Google, Where Startups Go To Die

by Amy Chan

Aardvark, Dodgeball, Jaiku, Slide. What do they all have in common? They were successful startups that subsequently failed or shutdown after being acquired by Google.

So why do so many startups fail inside the search giant? Isn’t getting bought by a large corporation with seemingly infinite resources (a “startup sandbox” if you will) a good thing? Below is an analysis of how Google’s often-praised culture and internal processes conflict with Lean Startup principles.

Building Phase: User-Centric Designs Lose

Google’s emphasis on engineering makes it so that their products are technical-centric rather than user-centric. Engineers inherently want to work on the most challenging projects, preferably at the forefront of technology. In fact, Google’s very foundation is based on a highly complex algorithm that effectively matches human searches. But unlike its predecessors that competed mostly on the basis of technology, Web 2.0 companies are not technically difficult applications (think Groupon, Linkedin, Foursquare, Twitter). They excel because of other dimensions such as ease-of-use and virality.

Google Wave is a good example of how the need to build something technical overshadowed a user-centric approach. The team built a product that was ill-defined and attempted to do too many things, coupled with an incredibly complex UI that no user wanted to learn.

Funding Phase: The Fight for Resources

With thousands of projects in development at Google, there is intense competition for funding. In an ideal situation, competition is good because the products that gain the most user-traction should win. Unfortunately, Google is not a free market. The products that win resources are the ones that have the most internal backing (i.e. pet project of an executive) or charismatic leaders that understand “the system” (i.e. PMs that can convince the best engineers to work for them). Entrepreneurs, often young, are great at visioning, working with little-to-no structure and building products; but they are less equipped at navigating through structured and bureaucratic resource-allocation processes. Precisely what makes founders so successful as entrepreneurs is what makes them unsuccessful as product managers.

This fight for resources is what frustrated Dodgeball founders Dennis Crowley and Alex Reinhart. After only two years inside Google and getting no attention, they left to create Dodgeball 2.0, also known as Foursquare.

Testing & Measuring Phase: False Positives

In a resource-rich venture, the Minimum Viable Product approach makes very little sense. Why would a product team test minimally when it has access to millions of Google users and thousands of employees? Moreover, Google tends to beta test within itself before releasing to the public. This type of internal testing creates a biased picture of what works and what doesn’t work. Products that cater to the highly educated, early adopters and computer-savvy end up producing great test results, but may not necessarily appeal to the masses.

Learning Phase: Bias Toward Not Pivoting

After a product is built, funded and tested successfully, there is still a long launch pipeline. With only 365 days of a year and thousands of projects, Google has to somehow artificially spread out its product launches. There is no way to go through fast iterative learning cycles and hypothesis-driven planning when you can’t even launch your product for several months. And in terms of pivoting, forget it – the team will lose credibility and end up in the back of the line. Thus if your options are to preserve, pivot or perish, the bias is toward either preserving or perishing. Unable to pivot, an entrepreneur’s learnings are limited from one venture to the next.

Prediction

Note that the internal processes that Google employ aren’t bad in and of themselves. They are actually quite good at sustaining existing revenue sources. But in terms of harnessing emerging opportunities, unless Google finds a way to reconcile its product development process and the Lean Startup methodology, the Google graveyard will only continue to grow.

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