access to a patent portfolio that could position the company well in a battle against
Microsoft to deliver advertisements in video games.
Google’s new intellectual property includes one patent granted to San Francisco-based Adscape—then called BiDamic—in
2005 for a “system and method for interactive on-line gaming.” Invented by CTO Dan Willis, the patent is for a complex
gaming system that sounds similar to Microsoft’s Xbox Live service, which lets owners of the Xbox console play games and
download multimedia via the Internet. BiDamic filed the application in September of 2002, mere months before the launch of
Xbox Live.
In addition to several pending patents, Google also gets access to Adscape’s AdverPlay and Real World/Virtual World
Gateway technologies, which make it possible to deliver dynamic advertisements like billboards in Internet-enabled games
and lets advertisers communicate with gamers via email or SMS text messages, respectively.
The acquisition marks Google’s first foray into the in-game advertising business and comes as it has been amassing deals
and technologies to deliver ads across many different types of media, including newspapers, radio, and TV.
In-game advertising is an area where we believe Google could add a lot of value to users, advertisers and publishers,” said
company spokesman Brandon McCormick.
Many are wondering how Google plans to do just that. “That’s the $23 million question,” said Kelly Hyndman, a Washington,
D.C.-based partner with IP law firm Sughrue Mion. Mr. Hyndman believes the search king is likely to use Adscape’s patent
portfolio defensively against companies like Microsoft while marshalling the expertise of executives including Mr. Willis to
build its own game ad delivery system.
Endoxon AG
                       Basic Facts                                           About The Company
 • Entity Name:            Endoxon AG                          The company was formed in 1988 under the name of
 • Year Established:       1988                                Symplan Map AG which established itself as “the leading
                                                               Swiss supplier of geo data and geo marketing services”.
 • HQ Location:            Lucerne, Switzerland                Already specializing in cartography and information
 • Founders:               Stefan Muff, Bruno Muff             technology, Symplan Map implemented a number of highly
                                                               successful internet solutions before merging with Endoxon
 • Acquisition Date:       December 2006                       AG in March 2001.
 • Acquisition Cost:       USD 28M                             Following the merger, the company focused on three main GI
                                                               Data - topographic maps, aerial photos, road navigation data,
                                                               satellite imagery, road maps, detailed town, city plans;
               About The Service                               Analogue Maps (paper, DVD CD-ROM) - map products are
                                                               based on satellite pictures, orthophotos, current town and city
The company provided imagery for, a              plans and specific customer information.
successful map service, and, a local search           Web based applications
service, both owned by Swiss Post and limited to
                                                               Before the acquisition, it employed 80 people, with offices in
Switzerland . This web-mapping service did scrolling,          Switzerland, India and St. Petersburg. Its Indian subsidiary
zooming, layering and address-searching since the early        assembles satellite images of different countries (Switzerland,
days due to AJAX technology, long before Google Maps           Germany, Austria, Japan, Dubai).
and the others were doing it.
                                                               Around 50 of Endoxon's 80 employees, among them CEO
Users can search & find places in the vicinity of their        Samuel Widmann and founder Stefan Muff, joined Google's
home, their place of work or other places which they visit     Swiss offices in Zurich.
occasionally. It provides access to directories (private and
                                                               After the acquisition by Google, Endoxon spun off the
business telephone and other directory entries) and
                                                               remaining three of its six units in cartography, geo data
leisure activities' listings.                                  trading and geo marketing business areas into Mappuls
                                                               Corp., founded on November 23, 2006. Bruno Muff, one of, the German directory publisher, also uses         the founders of Endoxon Corp., became its new CEO and
Endoxon’s “Blue” technology.                                   was joined by 20 members of staff.
        Innovations & Technology                                                 Why Endoxon
Endoxon has several significant innovations to its credit-   Google acquired Endoxon’s internet, mapping and data
                                                             processing business units. These complement Google Earth
•It is responsible for the first MMS service and the first
                                                             and Google Maps technologies and services. Endoxon’s
independent mobile portal Mobidick in Switzerland for        assets and its European network bolster engineering and
SMS, MMS, WAP and WEB, provided via all 3 Swiss              technical resources for Google, and will help improve the
mobile phone network operators.                              functionality of Google Earth and Google Maps across
•It also created another landmark for the Swiss Museum       Europe.
of Communication and Transport: The first hiking map
                                                             Endoxon is a pioneer in Ajax mapping technologies which
done with an aerial image or “Swissarena", the largest       enable the integration and processing of geo-referenced data
walkable aerial image of Switzerland at a size of 200        and high-resolution aerial and satellite images for dynamic
square meters and the nation's second largest depiction      internet and mobile services. Ajax is behind the most popular
after the country itself.                                    local search products on the market today and reduces the
                                                             need for page loads resulting in faster search and user
Endoxon had been working on a technology called "blue",
which is visualized information on the web. “blue” is the    By acquiring Endoxon and its "Blue" technology, Google
clever linking of a world map server, a search engine and    tremendously strengthens its own mapping expertise,
a GIS. It is a high-quality, comprehensive points- and map   particularly on the web and on mobile devices.
server, a virtual worldwide marketplace, a search and
services platform. The user can search for information or    The move also had to do something with location. Google
he can visualize his own collected information. The          began selling local business advertisement for Google Maps
download of selected blue data onto the mobile phone is      earlier this year, its European local business advertising
                                                             remained limited to the UK, France, Italy, Germany and
                                                             Spain. Google said it bought Endoxon to improve that
                                                             business, or at least the platforms from which those
Endoxon has been awarded with the ‘Excellence in             advertisements are served. It potentially sees this acquisition
Cartography’ award by the International Cartographic         as an opportunity to broaden its business advertising reach in
Association for its innovations.                             Europe past these five countries.
               Founders’ Profile                                                        Future

Stefan Muff:                                                  Google, Microsoft Corp., Yahoo Inc. and AOL LLC are all
An HTL engineer with post-graduate degree as a space          working feverishly to continually update and improve their
planner. He worked for two years at the Federal Office for
                                                              online mapping services, which have become an essential
Spatial Planning till 1988, when he founded Symplan Map
                                                              part of local search Web sites, whose advertising revenue
AG together with his brother, Bruno Muff. He was
                                                              is expected to grow from US$3.4 billion in 2005 to $13
responsible for projects such as Bahn 2000, and for the
development of the internal EDV computer systems.             billion in 2010, according to The Kelsey Group Inc.

Bruno Muff:                                                   While Google and its rivals have focused their initial efforts
A civil engineer. After completing his studies in landscape   mostly on the U.S., they all want to provide comprehensive
design and garden architecture in Rapperswil, he worked at    maps and local-business information globally, and Europe
the Swiss Ornithological Research Institute. In 1993, he
                                                              is certainly a priority region for them.
graduated from the HWV with a degree in environmental
                                                              Online maps have become extremely popular, as millions
                                                              of people use them every day to obtain driving directions,
                                                              find local businesses, read customer reviews, see high-
                                                              definition aerial images of places and even check real-time
                                                              traffic information.
dMarc Broadcasting, Inc.
                  Basic Facts                                                About The Company
• Entity Name:             dMarc Broadcasting              dMarc Broadcasting, Inc. was a studio automation and media company
                                                           providing market-leading digital solutions and media services to the radio
• Year Established:        2002                            broadcast industry.
• HQ Location:             California, US                  In 2004, dMarc broadcasting acquired market-leading radio automation
• Founders:                Chad and Ryan Steelberg         and digital systems vendors Scott Studios and Computer Concepts, as
                                                           well as the broadcast assets of dMarc Networks, the leader in broadcast
• Website:                  data services in a transaction valued at $29M. The integrated company
• Acquisition Date:        January 2006                    had the largest installed customer base for radio automation and digital
                                                           systems, with more than 4,600 radio station clients and over 1,800
• Acquisition Cost:        USD 102M                        stations. This represented over 40% of the stations in the top 50 radio
                                                           groups, including Cumulus Broadcasting, Citadel Broadcasting, Cox
                                                           Radio, Infinity Broadcasting, Radio One and Mapleton Communications.
             About The Service
                                                           The transaction included a $10 million financing into dMarc Broadcasting,
dMarc connects advertisers directly to radio stations      led by tier-one investors, including a multi-billion dollar US investment
                                                           firm and strategic corporate partners.
through its automated advertising platform. The
platform simplifies the sales process, scheduling,
                                                           dMarc was launched in 2002 by brothers Chad and Ryan Steelberg. The
delivery and reporting of radio advertising, enabling      duo started their first company, an Internet advertising service called
advertisers to more efficiently purchase and track their   AdForce, in 1995. They quickly developed AdForce into the world’s
campaigns. For broadcasters, dMarc's technology            largest centralized, independent ad-serving and management solution.
automatically schedules and places advertising,            As the primary competitor to DoubleClick, AdForce / 2CAN Media
helping to increase revenue and decrease the costs         controlled more than 50% of the online ad-serving market in the US,
associated with processing advertisements.                 through such clients as Netscape, GeoCities, AOL and, the
                                                           precursor to Overture Services. AdForce went public in 1999 and was
dMarc allows advertisers to target an ad campaign          subsequently acquired by CMGi in 1999 for more than $500 million.
across multiple stations in its network by market,
station format, demographic and day part. They can         In 2000, the brothers unveiled FreeDSL, renamed Winfire, which offered
manage the campaign from a self-service interface,         consumers free, fast Internet in exchange for viewing ads. Winfire shut
make changes on the fly, and assemble an assortment        down in March 2001.
of reports and ROI data.
                            Why dMarc                                               Acquisition Financials
Google will integrate dMarc technology into the Google AdWords
                                                                              Google paid $102 million in cash for all
platform, creating a new radio ad distribution channel for Google
                                                                              outstanding equity interests in dMarc. In addition,
                                                                              Google will be obligated to make additional
A key component of the deal was the inclusion of dMarc's wholly owned         contingent cash payments from time to time if
subsidiaries Scott Studios and Computer Concepts. The pair make it the        certain product integration, net revenue and
industry's largest digital air studio systems vendor with more than 4,600     advertising inventory targets are met over the
broadcast users, reaching more than 40 percent of the stations within the     next three years. The maximum amount of
top 50 radio groups.                                                          potential contingent payments is $1.136 billion
                                                                              over the next three years.
Google believes that this acquisition will bring new ad dollars and
accountability to radio by combining Google’s expansive network of
                                                                              Since these contingent payments are based on
advertisers with dMarc’s innovative radio advertising technology.
                                                                              the achievement of performance targets, actual
There are three clear reasons which appear as the rationale for the           payments may be substantially lower. The
acquisition of dMarc:                                                         acquisition is subject to customary closing
• To broaden its online advertising mix and ad distribution channels          conditions. Substantially all of the payments will
beyond the paid search model, from which Google derives most of its           be accounted for as part of the purchase price
revenue                                                                       for the transaction.

