Episode 9 Writely (Google Docs)

Abstract
Summary Notes

Abstract

In episode nine of "Acquired," hosts Ben Gilbert and David Rosenthal discuss the history of Google's productivity suite, including the acquisitions of companies like Upstartle (Rightly), which became Google Docs, and 2Web Technologies, which contributed to Google Sheets. They explore how Google strategically acquired bare-bones applications and developed them in-house to create a suite that rivaled Microsoft Office. While the suite, including Google Docs, Sheets, and Slides, became widely used, the discussion highlights how it didn't evolve into a significant revenue stream for Google. The episode also touches on the broader context of Google's focus and its potential distraction from other ventures, contrasting it with Microsoft's dedicated investment in productivity software. Additionally, the episode features a sponsorship segment from Pilot, a company offering comprehensive financial services for startups.

Summary Notes

Introduction to Acquired Podcast Episode

  • Discussion of Acquired podcast Episode 9, focusing on successful technology acquisitions.
  • Hosts Ben Gilbert and David Rosenthal introduce the theme of productivity software.
  • The episode centers around Google's acquisitions leading to Google Drive, Google Docs, Google Sheets, and Google Slides.
  • The acquisition of Upstartle, which created Writely, is highlighted as a key contributor to Google Docs.
  • The hosts encourage listener feedback and interaction via iTunes reviews and Twitter.

"Welcome back to episode nine of acquired, the show where we talk about technology acquisitions that actually went well. I'm Ben Gilbert." "I'm David Rosenthal, and we are your hosts."

The quote introduces the podcast hosts and sets the stage for the episode's focus on successful tech acquisitions, specifically in the realm of productivity software.

Google's Acquisition Strategy for Productivity Software

  • Google's acquisitions around productivity software, including the purchase of Upstartle, which led to Google Docs.
  • The episode traces the history of Google's suite, including Google Docs, Sheets, and Slides.
  • David Rosenthal outlines the acquisition history and facts, focusing on Writely, which became Google Docs.
  • Mention of other acquisitions contributing to Google's productivity suite, such as 2Web Technologies for Google Spreadsheets.
  • Recognition of the strategic, yet inexpensive, nature of these acquisitions.

"This week we're going to be covering an older acquisition, but following a theme from our last episode in productivity software, we're going to be covering what became the eventual suite known as Google Drive, Google Docs, Google Sheets, and Google presentations. Google Slides."

The quote summarizes the episode's focus on Google's strategic acquisitions that led to the creation of its productivity software suite.

Upstartle and Writely's Role in Google Docs

  • Upstartle, founded by technologists from Intuit, developed Writely, a collaborative document editing tool.
  • Google acquired Upstartle in March 2006 for an undisclosed amount, rumored to be around $10 million.
  • The acquisition included the three founders and one other employee, who all joined Google as product managers for Google Docs.
  • Writely's acquisition was part of Google's broader strategy to build a cloud-based productivity suite.

"And then in March 2006, Google announces that they had acquired the company for an undisclosed amount, rumored in the $10 million range."

This quote provides details on the acquisition of Upstartle by Google, which was a pivotal moment in the development of Google Docs.

Early Development and Launch of Google Docs and Spreadsheets

  • Google's first acquisition for its productivity suite was 2Web Technologies, focused on Excel-to-web technology.
  • Google Spreadsheets launched in Labs in June 2006, while Writely was acquired in March 2006.
  • Google Docs, based on Writely, was released publicly at the beginning of 2007.
  • Docs and Spreadsheets were merged, allowing users to access both documents and spreadsheets from a single platform.

"Google spreadsheet launched in Labs in June 2006, rightly was acquired in March 2006, and then shortly thereafter, in the beginning of 2007, Google Docs based on rightly was released publicly."

The quote outlines the timeline of Google Spreadsheets' launch and the public release of Google Docs, emphasizing the rapid development post-acquisition.

