Google + Writely = Beginning of the end for Google?

I’ll admit the title is a little sensationalistic, but I have yet to see any contrarian view-point on the story of Google acquiring Writely. All the stories I’ve read so far seem to tout Google Office and how they are one step closer to getting an office-for-the-web to defeat Microsoft.

When I first read the story, I was surprised that Google was really buying a company like Writely. Now I am not trying to bash Writely at all here – In fact, I’ve been a beta-tester of Writely since its launch and I think Writely is a good tool. I even recently ran a little project at work to see if we could use Writely as a collaboration tool. And so my thoughts on this matter as more about Google than Writely. Writely is a neat idea but where’s the real value here? If Google just wanted a WSYIWIG web-editor, they didn’t have to buy a company. They could have used one of the many open-source products out there like TinyMCE, FCKeditor and countless others that essentially do what Writely does at its core. Writely does add on the storage, versioning and other features on top of the WYSIWYG editors but is that worth buying the whole company?

Every time a large company buys a small company, I almost always flashback to a meeting I had in July 2000 with Paul Butterworth, who was then the CTO of Sun’s tools division. Paul had joined Sun as part of Sun’s acquisition of Forte Software. Paul Butterworth was the founder of Forte Software and spent a few months at Sun before moving on and starting AmberPoint, which is doing some really cool things. Not sure how many remember Forte Software, but Forte was the maker of a 4GL programming language called TOOL with a pretty cool n-tier architecture. Instead of using anything that Forte had, Sun decided to buy NetBeans and just use the name Forte for its tools. What a joke – billions of shareholder dollars wasted but that’s history now.

Any rate, a group of us got to spend an afternoon with Paul as part of a client visit. As we were quizzing him on why Sun bought Forte, he said something that’s still with me and rings true in most acquisitions. He theorized that large companies are always amazed at all the innovation coming from small companies and so they buy these small companies in hopes of bringing the small company magic into the larger company – and that almost never works as the small companies were innovative because they weren’t constrained by all the big company process, policies and red-tape. The minute the small company joins the large company, innovation stops as people that could have been creative and really stretched were now constrained by all the big company bureaucracy.

When I think about Google’s acquisition of Writely, I am reminded of that story. Google has some brilliant people that can take something like TinyMCE, FCKeditor or write something like that and ‘network-enable’ the whole idea of a web editor. Why would you buy Writely? Is it just to get the developers? Is Google getting too big that all the innovation that we expected from Google is just not materializing? Obviously I have no idea why Google purchased Writely and there may be something really there that I’m missing. What do you think? Is Google too big to be nimble and innovative like it was in the past? Am I reading too much into this Writely thing?


23 thoughts on “Google + Writely = Beginning of the end for Google?

  1. Well I read somewhere that Google is prepping to come out with a complete OS based incorporating all of their developed tools; ie: Picassa, Gtalk, Gmail, Writely (other office tools) with a whole new file system.
    I dont know, maybe they required Writely because they felt they couldn’t do a better job, why create and develop something similar and deal with red tape when buying something that does exactly what you need it.

    Seems to me like you’re saving time, when time is money and you’re worth a cool few billion, it seems only smart.


  2. I do think that they bought them for the people. They already have the guys who made pages, why not buy a small company, get a bunch of developers, ideas and a little bit of tech all in one nice package.


  3. Firstly, even though Google declares themselves to support open source, I don’t think they use it themselves. They want proprietary technology, they want secrets, in order to gain an edge over other companies. That’s why they don’t use TinyMCE.

    Secondly, buying Writely is buying them both customers and staff. See it as another way of recruiting good developers. I don’t think they kill the creativity, Google to me seems very creative still (at least the Google Labs).


  4. Paul said that big companies buy small companies to acquire missing innovation and passion, to bring “small company magic into the larger company.”

    But there’s another reason big companies buy small companies, to acquire a good development team.

    Google is struggling with hiring talent. It’s hard to find good people. Hiring takes enormous time and effort, most of which is spent filtering, testing, and trying to determine if these candidates are bozos or capable of getting cool things done.

    One shortcut is to look for people who have demonstrated that they can get cool things one. One potential shortcut filter is to look for people who have done work on open source projects. If you’ve done impressive work on an open source project, you’ve established that you can get cool things done.

    Another potential filter is people who have done clever prototypes at early stage startups. Writely is a great example of this. They had an early alpha product — it’s a good demo app, but obviously not finished — a tiny user base, and no revenues. They didn’t have a business yet. But they had demonstrated that they know how to get cool things done.

    I think this is why Google acquired Writely. The people at Writely are obviously passionate, skilled developers working in a relevant area. Google wants those kind of people. So Google got them.


  5. Hi Martin. That’s a really interesting point – Google does use a lot of open-source stuff but they haven’t contributed code back to the open-source community. Yahoo just open-sourced their whole AJAX library among other things.