• To measure the effectiveness & success of online advertising through
other media such as radio. The deal could be significant if Google
successfully introduces to broadcast advertising its methods of tracking
the effectiveness of online ad campaigns. This would be a step ahead
than traditional media, where evaluating the performance of ad
campaigns generally isn't done as accurately and scientifically as it is in
paid search advertising.

• To foray into local advertising, which has traditionally been a weakness
of online advertising, while being a strength of radio advertising, as most
radio stations are vehicles for local advertisers.
                       Future                                                    Founders’ Profile
In December 2006, Google integrated dMarc's
Revenue Suite inventory buying technology into its            Chad Steelburg:
AdWords program, and created new radio distribution           Chad was the CEO and CTO of AdForce. Chad attended the
channels for Google advertisers. Google's AdWords             University of Southern California. He is the recipient of numerous
platform allows advertisers to buy keywords and               technical and business awards, including the Smithsonian Award in
deliver targeted ads based on specific searches.              2000 for developing the best technology in information services.
Google says clickthrough rates improve when
advertising is placed with specific topics.                   Ryan Steelburg:
                                                              Ryan was responsible for sales & marketing at AdForce. He later
Google can significantly reduce the costs to                  founded 2CAN Media (AdSmart) and served as its CEO; the
broadcasters associated with processing broadcast             company grew to become the third largest Internet advertising sales
ads and announced several agreements they say                 organization and was sold to CMGi in 1999 for over $50 million.
further illustrate the needs of broadcasters to fill unsold
inventory.                                                    Ryan was named by the Orange County Business Journal as one of
                                                              the county's "50 Most Influential Businesspeople," and was also a
In August 2006, Google announced an advertisement             finalist for Ernst & Young's "Entrepreneur of the Year" in 2000.
agreement with XM Satellite Radio, a satellite radio
services provider. The partnership concerns a new
Google strategy to sell online search listings into a
traditional media environment. As a result, the
estimated seven million subscribers of XM Satellite
Radio will be introduced to Google's commercial
advertising inventory on non-music channels while XM
will benefit from tapping the Mountain View Company's
advertisers database. This was made possible once
the dMarc platform was integrated into AdWords by the
end of 2006.
                                                dMarc debacle
After the acquisition by Google, dMarc's founders, Ryan and Chad Steelberg, remained with the company; Chad
Steelberg became the general manager of Google's radio division. However in February 2007, both of them resigned
from their positions at Google, reportedly citing disagreements with the search engine's automated sales tactics and
disappointment in their compensation packages. As part of the deal, while over $1 billion in performance-based dollars
were offered, there were reports that the brothers are more likely to take about $200 million out of the deal.

The slow performance of the company since Google's acquisition is one of the reasons being cited as a determining
factor in the brothers' decision to leave. In December 2006, Google rolled out its beta version of Google Audio Ads
using the dMarc integrated technology, and the initiative faced some obstacles.
• First, dMarc is affiliated with only around 700 stations- too few to provide radio ad inventory on the scale needed to
achieve high revenue targets.
• Second, before the Google purchase dMarc mostly trafficked in leftover ad inventory- unsold air time that is low-value
by definition. Google has struggled to ramp up both the quantity and quality of inventory available through dMarc, with
limited success.

Finally, the two companies apparently differed over the need for a "human touch" in the sales process, and dMarc’s
founders blame Google’s single-minded focus on automating everything. Although dMarc was a pioneer in automated
radio ad sales, the company still employed human beings to explain the dMarc system to prospective customers and
tutor those who signed up. In the ad business, while automating has made Google a lot of money on cheap ads, more
expensive ads are typically sold by a sales force, which pitches to companies and gets them to deliver the check. As
Google began integrating dMarc's system into Google AdWords, it pushed to limit the number of product reps. dMarc
believed its sales force could have been extremely successful, but Google wanted everything automated, and prefers to
keep their "representatives" behind computer screens and let the product sell itself. dMarc executives blamed this
policy for their sluggish revenue results.

After their exit, Google issued a brief statement emphasizing its ongoing commitment to the audio business and said
that it will continue to gather feedback during the Audio Ads beta test and was happy with the progress to date.
                      Basic Facts                                           About The Company
• Entity Name:            FeedBurner                           The founders of FeedBurner met at Andersen Consulting
• Year Established:       2003                                 (Now Accenture) in the early 90's and have worked
                                                               together through four startups over the last 12 years one of
• HQ Location:            600 Townsend St., Ste. 242E,         them being Spyonit, which was sold to 724 Solutions in
                          San Francisco, CA, USA               2000.
• Founder:                Eric Lunt, Steve Olechowski,         The idea for FeedBurner was an evolution of work they had
                          Dick Costo & Matt Shobe              been doing at the intersection of meta-data and media
• Website:                         since 1996, but they really came up with the idea for
• Acquisition Cost:       $100 Million – Mostly cash           FeedBurner in October of 2003 when they were having
                                                               lunch and talking about the future of content distribution
                                                               and the need for publisher services. The founders batted
                 About The Service                             around a bunch of names. They wanted to capture the
                                                               notion of distributing content for customers. There were a
FeedBurner is the leading provider of media distribution and   lot of rejected names. The final two were FeedBurner and
audience engagement services for blogs and RSS feeds. The      FeedRunner.
companies Web-based tools help bloggers, podcasters and        The Company managed to raise $10 million in capital over
commercial publishers promote, deliver and profit from their   two rounds. Portage Ventures funded their $1 million Series
content on the Web. FeedBurner also offers the largest feed    A round in 2004 . The $9 million Series B round was closed
and blog advertising network that brings together an           in mid 2005 (second close in 2006), from Mobius Venture
unprecedented caliber of content aggregated from the world’s   Capital and Union Square Ventures. Matt Shobe said in
most recognized media companies (e.g. Wall Street Journal      one interview “We knew that with success and increased
Online, Wired News, Ziff Davis), A-list bloggers and blog      publisher adoption, we would be likely to shoulder some
networks and individual publishers from around the world.      significant capital expenditures for equipment, bandwidth,
Before the acquisition FeedBurner managed more than 75,000     and the like, and we wanted to also have the freedom to
feeds for over 50,000 content publishers reaching nearly 3     grow a small, skilled team composed of both newcomers
million combined subscribers, including many of the most       and trusted accomplices from over 10 years of
highly subscribed and well-known syndicated feeds in the       entrepreneurial efforts in Chicago. And don’t discount for a
world. They rely on Java as server-side lingua franca and      minute the value of engaged, active VC partners..”
MySQL as database solution, on various flavors of Linux.
                                         About The Company- contd
Feedburner in the early days was promoted by demos conducted by the founders within their lists of contacts and friends
they depended on the word of mouth and that worked for them. The ideology for this “Viral” marketing can be traced from
the excerpt on one of the founders blog:
“When we built FeedBurner, I would tell people about it, and some people would say “hey, that sounds very cool” and
others would reply “uh-huh”, which is web2.0-speak for “huh?”. It was obvious to us that FeedBurner was a very powerful
concept around which an ecosystem could flourish. It wasn’t obvious to most other people until they actually saw several
examples of people using FeedBurner in powerful ways. What’s the point? The point is that “build it and they will come”
isn’t true. You need to build it, and then show them exactly how it can be used, and then show them several explicit
examples of why it’s powerful, and then they might come.”

