The Exchanges

Q on the leap of faith. I do want to kind of dive slightly more into the nitty gritty though, and a common question that a lot of founders pose and ask me is the classic, how can I get acquired by Google? But I think the more prescient question before asking that is, should an entrepreneur sell their company versus stay independent? How do you think about this today, Dave?

A The general rule of thumb is that if someone is going to pay you today what you think you're reasonably going to be worth well into the future, then sell now. The problem with that rule of thumb is that it's not much use because it requires you to accurately predict what you'll be worth in the future. So there's a few other factors that I like to talk about with founders when they're thinking about this decision. First, what's your risk reward profile as a founder? Some founders have a fierce desire to remain independent and take their company public and never sell. Whereas I may want to cash out early, and even though the reward may not be huge, the amount they're getting could be life-changing. Neither one's right or wrong. It's just where you are on the spectrum. Another important factor to consider is whether the acquirer can increase the probability or speed of the success of your startup, and an example of that for us here at Google is YouTube, which we paid 1.6 billion for, and today some analysts say it's worth over a hundred billion dollars. And so based on that, you could say, oh, wow, those founders sold out way too early. But if you look back at the time, YouTube was facing a billion dollar copyright lawsuit. I mean, it had growing infrastructure costs, and it had very little revenue, all three of which Google was able to help out with quite a bit. So maybe in hinds…

AI assessment note: “The general rule of thumb is that if someone is going to pay you”

Q Well, that's very, very kind of you, but I'd love to kick off today with a little on you. So when you were a little child, did you always dream of being director of Corp Dev at Google, and how did that really come into fruition for you?

A I actually am one of the guys who just serendipitously found this job, which I absolutely love. My first career out of undergrad was as a CPA for KPMG, which was not my calling. I had a great experience and learned a lot, but then after that went to law school and I was a lawyer for several years, and in fact, 13 years ago, joined Google as a lawyer doing M&A and securities work, and then after a couple years at Google as a lawyer, So about 10 years ago, I made the jump to the business side and have been leading M&A and investment deals for Google worldwide ever since. Over the years, I've had the pleasure to work on a variety of deals like the acquisitions of YouTube, Android, Motorola, and Waze, and have just had a ton of fun being a part of Google's inorganic growth path.

AI assessment note: “I actually am one of the guys who just serendipitously found this job”

Q on the leap of faith. I do want to kind of dive slightly more into the nitty gritty though, and a common question that a lot of founders pose and ask me is the classic, how can I get acquired by Google? But I think the more prescient question before asking that is, should an entrepreneur sell their company versus stay independent? How do you think about this today, Dave?

A The general rule of thumb is that if someone is going to pay you today what you think you're reasonably going to be worth well into the future, then sell now. The problem with that rule of thumb is that it's not much use because it requires you to accurately predict what you'll be worth in the future. So there's a few other factors that I like to talk about with founders when they're thinking about this decision. First, what's your risk reward profile as a founder? Some founders have a fierce desire to remain independent and take their company public and never sell. Whereas I may want to cash out early, and even though the reward may not be huge, the amount they're getting could be life-changing. Neither one's right or wrong. It's just where you are on the spectrum. Another important factor to consider is whether the acquirer can increase the probability or speed of the success of your startup, and an example of that for us here at Google is YouTube, which we paid 1.6 billion for, and today some analysts say it's worth over a hundred billion dollars. And so based on that, you could say, oh, wow, those founders sold out way too early. But if you look back at the time, YouTube was facing a billion dollar copyright lawsuit. I mean, it had growing infrastructure costs, and it had very little revenue, all three of which Google was able to help out with quite a bit. So maybe in hinds…

AI assessment note: “if someone is going to pay you today what you think you're reasonably going to be worth”

Q Minute VC is absolutely the right acquisition for Google. After intense negotiations, Dave, we agreed on two billion dollars, and we progressed into the deal, and it's now time for the integration phase. Clearly, you want me as well. What can I say? I'm just too charismatic. But tell me, how can an entrepreneur ensure when they sell their company, it'll be properly integrated and avoid really being swallowed up?