    It would be great, once the dust settles to see if the people that come to Google via acquisitions stick around. I’m sure Google pays well but I think they also use stock options as an incentive, like everyone else in the Valley. But if you get in when Google stock is in the $300 – $400 range, I’m not sure that stock price is sustainable for 4-5 more years. I’ve read analyst reports where they are bullish on the stock and expect to see it go to $600. I guess time will tell. Besides, it’s fun guessing anyways 🙂


  6. Hi Greg and thank you for the clarification (and addition) to my recollection of Paul’s comments. And he is right – big companies do buy small companies to acquire missing innovation and passion but a lot of the things that fosters innovation may be missing organizationally at the large companies. Typical big companies have many layers and walls that inhibit the very thing that makes small companies take risks and innovate. If you don’t have great management, big companies tend to be the stereotypical big companies that are lumbering giants, incapable of doing anything innovative as they are mired in bureaucracy.

    I guess you’re also right about the talent part – If you’ve got billions in the bank, why not take that wallet out for a ride and pick up a few smart people that have demonstrated their ability in getting things done. Will be interesting to see where this leads.


  7. It’s simple hiring. At the rumored $7mm for four developer, it’s about $1.75 each with probably a 3 year lockup. While $500K or so a year is steep, the price is probably in the range for what a Google Founders award team might get.

    More importantly, they had a chance to see what the team could do pre-google in the “wild”.

    So what they get is a vetted team and *their productivity for the next 3 years*. That’s what they’re paying for.


  8. Hi Derrick and thanks. Interesting analysis – And you’re right. If you’re getting 4 great developers, maybe it is worth putting half-a-million into each of them. I’m sure a lot of people are coming pretty close to that number at Google anyways/

    I guess it’s like Noah Kagan’s blog entry (via Scoble) about how your blog or app is really your resume and traditional resume means crap. 🙂


  9. I was wondering why the air was ringing with ‘congratulations’ but no questions. I think Google is probably in race mode and all the big guys are snapping up all the web office apps they can in an attempt to get a full suite first. I also think they buy these small companies because of the people, not the product and think the entrepreneurs who get starstruck by aquisition will eventually feel stifled by the big company restrictions.


  10. Hi Natalie and thanks. I think you’re right – This acquistion is more about the people than the tool or technology. But there is a danger in getting Writely people that are passionate about their product and having them put it aside to work on something else.. Maybe they’ll get to spend their 20% ‘innovate’ time to work on Writely. Who knows? 🙂


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  12. Its all about that 80/20 rule. Google obviously were looking at something similar, and instead of developing it themselves, and spending money and resources doing so, they bought the product and the highly talented developers.

    So Google bought the folks that went through the growing pains and learning curves. 20% effort(the money) and 80% reward. Sounds like a great trade to me…


  13. Perhaps they bought it to knock out a potential competitor. If they plan to put out the best office suite out there, it’s not in their interest to have another popular tool like Writely out there to compete with Google.


  14. Every company when it starts fresh, they are in the stage of being taken over, which Google itself had faced during its start up phase. But when some one acquires a company, i feel only when there is value in acquistion they do acquire. Probably if Google had acquired Zimbra would it have been better? Now am i trying to create a contrarian view-point or a possibility? As shared by all i feel, there are immense benefits of taking over, saving time, gaining good developers, creating enough media attention and more over good products. Let us wait and watch how this take up over turns up to be.


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  16. I don’t mind that you deleted my comment, but could you at least fix the spelling error I pointed out? It’s “tout” not “taut” (unless you’re saying that Google Office is really highly strung).


  17. Hi Spelling-Nazi and thanks. I deleted your comment as you didn’t leave an email address and my spam filter marked it as spam. Not sure why – Sorry and thanks for the headsup.


  18. Hi Jason and thanks. Makes sense — The figure I’m hearing out there is $7 million and so that’s a bargain for the people, in the long term. I just love the hyperbole surrounding this whole acquisition. Google buys Writely, has calender = Microsoft Office is dead 🙂


  19. Hi Floyd. Interesting — That’s a possibility as well. Why not buy out the competition if you are going to have a competitive product. Good way to spend money, if you have a lot of it. 🙂 Thanks and miss you on TSS.


  20. about “technological secrets”, and “the code is value” – I disagree completely. so what if writely was 200% ASP.NET and stacked with microsoft evil technologies? it can probably be migrated easily enough, especially if you can put a team of hotshots on it. this kind of project never has “technological secrets” – it’s just straightforward work. it turns out good if the team has a vision and that impossible to immitate spirit. I agree with the observation, that just like yahoo expected flickr people to “flickerize” yahoo, google expects writely people to bring the spirit along with them (regardless of whether this actually works).


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