Feb, 25, 2004 saw the launch of the pre-alpha of FeedBurner. One drawback to FeedBurner was the difficulty in turning it
off and moving your feeds off the network (while retaining your audience). The method for doing this was complicated and
clunky (or required you run your site from your own server) and so many top bloggers stayed away from their service.
However, on June 10, 2005 FeedBurner announced a new feature to allow easy transition away from FeedBurner whilst
retaining the readers.

The company had an early mover advantage but never rested on that they continuously improved and incorporated based
on the suggestions and feedback from their customers (publishers).

In July of 2006 the company acquired “Blogbeat” a Raleigh-Durham-based provider of blog analytics. The combined
services gave FeedBurner’s 200,000 customers powerful tools for comprehensive comparison of feed subscribers and blog
visitors, insight previously not available from a single platform. Gaining a unique advantage of having one foot in the world
of blogging, and one foot in the world of Web 2.0.

AS time passed the company saw publishers like VNU and Reuters join them, cementing the future of the company.

Attached is a brief of Feedburners History:
                                                Why FeedBurner

It is rumored that Google paid about 10 times FeedBurners revenue to acquire the company. So, why would Google pay
such a high multiple, about 10 times revenues, for the startup? Probably, for the same reason it has developed Google
Analytics: it is another way for Google to tie in independent online publishers.

This would be part of a trend that is likely to continue for a while. Glover Lawrence, a veteran investment banker from
McNamee Lawrence & Co., pointed out that while big buyouts like the $6 billion Microsoft-aQuantive deal might get all the
attention, there is a lot of action in the smaller deals. Lawrence pointed out that future advertising-related deals would be
around filling out technology holes or start-ups that have an area of specialization.

As per the press release by officials at Google: “Google believes that feed-based content and advertising is a developing
space where we can add value for users, advertisers and publishers. FeedBurner's technology and talented team are a
great addition to Google's current solutions for advertisers and publishers.”

Susan Wojcicki, vice president of product management at Google, said in a conference call:
“The move means Google advertisers will have another, new avenue for their marketing and FeedBurner 's more than
430,000 publishers will be able to join the Google AdSense publisher network”

With this acquisition, you can see Feedburner and its management team running a group that includes Blogger, Google
Analytics and Google Reader to make a powerful blogging suite. Feedburner’s acquisition is especially important because
of its add network. They have figured how to get ads place inside of blog entries, on blog sites and through feed readers.
This could be a HUGE revenue boost for Google to leverage this channel with the leader in the space.
         Business/Revenue Model                                                          Future
Initially FeedBurner offered two services - a free version      November last year, in an interview Dick Costolo was asked
and a Pro version that costs between $5-$16 per month           what does he think would be the next big thing online, his
depending on the number of feeds managed. The stats for         response which may soon be a reality was : “ I'm going to
the free version were great, and the pro version also showed    make up a word: the next big thing online will be the
more detail and a “who’s syndicating me” feature. The Pro       'widgetisation' of media. I think there will be a universal
version has a 15 day free trial.                                widget library that somebody will create that will allow both
                                                                content creators and technology creators to say, 'Here are
According to Neilson/Net Ratings, FeedBurner is growing         ways of marrying this content and this tool so that it can be
faster than MySpace and Digg with 385% traffic growth year      distributed anywhere.” This could soon be a possibility with
over year. They deliver 50 million daily subscriptions to 190   now that they are on the same team as Google.
countries and serve 600,000 different feeds for 350,000
publishers including Wall Street Journal, USA Today and

However post the acquisition FeedBurner announced its
going completely free, something that many expected as
soon as Google acquired it. Google now it seems is looking
at monetizing this deal by creating revenue streams out of
advertising, which stays the companies mainstay focus.

By making the service free Google is trying to attract people
for whom the paid subscription was a disincentive, in turn
generating a potentially larger number base for the
advertising income.
DoubleClick Inc.
                        Basic Facts                                             About The Service
• Entity Name:              DoubleClick Inc.                      DoubleClick offers technology products and services that
• Year Established:         1995                                  are sold primarily to advertising agencies and media
                                                                  companies to allow clients to traffic, target, deliver, and
• HQ Location:              111 Eighth Avenue, 10th Floor         report on their interactive advertising campaigns. The
                            New York, NY, USA                     company's main product line is known as DART, which is
                                                                  designed for advertisers and publishers.
• Founders:                 Kevin O'Connor & Dwight Merriman
• CEO:                      David Rosenblatt                      DART automates the administration effort in the ad buying
                                                                  cycle for advertisers (Media Visor) and the management
• Website:                           of ad inventory for publishers (Sales Manager). It is
• Acquisition Cost:         $3.1 billion – All cash               intended to increase the purchasing efficiency of
                                                                  advertisers and to minimise unsold inventory for
                 About the Technology                             For PPC or SEM, DART Search provides a 3rd party tool
                                                                  to help consolidate the complexity of Paid Search
DoubleClick targets along various criteria. Targeting can be      Marketing. This tool uses the same infrastructure that has
accomplished using IP addresses, business rules set by the        enabled Doubleclick's SEM services arm Performics to
client or by reference to information about users stored within   manage SEM.
cookies on their machines. Some of the types of information
                                                                  Doubleclick Advertising Exchange (released Q2 2007)
collected are:
                                                                  attempts to go even further by connecting both media
IP address , Browser, Operating System, ISP, Bandwidth and        buyers and sellers on an exchange much like a traditional
Time of day                                                       stock exchange (NYSE, LSE or NASDAQ)
In addition, the cookie information may be used to target ads
based on the number of times the user has been exposed to any
given message. This is known as "frequency capping".
                                            About The Company

Internet Advertising Network was started by Kevin O'Connor and Dwight Merriman in 1995. IAN was acquired by Poppe-
Tyson (a division of Bozell, Jacobs, Kenyon & Eckhardt advertising) and named DoubleClick in 1996. In late 1995
O'Connor began DoubleClick with Dwight Merriman in O'Connor's basement in Alpharetta, Georgia (a northern suburb
outside Atlanta), eventually moving the company to New York City to be closer to media companies and advertising

DoubleClick was first in the online media rep business -- that is, representing websites to sell advertising space to
marketers. In 1997 it began offering the online ad serving and management technology they had developed to other
publishers as the DART services. During the dot-com downturn, DoubleClick divested its media business, and today
focuses on uploading ads and reporting their performance. DoubleClick went public on Nasdaq in 1998.

In 1999, at a cost of US $1.7 billion, DoubleClick merged with the data-collection agency, Abacus Direct, which works with
offline catalog companies. This raised fears that the combined company would link anonymous Web-surfing profiles with
personally identifiable information (name, address, telephone number, e-mail, address, etc.) collected by Abacus. This
merger made waves and was heavily criticized by privacy organizations. Controversy grew when it was discovered that
sensitive financial information users entered on a popular Web site that offered financial software was being sent to
DoubleClick, which delivered the ads. Much of this controversy was generated by statements made by Jason Catlett of
Junkbusters, claiming that DoubleClick was or intended to do things that it had never mentioned or included in any
planned or announced service. Due to the negative press, DoubleClick dropped any integration of their services with
those of Abacus, and instigated stronger privacy policies and oversight.

DoubleClick grew to over 2,400 employees in 25 countries though in the great "dot com bust" in 2000/2001 the company
downsized to about 1,200 employees and in the process became very profitable.

In April 2005, Hellman & Friedman, a San Francisco-based private equity firm, announced its intent to acquire the
company and operate it as two separate divisions with two separate CEOs for TechSolutions and Data Marketing. The
deal was closed in July 2005. Hellman & Friedman announced in December 2006 the sale of Abacus to Epsilon
                                                Why DoubleClick

On Apr. 13, Google announced that it would pay $3.1 billion for the advertising outfit DoubleClick. Just two weeks ago,
reports surfaced that the company could go for $2 billion, the price was considered lofty but justifiable. Now, Google
(GOOG) has forked out over 20 times DoubleClick's estimated revenues of $150 million. And it's paying triple the amount
that private equity firm Hellman & Friedman spent when it purchased DoubleClick in 2005—before selling off a couple of
pieces of the business.

