Make-Or-Buy Decision

Acquisitions of small companies by large companies happen all the time at "crazy" prices. GOOG paid $200 million for Slide in 2005, which was 200 times revenues at the time. Yes, you read that right. But the team who built Slide (about 50 engineers) had built a mobile operating system, more or less, and (properly incentivized) that team was able to build Android, the GOOG mobile phone operating system in four months. Had GOOG been forced to repartition its own engineers to build it, taking them off of search and other projects, it would have taken two years, and wouldn't have been as good.

So what was it worth to GOOG to be able to gain 18 months or more in speed against Apple, who was at the time threatening to restrict Google search access to their iPhones (angrily, Eric Schmidt resigned from Apple's board)?

Here it was a make-or-buy decision that was easy. It was a no brainer for GOOG to "over pay" for Slide and get Android "out there fast," rather than wait and just hope for the best.

Happens all the time. Good to be Slide.