A Well, first off, each integration we do is different. There's no one size fits all. It's always tailored to the objectives of the deals. So are we primarily interested in the product or the team or the user base or something else? And so corp dev, my job is to work with our internal product area, as well as the target company to figure out the right level of integration and autonomy. For example, we do some deals where they're largely autonomous, like deep mind and other deals where they're fully integrated, like a songs up and we do everything in between two. So it's important for you as we buy a 20 minute VC, as well as corp dev, To have an explicit conversation before you've signed the definitive agreements about the integration plan and make sure we're aligned.

AI assessment note: “have an explicit conversation before you've signed the definitive agreements about the integration plan”

Q Yeah, I, I'm sure you, you probably thought about it many times before, but how do you think about optimizing efficiency in this phase? And, and what have you seen that's worked really well in the integration phase?

A For every deal we do of any size, we have regular post-closing check-ins and do post-mortems to make sure we're learning from our mistakes. And the single most important element we found for a successful integration is that we have an engaged deal sponsor from the Google side stay intimately involved with the company after closing until it's fully integrated. So when we've done these post-mortems, we found that a deal can go sideways after closing for a variety of reasons. A founder may not like the food at Google, or they might have a beef with their boss. So it's hard to set up a pre-baked safeguard against all of these. So instead, we found that having a seasoned Googler stay involved with the deal with appropriate incentives to make sure the deal succeeds is a great way to help ensure that potential problems get addressed quickly.

AI assessment note: “single most important element we found for a successful integration is that we have an engaged deal sponsor”

Q Well, that's very, very kind of you, but I'd love to kick off today with a little on you. So when you were a little child, did you always dream of being director of Corp Dev at Google, and how did that really come into fruition for you?

A I actually am one of the guys who just serendipitously found this job, which I absolutely love. My first career out of undergrad was as a CPA for KPMG, which was not my calling. I had a great experience and learned a lot, but then after that went to law school and I was a lawyer for several years, and in fact, 13 years ago, joined Google as a lawyer doing M&A and securities work, and then after a couple years at Google as a lawyer, So about 10 years ago, I made the jump to the business side and have been leading M&A and investment deals for Google worldwide ever since. Over the years, I've had the pleasure to work on a variety of deals like the acquisitions of YouTube, Android, Motorola, and Waze, and have just had a ton of fun being a part of Google's inorganic growth path.

AI assessment note: “I actually am one of the guys who just serendipitously found this job”

Q Yeah, I, I'm sure you, you probably thought about it many times before, but how do you think about optimizing efficiency in this phase? And, and what have you seen that's worked really well in the integration phase?

A For every deal we do of any size, we have regular post-closing check-ins and do post-mortems to make sure we're learning from our mistakes. And the single most important element we found for a successful integration is that we have an engaged deal sponsor from the Google side stay intimately involved with the company after closing until it's fully integrated. So when we've done these post-mortems, we found that a deal can go sideways after closing for a variety of reasons. A founder may not like the food at Google, or they might have a beef with their boss. So it's hard to set up a pre-baked safeguard against all of these. So instead, we found that having a seasoned Googler stay involved with the deal with appropriate incentives to make sure the deal succeeds is a great way to help ensure that potential problems get addressed quickly.

AI assessment note: “single most important element we found for a successful integration is that we have an engaged deal sponsor”

Q Yeah, no, I completely agree with you. In terms of the process itself, and touching back on the wonderful Paul Graham, he said before that the process can be grueling. Would you say it's a Fair assessment of M&A once targets have been identified and are in pipe, and if so, are there certain elements over others that make a process more grueling versus smooth?

A The process certainly can be grueling, and it can happen on the front end before a term sheet is signed, maybe because it takes a long time for the two sides to agree on price, or it can happen on the back end after the term sheet is signed, and that can be due. It can confirmatory diligence process, which involves folks like lawyers and accountants, and it's very detail-oriented. You know, for example, we're going to review every contract you've ever signed now to deal with this. I found the best way is to be upfront with the founder on kind of once you're leading towards a deal on how the process is going to play out with some detail and the information we're going to request of them so that they can plan and hopefully get the help they need sometimes reaching out to their law firms or other folks on their team. And then likewise, we encourage founders to let us know in advance of any potential gotchas early in the process. We're likely going to find out about them anyway. It's always better to address them upfront earlier rather than later as surprises.

