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from the bankers-replaced-by-a-toothbrush dept.
When deciding whether Google should spend millions or even billions of dollars in acquiring a new company, its chief executive, Larry Page, asks whether the acquisition passes the toothbrush test: Is it something you will use once or twice a day, and does it make your life better?
The esoteric criterion shuns traditional measures of valuing a company like earnings, discounted cash flow or even sales. Instead, Mr. Page is looking for usefulness above profitability, and long-term potential over near-term financial gain.
Google’s toothbrush test highlights the increasing autonomy of Silicon Valley’s biggest corporate acquirers — and the marginalized role that investment banks are playing in the latest boom in technology deals.
Many of the biggest technology companies are now going it alone when striking large mergers and acquisitions. Companies like Google, Facebook and Cisco Systems are leaning on their internal corporate development teams to identify targets, conduct due diligence and negotiate terms instead of relying on Wall Street bankers.
(Score: 4, Interesting) by frojack on Monday August 18 2014, @05:45PM
Most of Google's recent acquisitions are clearly about patents or intellectual property of one sort of another.
Its pretty obvious that Google can replicate the functionality of almost anyone's applications or web based technology.
That they choose not to do so suggests they have learned its easier and cheaper to just buy the company, get the IP and the good will of the company's developers on their side rather than trying to fight them in the market place and end up in court. FTR, I think this is a much more honest approach.
Take the recent acquisition of Jetpack [pcworld.com]. Google already had some of this tech built into various apps, google shopper, Google Goggles, Google Image search, etc. Yet they went out and acquired Jetpack to improve their capabilities in this regard rather than just mine the jetpack app for technology.
It will probably meet the toothbrush test. But it meets the lawyer test too.
No, you are mistaken. I've always had this sig.
(Score: 0) by Anonymous Coward on Monday August 18 2014, @06:23PM
I hadn't heard about "Jetpac" before the acquisition, but now I know that Jetpac is shutting down.
Users of Jetpac should thank Google for destroying a valuable tool and eliminating a competitor. Maybe you'll see these features added to Google Images, maybe you won't.
(Score: 2) by Nerdfest on Monday August 18 2014, @08:14PM
It meets the "Don't be Evil" test as well. It's kind of a dick move to duplicate the technology of a small innovative company and drive them out of business. Legal, but a dick move.
(Score: 2) by kaszz on Monday August 18 2014, @09:49PM
Guess they didn't want to be another Microsoft..
And Microsoft probably feels the ostracization right now. Too few wants their Win8, XBox and Surface. Security and lock-in is starting to become a even worse issue. And the willingness to sleep with NZA eradicates their trust.