So why the sky-high price? It may be less a function of DoubleClick's current worth and more about what it can
strategically provide for Google—and what it could have done for Microsoft, a rival bidder.

DoubleClick has something that Google, for all its money and smarts, doesn't: a vibrant advertising business for banners,
videos, and other so-called display ads often intended more to promote brands than to generate immediate sales.
"DoubleClick currently has relationships with virtually every major online publisher and more than half of the online ad
agencies," says Dave Morgan, chairman of TACODA, a targeted advertising network. DoubleClick counts Time Warner's
(TWX) Sports Illustrated, Friendster, and Viacom's (VIA.B) MTV Networks among its customers. Google, on the other
hand, has made much of its billions by serving tiny text ads related to searches for relatively smaller businesses hoping
for some kind of immediate interaction with a customer.

Forrester analyst Charlene Li described the deal as a must-have for Google. "It's a lot of money, but who cares? This is
one of the things they had to buy," she says. "They were not making any headway" on display ads.

In a call following the acquisition announcement, CEO Eric Schmidt characterized the deal as helping Google gain a
greater foothold in the display advertising market. "It is accelerating our display advertising business," said Schmidt. So
far, search rival Yahoo! has been the main player in display advertising on the Web. Google's display efforts to date, like
its attempts to expand outside of search in general, have been marginally successful at best. "Google has been a one-
trick pony for a long time focusing on just search," says Bill Gossman, CEO of targeted advertising network Revenue
Science. "This is a way to give them another trick."
                                          Why DoubleClick- contd.

Rosenblatt, , DoubleClick's CEO, says that DoubleClick will gradually start to leverage Google's targeting capabilities with its
customers. Google's ability to match ads with consumers will be particularly helpful for publishers that have inventory they
can't sell through their in-house sales force.

The other big benefit of buying DoubleClick for Google is keeping it out of Microsoft's hands. At the moment, Microsoft poses
little threat to Google's search advertising business. Its share of Internet searches has been on the decline and dropped to
less than 10% in March, according to an Apr. 11 Hitwise report as a result, advertisers looking for the biggest potential
audience go to Google, not Microsoft.

DoubleClick could have changed that for Microsoft. DoubleClick serves ads on both Time Warner's AOL and News Corp.'s
(NWS) MySpace, two of the Web's most popular properties. Google has the rights to provide search ads on both those
sites—it bid aggressively to do so, agreeing to pay nearly $2 billion to both companies. But if Microsoft had acquired
DoubleClick, it could have had a competitive position at the two companies, jeopardizing Google's expensive search
agreements. It could also have given Microsoft a much greater search share. "Microsoft definitely needs agreements for
search advertising," says Matt Rosoff, an analyst at Directions on Microsoft.

In the end, however, getting a greater search share just wasn't worth $3 billion-plus for the software giant. "Maybe they would
have looked at the acquisition at a lower price, but you have to look at Microsoft's overall business and what they could have
spent that money on," says Rosoff. "It is much more important for Google—advertising is their core business."

To advertising industry executives, such as Gossman and Morgan, Microsoft's unwillingness to pay such a price showed that
the company isn't as serious about the market as Google. "Google is really serious they want to dominate digital advertising
and they don't want to lose," says Morgan. "Google has no intention of losing."

Google clearly thinks that the acquisition could be a multibillion-dollar one in the near future. During the call, Schmidt and
Google co-founder and Technology President Sergey Brin emphasized the importance of display advertising. "I think we have
thought that display advertising has been important for several years," said Brin. David Rosenblatt, DoubleClick's CEO, told that the market could be equal to—or even bigger—than paid search. "We could see a similar kind of
growth rate as search had," says Rosenblatt.

Paid search advertising will account for more than 40% of the $19.5 billion expected to go to online advertising this year,
according to an eMarketer report. Google grabs about two-thirds of the search advertising market. Much of that growth has
stemmed from the ability of search engines to find consumers who have demonstrated an interest in a certain product.

Display advertising, which is often broken up by the medium, has not been as vibrant as search in recent years. In an October
report, eMarketer put the display advertising number at $3.34 billion for 2006 and expected it to grow to $4.5 billion by 2010.
Meanwhile, paid search advertising accounted for $6.76 billion of online ad spending in 2006 and was projected to grow to
$10.3 billion by 2010.

Bill Gossman CEO of targeted advertising network Revenue Science believes that display will grow faster than expected
because of increased targeting capability. Display advertisers have typically sought to place their ads on pages where the
content is related and thus likely to attract interested consumers. For example, an SUV marketer would stick a banner on an
autos site. Ad networks and search engines such as Google can now target banner ads to customers who have demonstrated
an interest in content related to the ad, even if the page has nothing to do with the advertiser's product, says Gossman. As a
result, brand advertisers are becoming increasingly interested in display ads, says Gossman. In fact, Gossman and others
believe that display ads are poised to begin taking advertising dollars away from the television advertising market.

Rosenblatt, , DoubleClick's CEO, says that he is excited about the prospect of using DoubleClick's relationships and Google's
targeting to sell offline ads in the future. He also believes that DoubleClick clients will see the deal not as a threat, but as a tool
that makes advertising easier. "I think they will see this as a best-of-breed combination—the leading platform technology
provider and the leading monetization engine."
             Founders’ Profile                                       Founders’ Profile
Kevin O'Connor :
                                                       Dwight Merriman:
Received his bachelor's degree in 1983 from the
University of Michigan and co-founded Cincinnati-      Dwight is also the Chairman and Co-Founder of
based Intercomputer Communications Corporation, a      ShopWiki and Panther Express, and a director at web
microcomputer to mainframe inter-connectivity          photo/video sharing company Phanfare. He co-
company which achieved annual revenues of $35          founded DoubleClick in 1995 and served as its CTO
million. When ICC was acquired by DCA in 1992,         for ten years.
O'Connor eventually became its Chief Technology
Officer and a Vice President of Research and
Development.                                           Dwight is an investor in ShopWiki, Panther Express,
                                                       First Look, Music Nation, Silicon Alley Insider,
Due to the growth of the nascent World Wide Web, O'    phanfare, 9star, and foundvalue, and a Director of
Connor quit DCA in 1995. During 1995 O'Connor met      phanfare. He owns many blue-chip technology
Chris Klaus who had just started Internet Security     stocks, including Dell, Cisco, Microsoft, Intuit, HP, and
Systems (ISS). O'Connor was the initial investor and   Intel (and others). He has positions in hedge funds,
recruited Tom Noonan to be CEO. ISS went public in     private equity funds, and equity index funds.
1999 and was sold to IBM Corp. for $1.4billion in
In late 1995 O'Connor began DoubleClick with Dwight
Merriman. In 2005 the company was sold to private
equity firm Hellman Friedman for about $1.2billion.
Today, Kevin O'Connor runs the venture capital firm
O'Connor Ventures (
where he invests in early stage companies which
include 9star (, Travidia
(, Procore ( and
YouTube, Inc.
                          Basic Facts                                           About The Service
    • Entity Name:           YouTube, Inc.                     YouTube is a video sharing website where users can upload,
    • Year Established:      2005                              view and share video clips. The San Bruno-based service uses
                                                               Adobe Flash technology to display a wide variety of video
    • HQ Location:           1000 Cherry Ave. Second Floor     content, including movie clips, TV clips and music videos, as
                             San Bruno, CA , USA               well as amateur content such as videoblogging and short
                                                               original videos.
    • Founders:              Chad Hurley, Steve Chen &
                             Jawed Karim                       Unregistered users can watch most videos on the site, while
    • Website:                        registered users are permitted to upload an unlimited number of
                                                               videos. Some videos are available only to users of age 18 or
    • Acquisition Cost:      $1.65 billion – Google Stock      older (e.g. videos containing potentially offensive content). The
                                                               uploading of pornography or videos containing nudity is

