Semi-Organic Growth. Geis George T.

eorge T. Geis

      Semi-Organic Growth, + Website

      Semi-Organic Growth

       Tactics and Strategies behind

       Google's Success

      GEORGE T. GEIS

      Cover design: Wiley

      Copyright © 2015 by George T. Geis. All rights reserved.

      Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

      Published simultaneously in Canada.

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       Library of Congress Cataloging-in-Publication Data:

      Geis, George T.

      Semi-organic growth + website: tactics and strategies behind Google's success / George T. Geis.

      pages cm

      Includes bibliographical references and index.

      ISBN 978-1-118-93322-0 (hardback)

      1. Consolidation and merger of corporations. 2. Google (Firm) I. Title. II. Title: Semi-organic growth.

      HD2746.5.G447 2015

      658.4′012 – dc23

      To George S. Geis, Terri L. Geis, and Anne L. Geis – three ongoing sources of semi-organic growth

      Preface

      Around 1995, I became intrigued with developing a methodology and related visualization technology to systematically analyze company acquisitions, minority equity investments, alliances, and other corporate development activities. At the time, I was concentrating on companies that included Microsoft, Intel, and Cisco.

      Then along came Google. Starting with the early days of Google, acquisitions appeared to play a particularly important role in the strategic unfolding of this iconic company. Google was becoming an experimental lab, not only for products and services but also in utilizing M&A to further its purposes.

      I wanted to understand in depth why Google was engaging in what was an unprecedented level and type of M&A activity.

      As of 2015, Google had acquired some 200 companies. But there's much more to the story than numbers. The major thesis of this book is that early in the company's existence, a playbook for M&A activity (which I dub semi-organic growth) was established, and that this pattern became a core element of Google's success.

       Semi-Organic Growth presents a unique analysis of Google's distinctive expertise in the area of mergers and acquisitions. The book provides insights derived from the many Google acquisitions completed over the company's brief history. While organizational revenue growth has traditionally been characterized as organic (internally generated) or inorganic (from acquisition), this book features Google's use of a blended, semi-organic strategy to accelerate product and service revenue.

      Google's extensive use of M&A during its period of rapid growth has been in sharp contrast to rivals such as Apple. In addition, Google's overall success in M&A further contrasts with the failures of many other companies in this area of corporate business development. All readers will gain distinctive insights from the M&A expertise and practices of this iconic company.

       Semi-Organic Growth illustrates how Google's M&A moves can be explained through a unique sector/subsector classification scheme that dynamically maps the media, Internet, and technology platform markets. Market modeling dynamics are illustrated with some 50 infographics to help understand important categorical M&A dimensions and visualize deal constellations. These market-modeling techniques are applicable to any company.

      The book examines Google's practices in disclosing M&A deal structure (such as valuation and form of consideration) and in using contingent consideration in the form of earn-outs and stay bonuses.

      But perhaps most importantly, we examine how Google has integrated its acquisitions, thereby accelerating the growth of its array of products and services.

       Chapter 1 describes the challenges of building a successful M&A program in domains that include strategy, economic valuation, organizational design, and deal dynamics. This chapter discusses each of these activities, emphasizing approaches linked to positive outcomes.

       Chapter 2 features Google's acquisition of Applied Semantics, a watershed transaction in that it imprinted on Google a methodology for revenue acceleration through semi-organic growth. This chapter provides a history of the Applied Semantics deal and how the acquisition led to the creation of AdSense, which grew into a highly significant service within Google.

       Chapter 3 contrasts Apple and Google, two companies that have had dramatically different corporate philosophies with respect to the role of M&A in strategy. Until 2012, Apple engaged in M&A only sparingly, believing that innovation should essentially originate from within. In contrast, Google was acquiring companies at a rapid clip and using technology and talent from the purchases as a major part of its innovation efforts.

       Chapter 4 introduces marketing modeling, which involves connecting knowledge chunks comprised of three elements: market segments, companies, and deals. The chapter illustrates market modeling by developing a sample model for Google in the MIT (media, Internet, and technology infrastructure) spaces.

       Chapter 5 highlights advertising as Google's core business. The chapter develops a market model for media and then analyzes Google's acquisitions in sectors such as online content and advertising.

       Chapter 6 analyzes numerous