Acquisitions for Google Presentations (Slides)

  • Google acquired Tonic Systems and Zenter in 2007, both working on presentation software for browsers.
  • Tonic Systems contributed the backend, while Zenter provided the frontend for what would become Google Slides.
  • Google Presentations was launched in September 2007, completing the suite of office productivity software in the cloud.

"And it's pretty amazing how quickly Google turned these acquisitions around. September 2007, Presentations was launched, and finally, there is now a full suite of Microsoft Office esque productivity software in the cloud."

This quote highlights the swift integration and launch of Google Presentations, rounding out the cloud-based productivity suite.

Google's Non-Competitive Stance with Microsoft Office

  • Eric Schmidt, then CEO of Google, publicly stated that Google Docs and Spreadsheets were not direct competitors to Microsoft Office.
  • This statement was made despite the apparent overlap in functionality between Google's and Microsoft's productivity tools.

"That's right. But don't ask Eric Schmidt that. When they announced Google Docs and spreadsheets, he definitely told a gigantic audience full of people that they were not indeed competing with Microsoft and it was not a competitor to Office."

The quote captures the contradiction between Google's product offerings and its public stance on competition with Microsoft Office.

The Mythical G Drive and Dropbox

  • Discussion of the rumored "G Drive," which was anticipated as a Dropbox killer but did not launch until 2012.
  • Speculation on how the acquisition landscape might have changed if Google had acquired Dropbox or Box to accelerate its drive efforts.
  • The founding of Dropbox in June 2007 is noted as a significant event in the cloud storage space.

"All these companies, these five or so companies that Google acquired, that became the backbone of Google Docs, there were all these rumors, I don't know if you remember, Ben, around the time for years, about the mythical G drive."

The quote reflects on the rumors and anticipation surrounding Google's cloud storage solution, which was later realized as Google Drive.

Acquisition Category: Technology and People

  • Ben Gilbert categorizes the acquisitions as technology and people, given the experimental nature of Ajax apps at the time.
  • The acquired companies were seen as having expertise in collaborative editing and browser technology, which was valuable to Google.

"To me, technology, I think all these acquisitions, primarily, rightly, were these kind of experimental Ajax apps, and everybody was seeing what they could do with Ajax at the time."

The quote emphasizes the technological aspect of the acquisitions, focusing on the innovative use of Ajax for collaborative web applications.

Acquisition Category: Business Line

  • David Rosenthal suggests a business line category for the acquisitions, as Google aimed to establish a new business in cloud-based productivity apps.
  • The acquisitions were part of a deliberate strategy to enter and shape the market for online productivity tools.

"Google decided they wanted to get into the business of productivity apps and they wanted to take a typically Google bent on it and put them in the browser instead of being installed software on your pc."

This quote explains Google's strategic decision to create a business line around browser-based productivity applications, differentiating from traditional installed software.

Buy vs. Build Decision

  • The discussion opens with the strategic decision-making process in business, particularly the choice between buying a company or building a capability in-house.
  • Google's decision to purchase a company for $50 million as a shortcut to market is highlighted as a case study of this dilemma.
  • The acquisition allowed Google to quickly integrate right brain power and productivity software into their ecosystem.

"Business and made the judgment that buying was going to be a faster way to get there than building in house." "Yeah, it sure does feel like a case study in the buy versus build."

The quotes underline the strategic decision faced by businesses to either buy existing solutions or build them internally, with Google opting to buy as a faster route to market.

Evolution of Productivity Software

  • The conversation shifts to the evolution of productivity software from standalone applications like Word, Excel, and PowerPoint to integrated suites that include email and cloud services.
  • The speakers discuss how Google blended the acquisition of traditional productivity software with the in-house development of Gmail and cloud services.
  • The success of Google's cloud services relative to Amazon is also questioned.

"And what's interesting is it's also, I think, blending a little bit kind of the tech themes."

This quote reflects on how Google's strategy blended different technological themes to create a comprehensive suite of productivity tools.

Google's Business Model and Productivity Software

  • The speakers debate whether Google, primarily an advertising business, should have entered the productivity software market.
  • The discussion considers if productivity software is essential for Google's future or if it complements their primary revenue stream from AdWords and search.