          About The Services –contd.                           prohibited. Related videos, determined by title and tags, appear
                                                               onscreen to the right of a given video. In YouTube's second
Few statistics are publicly available regarding the number     year, functions were added to enhance user ability to post video
of videos on YouTube. However, in July 2006, the company       'responses' and subscribe to content feeds.
revealed that more than 100 million videos were being          YouTube policy does not give permission for anyone to upload
watched every day, and 2.5 billion videos were watched in      content not permitted by United States copyright law, and the
June 2006. 50,000 videos were being added per day in           company frequently removes uploaded infringing content.
May 2006, and this increased to 65,000 by July.                Nonetheless, a large amount of potentially infringing content
In August 2006, The Wall Street Journal published an           continues to be uploaded Generally speaking, unless a
article revealing that YouTube was hosting about 6.1 million   copyright holder reports them, YouTube only discovers these
videos (requiring about 45 terabytes of storage space), and    videos via indications within the YouTube community through
had about 500,000 user accounts. As of December 14th           self-policing. YouTube generally identifies video content through
2007, a YouTube search for "*" returns about 59,500,000        search terms that uploaders associate with clips.
(mostly likely more) videos (the asterisk is a commonly-       Starting October 2007, YouTube is allowing media companies to
used wildcard character in search engines, therefore           block their copyrighted video content that was loaded onto
showing all videos).                                           YouTube without seeking any prior permission.
                                            About The Technology
As of November 2007 YouTube plays back videos limited in both size and quality. The size is limited to pixel dimensions of
320 by 240 and the quality is limited to a bitrate of around 314kbit/s with a frame rate dependent on the uploaded
video.[58]YouTube limits the playback size and quality by re-encoding the user's uploaded video at the time of upload. In
2006 YouTube permitted playback at higher quality, larger sizes, and in stereo, but some time after January 2007 YouTube
applied quality reductions to new uploads.
YouTube's video playback technology is based on Macromedia's Flash Player 7 and uses the Sorenson Spark H.263 video
codec. This technology allows the site to display videos with quality comparable to more established video playback
technologies (such as Windows Media Player, QuickTime and RealPlayer) that generally require the user to download and
install a web browser plugin in order to view video. Flash also requires a plug-in, but Adobe considers the Flash 7 plug-in to
be present on approximately 90% of online computers. The video can also be played back with third-party media players
such as GOM Player, gnash or VLC.
YouTube converts videos into .FLV (Adobe Flash Video) format after uploading. The extension is then stripped from the file
(Extension can be found again with TrID[citation needed]). The different files are stored in obscurely named subdomains.
YouTube also converts content to other formats so that it can be viewed outside of the website.
YouTube officially accepts uploaded videos in .WMV, .AVI, .MOV, MPEG and .MP4, formats. Users can view videos in
windowed mode or full screen mode and it is possible to switch modes during playback without reloading it due to the full-
screen function of Adobe Flash Player 9.
YouTube files contain an MP3 audio stream. By default, it is mono-encoding with a 65kbit/s rate at 22050 Hz. However, it is
possible to get a stereo audio track if the movie file is manually converted to FLV format using a program such as ffmpeg for
Linux, ffmpegX for Macintosh or the commercial Riva FLV Encoder for Windows.
On June 18, 2007, YouTube launched its online video editing tool, YouTube Remixer. The tool allows users to edit their
YouTube videos online, although the editing tools are very limited.
                                                 Business/Revenue Model
Before being purchased by Google, YouTube declared that its business model was advertisement-based, making 15 million dollars per month.
Some industry commentators have speculated that YouTube's running costs — specifically the bandwidth required — may be as high as 5 to 6
million USD per month, thereby fueling criticisms that the company, like many Internet startups, did not have a viably implemented business
model. Advertisements were launched on the site beginning in March 2006. In April, YouTube started using Google AdSense. YouTube
subsequently stopped using AdSense but has resumed in local regions.

Advertising is YouTube's central mechanism for gaining revenue. This issue has also been taken up in scientific analysis. Don Tapscott and
Anthony D. Williams argue in their book Wikinomics that YouTube is an example for an economy that is based on mass collaboration and makes
use of the Internet. "Whether your business is closer to Boeing or P&G, or more like YouTube or flickr, there are vast pools of external talent that
you can tap with the right approach. Companies that adopt these models can drive important changes in their industries and rewrite the rules of
competition" "new business models for open content will not come from traditional media establishments, but from companies such as Google,
Yahoo, and YouTube. This new generation of companies is not burned by the legacies that inhibit the publishing incumbents, so they can be much
more agile in responding to customer demands. More important, they understand that you don't need to control the quantity and destiny of bits if
they can provide compelling venues in which people build communities around sharing and remixing content. Free content is just the lure on which
they layer revenue from advertising and premium services".

Tapscott and Williams argue that it is important for new media companies to find ways of how to make profit with the help of peer-produced
content. The new Internet economy that they term Wikinomics would be based on the principles of openness, peering, sharing, and acting globally.
Companies could make use of these principles in order to gain profit with the help of Web 2.0 applications: “Companies can design and assemble
products with their customers, and in some cases customers can do the majority of the value creation”. Tapscott and Williams argue that the
outcome will be an economic democracy.

There are other views in the scientific debate that agree with Tapscott and Williams that value creation is increasingly based on harnessing open
source/content, networking, sharing, and peering, but that argue that the result is not an economic democracy, but a subtle form and deepening of
exploitation, in which labour costs are reduced by Internet-based global outsourcing.

The second view is an example taken by Christian Fuchs in his book "Internet and Society". He argues that YouTube is an example of a business
model that is based on combining the gift with the commodity. The first is free, the second yields profit. The novel aspect of this business strategy
is that it combines what seems at first to be different, the gift and the commodity. YouTube would give free access to its users, the more users, the
more profit it can potentially make because it can in principle increase advertisement rates and will gain further interest of advertisers. YouTube
would sell its audience that it gains by free access to its advertising customers.
"Commodified Internet spaces are always profit oriented, but the goods they provide are not necessarily exchange value and market oriented; in
some cases (such as Google, Yahoo, MySpace, YouTube, Netscape), free goods or platforms are provided as gifts in order to drive up the number
of users so that high advertisement rates can be charged in order to achieve profit."
                                             About The Company
YouTube was founded by Chad Hurley, Steve Chen and Jawed Karim, who were all early employees of PayPal. Prior to
PayPal, Hurley studied design at Indiana University of Pennsylvania. Chen and Karim studied computer science together at
the University of Illinois at Urbana-Champaign. The domain name "" was activated on February 15, 2005, and
the website was developed over the subsequent months. The creators offered the public a preview of the site in May 2005, six
months before YouTube made its official debut. Like many technology startups, YouTube was started as an angel-funded
enterprise from a makeshift office in a garage. In November 2005, venture firm Sequoia Capital invested an initial $3.5 million;
additionally, Roelof Botha, partner of the firm and former CFO of PayPal, joined the YouTube board of directors. In April 2006,
Sequoia put an additional $8 million into the company, which had experienced huge popular growth within its first few months.

During the summer of 2006, YouTube was one of the fastest growing websites on the Web and was ranked the 5th most
popular website on Alexa, far out pacing even MySpace's rate of growth. According to a July 16, 2006 survey, 100 million
video clips are viewed daily on YouTube, with an additional 65,000 new videos uploaded every 24 hours. The website
averages nearly 20 million visitors per month, according to Nielsen/NetRatings, where around 44% are female, 56% male, and
the 12- to 17-year-old age group is dominant. YouTube's pre-eminence in the online video market is substantial. According to
the website, YouTube commands up to 64% of the UK online video market.

On October 9, 2006, it was announced that the company would be purchased by Google for US$1.65 billion in stock. The
purchase agreement between Google and YouTube came after YouTube presented three agreements with media companies
in an attempt to escape the threat of copyright-infringement lawsuits. YouTube will continue operating independently, with its
co-founders and 67 employees working within the company. The deal to acquire YouTube closed on November 13, and was,
at the time, Google's second largest acquisition.

Within a relatively short time, YouTube has experienced much well-publicized growth, fueled primarily by online word-of-
mouth. The website received an early surge of publicity when it hosted the popular Saturday Night Live short Lazy Sunday.
However, YouTube's official policy prohibits submission of copyrighted material, and NBC Universal, owners of SNL, soon
decided to take action. In February 2006, NBC asked for the removal of some of its copyrighted content from YouTube,
including Lazy Sunday and 2006 Olympics clips. The following month, in an attempt to strengthen its policy against copyright
infringement, YouTube set a 10-minute maximum limit on video runtime. Although earlier users were grandfathered in, new
members cannot upload videos over 10 minutes long. Established content creators can apply to have this restriction lifted. The
restriction can easily be circumvented by uploaders, who simply split the video.
                                      About The Company- contd.
In August 2006, YouTube announced its goal, within 18 months, to offer every music video ever made, while remaining free of
charge. Warner Music Group and EMI have confirmed that they are among the companies in talks to implement the plan. In
September 2006, Warner Music and YouTube signed a deal, in which the website will be allowed to host every Warner music
video while sharing a portion of the advertisement income. Moreover, user-created videos on YouTube will be allowed to use
Warner songs in their soundtracks.

