SoylentNews is people
SoylentNews
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: 3, Insightful) by Tramii on Monday August 18 2014, @07:09PM
> toothbrush test: Is it something you will use once or twice a day, and does it make your life better?
I like the basic idea (forget what Wall Street says, it is actually something useful) but the wording is highly subjective. A lot of things start out with you using it multiple times a day, but later after the shiny factor wears off, your usage of it drops off. Also, how do you determine if something "makes your life better"? Some people would claim Facebook makes their life better; others would claim it makes their life worse.
I would propose something closer to this: "Can you actually make any money off of it, and is it more than just a passing fad?"
(Score: 2) by fishybell on Monday August 18 2014, @07:23PM
Dentists love it when you do that.
Seriously though, that happens because, unlike toothbrushes, you don't have an actual use for the app, no matter how shiny. The number of apps that are in the "wow, this made my life/job/etc. so much better I can't imagine a world without it" is like 3: instant messaging, phone calls, turn-by-turn directions. Two of those things my old phone did perfectly fine.
(Score: 2) by frojack on Monday August 18 2014, @07:55PM
Looking stuff up, password wallet, and Email. And a distant last place reserved for phone calls.
I look crap up at the drop of a hat. Web, weather apps, Ok Google, or just web search. Any question comes up and 4 smartphones come out of pockets in this household.
I suspect I'm not all that different then most people, and retrieving info is the single most frequent activity on a smart phone.
No, you are mistaken. I've always had this sig.
(Score: 0) by Anonymous Coward on Monday August 18 2014, @07:24PM
Ahh, but we're talking about potential here, not implementation. The potential Facebook offers is easy availability of your social network (family, friends, co-workers) in a way that brings you closer to them.
You take issue with it's current implementation (One friends new interest in Candy Crush starts to overwhelm your page, difficulty in segregating disparate parts of your social network, and the steady degradation of privacy)
I don't think it is as hard as you think to estimate the potential usefulness of an app. I DO think where this method breaks down, and they have to turn back to "the old ways" is in estimating it's value, or worth. That seems like an important question in a Billion dollar merger.