"Does it make sense for them to be in the productivity game at all?"

The quote poses a strategic question about Google's involvement in the productivity software market in relation to its core advertising business.

Google's Search for the "Next Big Thing"

  • Google's search for new revenue streams beyond their advertising business is discussed.
  • Alphabet's (formerly Google) revenue reporting and corporate restructuring are mentioned as evidence of their focus on finding the next big innovation.
  • The acquisition of Bebop and the appointment of Diane Green to oversee Google's cloud business is cited as a recent strategic move.

"Alphabet's revenues now are reported as Google and other like, they're so fascinated with this, what's the next widget."

This quote indicates Google's (Alphabet's) ongoing quest to diversify its revenue sources beyond its traditional search business.

Google's Position in the Tech Landscape

  • The speakers reflect on Google's identity as a search company and ponder its future direction.
  • The comparison is made to Microsoft's evolution from an operating system and office company to a mobile-first, cloud-first company.
  • Google's acquisition of Bebop is seen as part of its strategy to define its role in the enterprise productivity and cloud space.

"And I think this is a big part of the question of what does Google want to be when it grows up?"

The quote encapsulates the discussion around Google's long-term strategic goals and its evolution as a company.

Low-End Disruption and Productivity Software

  • The concept of low-end disruption is applied to Google's entry into productivity software with Google Docs.
  • Google Docs is seen as a simpler, cloud-based alternative to Microsoft Office, initially perceived as a toy but gaining traction due to features like real-time collaboration.
  • The speakers debate whether Google Docs has lived up to its potential as a disruptive force in the productivity software market.

"I mean, you have the big thing that the enterprise people are buying with these companies that need every single last feature of office, even though any given person only uses 5% of it."

This quote discusses the traditional enterprise software model and how Google Docs challenged it by offering a more streamlined set of features.

The Future of Cloud Services

  • The discussion turns to the future of cloud services and the roles of Microsoft, Amazon, and Google.
  • The speakers explore whether companies need to offer a full stack of cloud services, from infrastructure to platform to software.
  • The strategic importance of productivity software in the context of cloud service offerings is questioned.

"Do you think that as all of these businesses are betting on that being the cash cow of the future, do all of them need all of the layers?"

The quote questions the necessity for tech companies to offer a complete range of cloud services, including productivity software, as part of their business model.

AWS's Dominance in Cloud Infrastructure

  • AWS began as a provider of infrastructure services and has since expanded its offerings.
  • Despite not being a major player in email services, AWS is still a leader in cloud infrastructure.
  • The discussion reflects on how Google could have competed with AWS on infrastructure rather than focusing on productivity tools like Microsoft.

"No farther than AWS to see mean AWS started as infrastructure. That's what they do. And of course they've moved up the stack and added other things, but they aren't offering email."

This quote highlights AWS's core focus on infrastructure services and their expansion into other areas, despite not being a major player in email services.

"They're pretty far and away the leader. And it's interesting to think about what could Google have done rather than copying the Microsoft strategy in the mid two thousand s of, okay, we've got the quote unquote operating system, now we're going to do productivity."

The quote suggests that AWS's leadership in cloud infrastructure is solid and questions Google's strategic choices in trying to emulate Microsoft's focus on productivity software.

Early Cloud Service Decisions by Google and Amazon

  • Google App Engine initially required users to adopt Google's proprietary data storage and use Python, limiting flexibility.
  • Amazon's cloud services provided a level of abstraction just above managing one's own server, which was appealing to users.
  • The choices made by Google and Amazon in the early days of cloud services significantly differed and impacted their market positions.

"Well, yeah, it's interesting. I think with Google app engine you were locking yourself into Google's proprietary data storage and you had to use Python."

This quote explains the limitations of Google App Engine, which locked users into a specific technology stack, contrasting with Amazon's more flexible approach.

