Friday, March 17, 2006

The Stanford Conspiracy

There seems to be a rumor that Google is going to buy Sun. [Some think it's a conspiracy to boost Sun's stock price, but that could be illegal and it wouldn't be so high profile]. This speculation isn't totally ungrounded or new, because rumors of Sun and Google being in cahoots go back (perhaps further) to a highly anticipated press conference back in October that disappointed a lot of people (including me) who were expecting something like Google selling Sun workstations to access the Google OS. What they did end up agreeing to do is cooperate in driving up adoption of Google Toolbar and Sun's Java Runtime Environment over the course of a multi-year partnership. Now, you can read up on what signs point to a merger or aquisition or more tight cooperation, or read up on why it's just hype. What I want to do is to explore how their cultures are aligned.

Google's had some experience in acquiring companies (see a surprisingly long list here). It's usually more like them acquiring smart people who produced fantastic stuff. The big names I can remember are Blogger (way back in 2003), Dodgeball, Picasa, KeyHole, and now @Last. Many times, it didn't seem like the products really aligned with Google's typical web-based ones, especially Picasa and KeyHole's Google Earth precursor. The one thing that remained extremely important, however, was the cultural fit. Google's culture is that of competence/intelligence/innovation (see what they're doing to make sure this doesn't change). They also like to think of themselves as having a small company feel where employees are highly resourceful and independent (20% of the time they manage themselves and work on their own projects). This matches the qualities of many of their acquisitions, which had one or two products each. That also makes for an easy transition to the GooglePlex.

I can't imagine Google [just taking Sun] and just merging them into the GooglePlex, despite having many times the market capitalization of Sun. Sun is in 100 countries and it really would be a headache. However, their cultures are not all that different. From a financial analysis report quoted in the pro-merger post, Sun and Google have a lot more in common and posit that Google's existence can be traced back to Sun, which is in turn traced back to the Stanford University Network or S.U.N. Company. Google's founders are Ph.D. students of Stanford University who have been "on leave". Stanford, which has a great reputation of putting out strong technology innovators owns a sizeable chunk of Google because the technology is technically being licensed from them, having been originally conceived by its students. Google's CEO, Eric Schmidt, who at one point, ran Sun's Java development as CTO (btw, Sun's CEO recently announced his resignation, seemingly satisfied at completing a milestone in Sun's history). According to vault.com, Sun's culture is that of individualism where employees are expected to "take initiative, make decisions, and be creative in solving problems." This sounds like the typical Stanford graduate.

The standard intuition regarding mergers is that the buying company's stock price falls and the company being picked up sees a rise. It seems the case based on very rough estimates. Google's price has dropped around 15% since a February 23 article sparked interest. Sun is worth about 16 billion to Google's now 100 billion. Of course, there is all that click fraud controversy, with the settlement and worries of more trouble down the line, the slowing of Google's growth statement by Google's CFO. It's fun to think about a Stanford conspiracy, though, and it's not hard to understand where the rumors come from.

Other Stanford people (not surprising): Vint Cerf graduated from Stanford and is now Google's Chief Internet Evangelist. Half the members of Google's Management Team have a very obvious relationship to Stanford and Eric (through SUN) and Vint (undergrad) don't even have Stanford in their descriptions so maybe there's even more. Of course, Yahoo's founders Jerry Yang and David Filo are Stanford alumni along with Steve Balmer, but that doesn't mean much.

UPDATED 12:43 PM, 11:57 PM

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