On October 9, 2006, CBS, Universal Music Group, and Sony BMG Music Entertainment announced an agreement to provide
content to YouTube. On January 29, 2007, YouTube co-founder Chad Hurley announced that the online video service will pay
its active user-contributors (who should actually be the true copyright owners) a portion of the website's advertising revenue.
However, at the World Economic Forum, Hurley did not mention an exact amount of money that YouTube will pay the
Time featured a YouTube screen with a foil mirror as its annual 'Person of the Year', citing user-created media such as
YouTube's, and featuring the site's originators along with several content creators. The Wall Street Journal and New York
Times have also reviewed posted content on YouTube, and its effects upon corporate communications and recruitment in
2006. PC World Magazine named YouTube the 9th of the Top 10 Best Products of 2006.

YouTube was founded by three former PayPal employees, who, witnessing the boom of online grassroots video, realized the
need for a decent service that made the process of uploading, watching and sharing videos hassle-free. They registered the
domain on February 15th, 2005 and developed the site over the following months from a garage in Menlo Park.
In May 2005 they launched in a public beta, and in November, YouTube made its debut with an $3.5 million of funding from
Sequoia Capital.

To get a decent start and attract the initial crowd they were looking for — teenagers, college students, hobbyists, film-makers
— they came out with a contest that promised to give out one iPod Nano to a random member each day, which ran for two
months. This contest worked on a point-based system, for example one point was rewarded for signing up, one for inviting
others, another one for posting a video, etc. The more the points you gained, the higher the chance of winning you had. This
was a significant action that got YouTube noticed by the masses and gave it a headstart as per the signups. After all, if you
knew you had a chance to winning a $250 iPod Nano just by signing up and posting that Uncle Bob's funny biking incident clip
you've had on your hard-drive for the past few years, wouldn't you?
                                                    Why YouTube
Google paid YouTube in Google stock meaning that the owners could have a Google stock portfolio worth a lot more than $1.6
billion in a few years time. YouTube investors Sequoia are rumored to take $480 million of this stock portfolio.

Despite recent criticisms , the overall feeling is that the acquisition is a good thing for both companies.
According to the Google press release the two companies will continue to work independently and maintain their own brands.
"Following the acquisition, YouTube will operate independently to preserve its successful brand and passionate community."

Putting criticisms aside you need only look a the amount of users and growth of YouTube to see why Google bought them. 20
million regular users, the Top 10 site on the net, and 100 million video views a day. Google itself is already the 3rd busiest site
on the internet, and now that it owns YouTube the company has control over a tremendous number of internet users, probably
a higher percentage than anyone else!

YouTube has previously received a lot of criticism. In summary the criticisms are:
• Lack of a business model – the company has not proven to be profitable and has huge bandwidth costs.
• Copyright issues – with so much copyrighted content appearing on the site it is considered just a matter of time before
  YouTube gets sued.
• Censorship – it is questioned whether YouTube is responsible enough about what it allows, and more importantly doesn't
  allow, on its site. It has received accusations of double standards with regards to freedom of speech.
What Google can do for YouTube
1. Lack of a Profitable Business Model:
Google has the experience to make YouTube profitable without being too greedy and sacrificing the user experience.
Monetization possibilities include:
a) Video adverts in YouTube videos:
I don't know if you noticed but Google has also started introducing video adverts into AdSense adverts using the same
contextual system they use for the text based adverts. Google could possibly integrate these adverts to be shown every now
and then at the end of a YouTube video. Not in all videos but just in say 1 in 5 videos and also make sure the adverts match
the theme of the video. Google has a reputation for acting responsibly with adverts. They don't overwhelm the consumer. Just
compare its search engine to MSN and Yahoo as an example. I'm sure Google could integrate ads into YouTube without
sacrificing userbility. Given that advertisers are becoming increasingly annoyed with ad skipping PVRs and are looking for
other more effective ways to advertise, YouTube could become a popular platform for advertisers.
                                           Why YouTube – contd.

b) Selling premium video:
Google already sells premium video on and it could attempt to do the same on YouTube or somehow
integrate the premium Google Videos with YouTube.
c) Licensing content:
There is a possibility that Google and YouTube could license the content on YouTube to TV networks in a similar way to

2. Copyright Issues:
The company that bought YouTube had to be impartial to content producers. For example if Disney bought YouTube then
every other content producer would be giving the company hassle in an attempt to knock out the competition.
Google fits the bill perfectly and provides a non-biased distribution system for large content producers which will somewhat
help douse any fiery copyright concerns.
Google has had its fair share of legal battles and has a very strong legal team. Google has won and fended off a growing
number of copyright cases. If anyone can fight a legal battle for YouTube it is Google.
Additionally both Google and YouTube have struck a series of deals with content owners Universal Music, Sony BMG and
CBS which helps the copyright situation somewhat.

3. Censorship:
Google has done well to organize the world's websites while maintaining fair censorship that doesn't forfeit freedom of speech
(although I'm sure some won't agree with me on this one). In fact Google has tended to stand up for freedom of speech. When
MSN and Yahoo sucked up to China's censorship laws Google tried to fight it. Of course Google eventually gave into China,
but at least they tried. Google could effectively channel its vision and expertise on "managing" freedom of speech towards
YouTube allowing YouTube to manage its video library more responsibly.

With such a huge video library and more video viewers than anyone, Google and YouTube could monopolize the
video sharing market. Although there is some healthy competition around, there is still a potential threat of a
Acquisition Strategy
Google : Acquisition History (1/2)
Google's past conquests have been varied, but they have all been smallish Internet companies that are doing cool stuff. Listed
below is a brief about how they were acquired, and what has changed in the post-Google era.

Deja News (Google Groups) - This web-based Usenet archive started life in 1995. Between 1999 and 2000, Deja
overexpanded into a comparison shopping portal. Losing money, Deja sold the shopping component to eBay in late 2000, and it
became part of
In February 2001, the big G entered the game and snatched up the Usenet archives, reintroducing them as Google Groups and
extending them back to 1981 with the help of private collections. Today, Google Groups features Deja's Usenet, mailing lists,
and Yahoo! Groups-esque features with a Gmail-like interface. Outride - Outride, Inc. was an information retrieval spin-off from
Xerox Palo Alto Research Center (PARC). Google acquired certain technology assets in September 2001 and quickly
integrated them into its search engine. currently forwards to Google. Applied Semantics - Google bought up this
contextual advertising company in April 2003 and used it for its AdSense/AdWords services, allowing it to compete with
Yahoo!'s Overture.

Kaltix - This 3-person personalized search startup company was quickly picked up by Google in September 2003. Kaltix
formed the foundation of Google Personalized Search. currently forwards to Google.

Blogger - Blogger was the flagship product of Pyra Labs. For a long time, Blogger was free of fees and ads, but it wasn't
making money. After the original capital for Pyra dried up, a number of employees resigned, including the co-founder. In an
effort to become profitable, Pyra introduced the ad-powered Blogspot hosting and the pay Blogger Pro service. It wasn't quite
enough, and Pyra needed more resources, so Google stepped in during 2003. Blogger was redesigned by professional web
designers in May 2004, and is now one of the most-used blogging tools.

Picasa - Picasa, a $30 photo organizer program, was first released in October 2001. In May 2004, Picasa announced
integration with the Google-owned Blogger, and in July 2004, Google bought the company. Soon, Picasa was free, and it
featured Google trademarks like an "I'm Feeling Lucky" button. The software routinely wins awards from
leading PC publications.

Keyhole - Keyhole is a digital mapping company founded in 2001. Presumably to cut out the middleman for the not-yet
released Google Maps, Google bought them in October 2004. Since then, there has been an immediate price reduction for the
Keyhole software (from $69.95 to $29.95), and integrated satellite photos in Google Maps.
Google : Acquisition History (2/2)
Zipdash - Google acquired this traffic/mapping company in 2004 and put it to work in Google Maps. Although the acquisition
was not publicized, Zipdash is mentioned in Google's 2004 annual report.

Where2 - This Australian mapping company was also mentioned in the 2004 annual report, but not much is known about it. It
also had something to do with Google Maps.

Urchin - In March 2005, Google acquired Urchin, a web analytics and statistics company. Though we haven't yet seen what
they're up to with it, it will probably be used with AdWords/AdSense, with statistics about clickthroughs and such.

Dodgeball - Google acquired this two-person cell phone social networking company in May 2005. The company was looking
for investors, and Google apparently fit the bill. So far, nothing has happened with this company, but it will probably have
something to do with Google Mobile. So those are the companies Google has acquired.

A common misconception is that Google has only been acquisitive since its (in)famous IPO. As shown here, however, the IPO
has only made it easier for Google to buy companies it likes. Pre-IPO, from 2001 to August 2004, Google acquired 6
Google : Acquisition Analysis (1/2)
•   Most acquisitions fall into a well-defined set of groups. Initially those groups were search, advertising, maps and a general
    Internet/Social Networks/Blogging category. More recently, they have added mobile, enterprise and security acquisitions
    while continuing to build the other categories.