The Impact of AWS on Productivity and Enterprise Adoption

  • Companies like Dropbox initially relied on AWS, which Ben Thompson referred to as paying the "Amazon tax."
  • Despite the use of Google Docs, it has not become a significant business for Google, especially in the enterprise sector.
  • There has been stagnation in the adoption of Google Apps in enterprises, which is not indicative of successful disruption of the incumbent.

"And you look at the diversity of companies and enterprises and workloads that have adopted Amazon over the past few years. And you mentioned Dropbox moving off of Amazon. But for the longest time, Dropbox, Amazon kind of won the first round of this fight across productivity because everybody used AWS. Dropbox paid the Amazon tax."

This quote discusses how AWS won the first round in cloud services by being the platform of choice for diverse companies, including Dropbox, which incurred costs for using AWS.

Microsoft's Resurgence and Strategy in Productivity Software

  • Microsoft has made a comeback in the productivity software space, partly through acquisitions.
  • Office 365 and Outlook have gained significant traction, surpassing Google Apps in market share.
  • Google Docs has not significantly disrupted Microsoft's position, and Microsoft continues to capture the majority of the productivity market's value.

"And instead, actually, I mean to bring back to our last episode, what you've seen happen is this resurgence of Microsoft, of the original winner in this space with granted some expensive acquisitions that they've made."

The quote mentions Microsoft's resurgence in productivity software, highlighting their strategic acquisitions that have contributed to their success.

The Battle for Productivity Software

  • The cloud versions of Microsoft's Word, Excel, and PowerPoint are not necessarily superior to Google Docs, but they are winning in the enterprise market.
  • The battle for dominance in productivity software is not just about the quality of the product but also about capturing the enterprise market and revenue.

"And what's really interesting here is that I don't think anyone would argue that the cloud versions of Word and Excel and PowerPoint are great or beating a resurgent or beating Google Docs. But it doesn't matter."

This quote suggests that despite the quality of Google Docs, Microsoft's productivity suite is winning in the market because of factors beyond product quality alone.

Incentives and Business Focus of Microsoft and Google

  • Microsoft is primarily a productivity and operating system company, while Google is an advertising company.
  • The incentives and core business focus of these companies influence their strategies and outcomes in the productivity software market.
  • Google's focus on advertising may explain why Google Docs has not been as aggressive or successful in displacing Microsoft's productivity suite.

"Microsoft is a productivity company. Operating system, productivity company and operating system, broadly defined, that will become something much more cloud oriented. Google is an advertising company."

The quote clarifies the fundamental business focuses of Microsoft and Google, with Microsoft being primarily concerned with productivity software and Google with advertising.

Theoretical Alternatives and Market Dynamics

  • The discussion speculates on what could have happened if companies like Rightly had remained independent and competed in the productivity space.
  • The conversation touches on companies like Box and Dropbox and their potential strategies, including the hypothetical scenario of Apple acquiring Dropbox.

"Had these companies, let's take Rightly for instance, had that been an independent company, launched publicly and let's say they built Google Docs, what would that look like?"

This quote prompts consideration of alternative market scenarios where independent companies could have shaped the productivity software landscape differently.

Statsig Sponsorship

  • Statsig is introduced as a new sponsor for the podcast episode.
  • Statsig offers a feature management and experimentation platform for product teams to ship features faster and understand their impact on business metrics.
  • Notable Statsig customers include Notion, Brex, OpenAI, and Microsoft, among others.

"Our sponsor for this episode is a brand new one for us, Statsig."

This quote introduces the sponsorship segment, highlighting Statsig as the sponsor for the episode.

Scale of Cloud Storage Companies

  • Discussion on the potential for Box or Dropbox to reach the scale of tech giants.
  • Skepticism about Box or Dropbox becoming as large as Microsoft, Google, or Amazon.
  • The need for innovation and consumer payments in the utility file storage sector.
  • Speculation on acquisitions that could bolster Dropbox's offerings.

"Do we think Box or Dropbox could ever be a company at the scale of Microsoft or Google or Amazon? Personally, I think that's hard to see."