AI assessment note: “The process certainly can be grueling, and it can happen on the front end”

Q Can I ask, from the founder perspective, when they're engaging in these meetings with you in the earlier days, are there elements that they should really be paying attention to? Are there questions that they should really be asking? What are those core fundamentals they should watch for in those initial relationship building meetings?

A Founders often focus on how they are pitching their company to us, which of course is appropriate. But it's also important for the founder to do their own diligence on us and what our specific plans are for the deal. We almost always want the founders to stick around and work for Google after the closing. So it's very important for them to understand and make sure we have alignment on what our plans are for the product, the team, the future growth, and all those things, because hopefully it's going to be their job for the next several years. It's important for me as a corp dev person to make sure that these discussions happen. But I always encourage founders to ask questions along the way, too, to make sure we're on the same page.

AI assessment note: “important for the founder to do their own diligence on us and what our specific plans are”

Q Minute VC is absolutely the right acquisition for Google. After intense negotiations, Dave, we agreed on two billion dollars, and we progressed into the deal, and it's now time for the integration phase. Clearly, you want me as well. What can I say? I'm just too charismatic. But tell me, how can an entrepreneur ensure when they sell their company, it'll be properly integrated and avoid really being swallowed up?

A Well, first off, each integration we do is different. There's no one size fits all. It's always tailored to the objectives of the deals. So are we primarily interested in the product or the team or the user base or something else? And so corp dev, my job is to work with our internal product area, as well as the target company to figure out the right level of integration and autonomy. For example, we do some deals where they're largely autonomous, like deep mind and other deals where they're fully integrated, like a songs up and we do everything in between two. So it's important for you as we buy a 20 minute VC, as well as corp dev, To have an explicit conversation before you've signed the definitive agreements about the integration plan and make sure we're aligned.

AI assessment note: “have an explicit conversation before you've signed the definitive agreements”

Q Can I ask, from the founder perspective, when they're engaging in these meetings with you in the earlier days, are there elements that they should really be paying attention to? Are there questions that they should really be asking? What are those core fundamentals they should watch for in those initial relationship building meetings?

A Founders often focus on how they are pitching their company to us, which of course is appropriate. But it's also important for the founder to do their own diligence on us and what our specific plans are for the deal. We almost always want the founders to stick around and work for Google after the closing. So it's very important for them to understand and make sure we have alignment on what our plans are for the product, the team, the future growth, and all those things, because hopefully it's going to be their job for the next several years. It's important for me as a corp dev person to make sure that these discussions happen. But I always encourage founders to ask questions along the way, too, to make sure we're on the same page.

AI assessment note: “important for the founder to do their own diligence on us and what our specific plans are”

Q Yeah, no, I completely agree with you. In terms of the process itself, and touching back on the wonderful Paul Graham, he said before that the process can be grueling. Would you say it's a Fair assessment of M&A once targets have been identified and are in pipe, and if so, are there certain elements over others that make a process more grueling versus smooth?

A The process certainly can be grueling, and it can happen on the front end before a term sheet is signed, maybe because it takes a long time for the two sides to agree on price, or it can happen on the back end after the term sheet is signed, and that can be due. It can confirmatory diligence process, which involves folks like lawyers and accountants, and it's very detail-oriented. You know, for example, we're going to review every contract you've ever signed now to deal with this. I found the best way is to be upfront with the founder on kind of once you're leading towards a deal on how the process is going to play out with some detail and the information we're going to request of them so that they can plan and hopefully get the help they need sometimes reaching out to their law firms or other folks on their team. And then likewise, we encourage founders to let us know in advance of any potential gotchas early in the process. We're likely going to find out about them anyway. It's always better to address them upfront earlier rather than later as surprises.

AI assessment note: “The process certainly can be grueling, and it can happen on the front end”