       • Internet/Social Networking/Blogging: Google has done a good job of stitching these properties together. E.g how Blogger, Feedburner,
         Picasa and AdSense are all integrated together.

       • Search: Google was not too proud to acquire technology it didn't already have. In their quest to become the search leader, there was
         willingness to augment internal development with astute acquisitions from the earliest days

       • Advertising:Google has added to advertising capabilities as needed and has built a juggernaut. Now that the contextual and search
         advertising sectors are dominated by Google, they are working on developing leadership in display advertising via the DoubleClick purchase.
         Radio, newspapers and cell phones are next on the agenda

       • Mapping: Google wasn't the first to introduce mapping but they have become practically the standard against which others are measured.
         These acquisitions helped along the way.

       • Enterprise: With Google Apps, Google wants to challenge Microsoft in business productivity software. They have essentially bought the ability
         to compete against Microsoft Word and PowerPoint. Now, via the Postini acquisition, they are adding security features, a must have for most
         corporations. Another example of building out a full-featured solution.

       • Security: Google prides itself on being a good Internet citizen. Look for more acquisitions in this space. Google has only scratched the surface
         with the GreenBorder and Postini acquisitions but they are doing a nice job of integrating Postini with Google Apps. Will they buy a smaller anti-
         virus company like Panda to round out their offerings? Time will tell but the move would make sense.

       • Mobile: Acquisitions have not quite spelled out the direction Google is taking in the mobile space, though it seems they are majorly targeting
         Mobile advertisement, they have not dropped enough hints and leaked enough secrets therefore the blogosphere has started an endless cycle
         of speculation especially after the announcement on 4th of Decemeber. Google Inc. confirmed its plans to bid for a prized piece of the airwaves
         in an upcoming government auction, further underscoring the Internet search leader's determination to shake up the wireless market and plumb
         more profits from mobile phones. In a mild surprise, Google will enter the competition without a partner more experienced in the wireless
         industry. The bidding for the swath of 700-megahertz spectrum that Google wants will start at $4.6 billion, with analysts predicting the final price
         will be substantially higher. Building out the network for national coverage might cost an additional $5 billion to $7.5 billion.
Google : Acquisition Analysis (2/2)
•   Most acquisitions are very small. 1-2-3 people and public generally never hears about them.

•   Hire by buying as the acquisition Modus Operandi.

       • Google “acquires” people, more often than not, in buying out small tech plays – to leverage innovation

       • Engineering staffing strategy seemed to be behind Google’s 2005 “acquisition” of Dodgeball, a two-person start-up based on a grad school

•   The reason to be acquired is that Google gives them–Web entrepreneurs–a platform that they might otherwise not be able
    to get.

•   As markets consolidate these little companies often cannot get enough ‘mindshare,’ even though their technology is really
    good. Any one of these people are a reasonable–acquisition–candidate.

•   Google has been acquiring social networks that work on cell phones. This leads us to believe that the company understands
    the basics of what they need to be successful in the mobile arena -- hardware, phone OS, search, advertising

       • Google recently announced that they have mobile ads available as part of the AdWords network - and the addition of the social networks is the
         last piece needed to roll out a full-featured mobile solution.

•   Google is willing to buy companies as needed, they have been very effective at integrating the acquisitions into Google's
    major lines of business.

       • The mobile sector seems to be a work in progress but it is clear Google won't hesitate to buy whatever they feel will round out their offering.
Google : Acquisition Strategy - Overview
Google Inc. looks for ideas that are ``really crazy'' when sizing up potential purchases. The Internet company's top dealmaker said. ``We
look at everything very carefully,'' Salman Ullah, Google's director of corporate development, said in a speech at a meeting of the Los
Angeles Venture Association. ``The really crazy ones do really well.''

Google, owner of the most-popular Internet search engine, has about 15 people working on acquisitions that meet with dozens of
companies a week, Ullah said. Mountain View, California-based Google responds to every e-mail pitching a company, while phone calls
have a 10 percent response rate, he said.

The search engine, which had more than $11 billion in cash at the end of the fourth quarter, last year bought video-sharing site YouTube
Inc. and DMarc Broadcasting Inc. to move into the market for radio advertising. Google also bought smaller startups including online
software company JotSpot Inc.
``The crazy ones mean they ignore the usual restraints of investment levels required or design parameters or `Gee I need more servers
than anyone ever thought was possible','' Ullah said. ``When you free yourselves from these constraints, you create crazy, cool things.''

Google wants companies that can build revenue streams from their users, instead of buying firms with a lot of users that don't bring in
much in sales, Ullah said. ``We don't do traffic for traffic's sake,'' he said. ``It has to be highly monetizable.'' In the past Google has also
used a technique called Monte Carlo analysis to size up a deal, where computer algorithms are used to answer questions.

Google's intention, is to become the largest advertising network on the planet, and the company is not leaving a single stone unturned in its
quest to get there. With the billions Google has in the bank, along with marketable securities that it has ready to spend, the acquisition trail
has not been light to the company. In fact, it's acquiring companies left and right -- some are high-profile deals while others are significant
but small.

While not all of Google's acquisitions directly point to its goal of an all-powerful advertising behemoth, there are peripheral industries that
produce acquisitions that are meant to help Google keep its stranglehold on the web browser and access to it where it can display its
advertising, help connect buyers and sellers and take its traditional cut of the transaction. In fact, two of Google's largest acquisitions to
date -- YouTube and DoubleClick -- are directly related to allowing the company to maintain its advertising grip while it expands its
tentacles into any area that it can to allow for sustainable control over the face of advertising. One thing still slips past many: Google still
makes virtually all of its money from web advertising. Make no mistake: protecting that is Google's #1 priority.

While it does that, though, Google's 11 company or technology purchases in the last year have helped the company fill gaps in its product
portfolio for customers from offering web-based documents to integrating as many neat features into Google Earth as possible (which still
makes a pittance in "pro" subscriptions). Interestingly, though, competitor Microsoft has made about 13 acquisitions during the same time
period, with the most recent being aQuantive (a pure-play response to Google's huge advertising threat on the web).
Google : Acquisition Strategy - The Promoter
In November this year GOOGLE Inc announced that it is offering $11.4 million in prizes for people who build the best software
to enhance the company's upcoming mobile phone operating system. The company is developing a free mobile phone software
package it says will make it easier to surf the web on mobile devices. It also will give Google more opportunities to sell ads and

The operating system will be based on computer code that can be openly distributed among programmers, which Google
hopes will encourage developers to create software and improvements that could spawn new uses for smart phones.
Winning offerings could encompass simple aesthetic improvements such as personalised home screens or more complicated
social-networking programs that merge data from the web -- such as maps or personal web pages -- with data from users‘
phones such as contact information or the phones' geographic locations.

As part of the Android Developer Challenge, a panel of judges will pick 50 winners from entries received from January 2 to
March 3. In the first phase of the competition, those winners will each get $28,500 and be eligible for 10 awards of $100,000
and another 10 $275,000 awards.

The second phase of the competition will feature another $5 million in prize money.

Google did not specify how the applications would be judged. The company only said the winning programs would ``provide
consumers with the most compelling experiences''. Google also released a tool kit for working on the new platform, which is to
be released in the second half of next year.

Four mobile phone manufacturers -- Motorola Inc, Samsung Electronics Co, HTC and LG Electronics Inc -- have agreed to use
Android in some of their phones. Google chief executive Eric Schmidt said he eventually hoped the software would be
integrated into thousands of different devices. Twenty-nine other companies have signed on as members of the alliance.

Android will compete with mobile operating systems made by Microsoft Corp, Palm Inc, Research In Motion Ltd, and Symbian,
which is owned by Nokia Corp and several other major phone manufacturers.
Google : Acquisition Strategy - The V.C
Just as it has done to companies in the software, publishing, and advertising industries, Google is becoming a thorn in the side
of venture capitalists. The owner of the world's largest Web search engine is scooping up young tech outfits for a relative
pittance, giving itself first dibs on hot-growth technologies and in some cases boxing VC funds out of potential big-bang
acquisitions and initial public offerings.

Google (GOOG) has begun making VC-style investments to the tune of about $500,000 or less in promising startups, often
buying those companies afterward, according to partners at Silicon Valley VC firms who spoke on condition of anonymity. In
an effort to keep spotting promising deals, Google has been hiring a stable of finance pros. And it has invested more than $1
million in a Mumbai-based investment firm called Seedfund to gain access to technology such as automatic translation
software that could help spur growth in India.

"Google has easy money," says Pravin Gandhi, a managing partner at Seedfund, which also has raised some of its $15 million
from Motorola (MOT) and VC firm Mayfield Fund. So far, Seedfund has taken $500,000 to $750,000 stakes in four companies,
including an online news site. On the horizon could be investments that help Google add specialized channels, such as
information about autos, to its Web site or cultivate technology that can translate Web content from English into Indian
languages, Gandhi says. "It's a somewhat less risky way to participate in the Indian growth story," he says.