This quote expresses doubt about the growth potential of Box or Dropbox to reach the scale of the largest tech companies.

"If it does go that direction, it's box going the Microsoft route and Dropbox pioneering. Some need. They need consumers to pay, which is a really hard thing to do for utility file storage, thing like that."

Ben Gilbert highlights the challenges for cloud storage companies in getting consumers to pay for what is essentially a utility service.

Theoretical Competitors and Acquisitions

  • A hypothetical competitor, "rightly or upstartle," is discussed as a more formidable contender than a purely storage-focused company.
  • Mention of Dropbox's acquisition strategy, including the purchase of Mailbox and other companies.
  • Critique of Dropbox's track record with acquisitions.

"What happens is Dropbox buys upstartle and then you have the Microsoft equivalent of OneDrive and Word online, and that is sort of the stack."

Ben Gilbert imagines a scenario where Dropbox acquires a company to enhance its product offerings, similar to Microsoft's strategy.

"Clearly Dropbox has had these thoughts as well. I mean, they bought mailbox and they bought several other companies."

David Rosenthal points out Dropbox's history of acquisitions, which indicates their awareness of the need to expand their services.

Google's Business Strategy and Focus

  • Discussion on Google's acquisition strategy and its focus on productivity tools.
  • The argument that Google's pursuit of productivity tools was a distraction from its core business.
  • The opportunity cost of attention for tech companies and the importance of focus.

"I think it's expensive in terms of opportunity, cost of attention."

Ben Gilbert argues that Google's foray into productivity tools was costly in terms of diverting focus from potentially more lucrative ventures.

"It was actually a major distraction from either their core strategy within search or finding another sort of leg of the stool that would be a better fit with their core capabilities as a company versus trying to go down a path that they really weren't equipped to succeed in."

David Rosenthal suggests that Google's focus on productivity tools may have been a strategic misstep, diverting attention from areas where they could have had more success.

The Carve Out Section

  • Introduction of a new segment called "the carve out," where the hosts discuss interesting media, TV shows, books, or publications.
  • Ben Gilbert shares his thoughts on Bill Simmons' new media venture, The Ringer.
  • David Rosenthal discusses the book "Creativity, Inc." by Ed Catmull and its insights into the creative process at Pixar.

"Bill Simmons launched the Ringer... it's totally sports focused, but it's really the kind of crown jewel of the Bill Simmons media empire."

Ben Gilbert introduces The Ringer, a sports-focused media venture by Bill Simmons, as an example of engaging content in the carve out segment.

"I just finally finished, crossed off my reading list, Creativity, Inc... It is fantastic."

David Rosenthal recommends "Creativity, Inc." for its valuable insights into the creative process and management lessons, relating it to startup challenges.

Crusoe Cloud Computing

  • Discussion on Crusoe, a clean compute cloud provider for AI workloads.
  • Crusoe's partnership with Nvidia and use of wasted, stranded, or clean energy.
  • The environmental and cost benefits of Crusoe's approach to data center location and energy use.
  • Comparison of Crusoe's strategy with traditional cloud providers.

"Crusoe's data centers are nothing but racks and racks of a because Crusoe's cloud is purpose-built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers."

The hosts discuss Crusoe's specialized AI cloud services and their unique approach to using otherwise wasted energy, offering performance and cost advantages.

"Crusoe, of course, locates their data centers at stranded energy sites... and uses that power that would otherwise be wasted to run your AI workloads instead."

The environmental impact and cost-saving measures of Crusoe's data center locations are highlighted as key differentiators from other cloud providers.

Conclusion

  • The hosts wrap up the podcast episode.
  • Encouragement for listeners to review the podcast and share it with friends.
  • A final reminder to tune in for future episodes.

"Listeners will leave you here. Thanks for tuning in this week. Visit us on iTunes, write a review if you like the show, tell your friends and see you next time."

The hosts conclude the episode by thanking the listeners, inviting them to leave reviews, and encouraging them to share the podcast with others.

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