By staking startups, Google hopes to avoid paying the higher prices companies can fetch once they take funding from
traditional VCs. It's possible that some of its investments are conditioned on Google having first-acquisition rights should a
target opt to sell, some VCs speculate. Google didn't respond to calls requesting comment. Making investments in startups
also can help Google use more of its $4.5 billion in cash to cultivate tools that complement existing products. Google recently
started a program called Gadget Ventures to fund entrepreneurs who build online tools using Google's technology.
The zeal for dealmaking at Googleplex mirrors an increase in corporate venture investing to its highest level in years. "They're
back, like the swallows returning to Capistrano," says Paul Maeder, a managing general partner at Highland Capital Partners.
"We're in a wave now where corporate venturing is increasing again."

Companies that aren't full-time investors pumped $1.3 billion into 390 venture capital deals in the first half of 2007, up 30%
from the $1 billion invested in about 350 deals a year earlier, according to an Aug. 30 report by PricewaterhouseCoopers and
the National Venture Capital Assn. (NVCA), based on data from Thompson Financial (TOC). That's the most invested since
2001, just before the bottom fell out of the tech industry. The big spenders include Intel (INTC), which invested $112 million in
U.S. startups in the first half of 2007, vs. $79 million a year earlier, and Motorola, which invested nearly $30 million in the first
half of the year and says its overall 2007 investments should top the record set in 2006.
Google : Possible Acquisition Targets
These companies are tossed around quite a bit by bloggers as possible Google fodder, and they would integrate well with Google's current
offerings and its future strategy. They're all pretty small companies, but quickly becoming popular among web users in the know.

Technorati - If Google is the average person's homepage, Technorati is the homepage of the underground, tech-savvy web User
Technorati is a blog portal whose average visitor enjoys podcasts, Wikipedia, and the Daily Show with Jon Stewart. Providing more cutting
edge results than a normal search engine, Technorati would integrate well with Google News and/or Blogger, and could perhaps feature
blogs on the Google Personalized Homepage. Technorati is somewhat similar to Bloglines, which was purchased by Ask Jeeves recently.

Buzznet - Yahoo! beat Google to the punch by acquiring Flickr, one of my candidates in the first draft of this article. Like Flickr, Buzznet is
a photo hosting and sharing service that features unique tagging features. It is possible to browse by tag and see all sorts of interesting
stuff. Buzznet would probably jibe with Picasa's Hello photo posting service, perhaps include some sort of photo-Blogger, and integrate
well with Orkut.

Koders - Koders is a search engine for open source code that works remarkably well. With the recent push for plugins for Google Desktop
search, Koders would be an interesting addition to Google's software initiatives. It would make sense to combine with Google Code and
Google Linux Search in some way.

GuruNet ( - Recently, Google stopped linking to definitions on, and started linking to instead.
Answers features a wealth of information about different topics, and uses Wikipedia for much of it. Since Wikipedia's non-profit status rules
it out as a potential Google acquisition, would be the next best thing. It also would help improve Google Q&A quite a bit.
Interestingly, GuruNet is a publicly traded company (AMEX: GRU) with a market cap of about $100 million. - This social bookmarking and tagging application could be used to improve Google search results, and perhaps integrate with
Orkut in some way. Were Google to buy Buzznet as suggested above, this would work well with it.

StumbleUpon - This unique browser plugin and service would probably improve Google results and add a new level to the venerable
search engine. It would probably combine with the Google Toolbar in some fashion, since the two have some similar functions.

Propel - Similar to Google Web Accelerator, Propel claims to speed up your browsing experience. The company is run by optical mouse
inventor Steven T. Kirsch, who is no stranger to buyouts: his Frame Technology Corp. was purchased by Adobe, and his Infoseek was
bought by Disney. This could help Google out with Web Accelerator, which it has been having trouble with.
Key Insights For Startups (1/2)
•   What makes deals fail? : Both Microsoft and Google were clear—the biggest obstacle is lack of openness and honesty on
    the part of the entrepreneur. Their advice: disclose right up front anything that may be a problem for the deal. Disclose that
    you have a contract with a competitor of theirs whose terms you can’t legally disclose, for instance. If they discover
    something later, the value of your deal goes immediately from something to zero. Not to half, but to zero. If you disclose
    tough issues up front, they can work with you to make the deal happen. If you are not open, the trust is gone.

•   As might be expected, the most successful deals come in through working together: At Microsoft, acquisitions
    “come from a relationship, then synergy with a market dynamic and customer.” The startup should do its homework,
    understand the value of what you have to offer and how that fits the potential acquirer. “We are involved in a large number
    of the AlwaysOn 100 companies” in a variety of ways. At Google, the engineering and product people have to champion
    the deal. At IAC, introductions through VCs and investment bankers also work. Postini and Zenter are a fine example.

•   Deal sizes tend to be small: Google prefers smaller acquisitions though does some larger ones, as does Microsoft.
    Even Intel says it’s easier to integrate smaller teams: “We historically have done a lot of larger deals, but they haven’t all
    worked well for us.” Google is acquiring at the rate of 2 companies per month, Microsoft at 3. All said Google wont hesitate
    shelling a billion dollars if it sees the fit and scope for monetization.

•    Will you get swallowed or will you retain some autonomy?: The answer depends on the role your company will play
    to the acquirer. If you are small, you are more likely to fill a gap and get absorbed into the culture and existing teams. If
    you are larger, you may retain more autonomy. At IAC, they look for business leaders who will continue to run their
    business for some time. “We try to create the right incentives to keep people engaged and motivated” with some pretty
    interesting equity structures. Google says it is “geographically agnostic. We don’t insist that people relocated. We are
    distributed and we know how to do distributed development. Talent is everywhere in world, we want access that talent.

•    What types of companies does Google want to acquire?: Google is an engineering centric company, focused on hiring
    the best computer scientists in the world. As per Salman Ullah, Google's director of corporate development “Most of what
    we do is about building products internally. Now and then we seek out things to acquire, more efficient to buy in those
    cases. In that context M&A is important. We have 3 businesses -- search, ads, apps. We don’t do many acquisitions in the
    search area—we have lots of great search engineers so the bar is very high. Advertising—look beyond just online. Apps
    are very broad. We look for strong engineering talent, high IQ and great IP. If the company is related to traffic, we need
    high value traffic that can generate money. We are very careful on traffic deals, don’t want to repeat 1999 or 2001.”
Key Insights For Startups (2/2)

 •   Focus on the user:This is possibly the single most important thing for entrepreneurs to remember. "Every startup
     that dies fails to do this," Graham says. "A lot of startups focus on their competitors or lawsuits, but what really kills
     startups is if users think it's boring. It's a much quieter and dangerous reason, but if users don't care about your
     product, that will just kill a company.“ Paul Graham, a founding partner of Y Combinator, the startup factory that
     funded Zenter says "The way to get acquired really fast is to not focus on it. If people get the impression that you
     want to get bought, you won't."

 •   Ignoring limitations lets you tackle problems from a different angle: It's not enough to just build an existing
     offline product (ie. Microsoft Word or PowerPoint) and port it onto the web. Zenter looked at how they could build a
     slideshow application that really takes advantage of the Internet, like adding community slideshows, delivering
     presentations online in real-time and dragging and dropping content from the web into a presentation. "Every system
     and every platform has limitations. Some people look at a problem and say, You can't do that because a browser
     won't let you and proceed to work around those limitations," says Crosby, who spent his first day of orientation at the
     Google campus yesterday. "What we did was look at what we wanted to happen and then found a way around the

 •   Don't be afraid to tackle the giants: Big companies like eBay (EBAY) and Microsoft (MSFT) may have more
     manpower and financial resources, but they also have disadvantages. "Often times, they're not as driven. They're not
     willing to make the sacrifice, like two guys sleeping on air mattresses, to make their product really good," says
     Graham. Case in point. Google bought YouTube, which was far superior to Google Video. eBay bought PayPal
     because clearly, no one was liking eBay's Billpoint. Big companies also have restrictions that startups don't have to
     worry about. Adds Graham, "Microsoft has to think about web-based applications that don't threaten Windows. A
     company like Zenter doesn't care about hurting Windows. All they want to do is make the best application.“

 •   Pay attention to the details: When your product is 80% done, that means you have another 80% to go. "To get
     something pretty close is easy, but you need to concentration on the little things. That's what will set you apart from
     the competition," says Crosby. "You can have the best algorithm in the world and the fastest process, but at the end if
     the day, if the user struggles to find out how to click a box or delete something, then you don't succeed."

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