(Crain's) — The last time Google Inc. bought a local startup, the seller stayed virtually intact and in Chicago, from the executive suite on down to the rank and file.
The acquired company was FeedBurner Inc., an RSS feed service with fewer than three dozen employees that Google bought in 2007 for a reported $100 million.
Since then, Google has kicked its shopping habits into overdrive. The Mountain View, Calif.-based company, which made 15 buys in 2007, three in 2008 and five last year, acquired 40 companies in just the first nine months of 2010, spending a total of $1.6 billion, according to research firm CB Insights and regulatory filings.
It's a tough call on whether the FeedBurner takeover portends what might happen to Groupon Inc. if Google's rumored $5.3-billion purchase goes through.
For one thing, Groupon, with 630 full-time local workers and about 2,600 employees worldwide, dwarfs FeedBurner, with 30 employees. Groupon's business also doesn't fit as neatly into Google as FeedBurner’s did.
But if the FeedBurner buy does provide any kind of roadmap, Groupon employees — and the city of Chicago — likely needn't worry about job losses.
"Google acquires a company as much for the star talent as much as they do for the technology," said Matt McCall, a partner in Chicago-based venture capital fund New World Ventures. "There are a lot of stars at Groupon."
Augie Ray, a senior analyst of social computer for Forrester Research, said that he doesn't see any job redundancies between Groupon and Google, but some jobs may leave Chicago for Mountain View.
"(Google) has really been looking at experienced entrepreneurs with backgrounds in social business," Mr. Ray said.
FeedBurner is an example of Google keeping its acquisition intact. After the purchase, the four founders of FeedBurner and its employees were absorbed into Google's River North office. The majority still work at the web-search behemoth.
Two of FeedBurner's founders are still on Google's payroll, too: Steve Olechowski is product manager for Google's AdSense program, and Matt Shobe is a user-experience designer.
FeedBurner co-founder Dick Costolo was the first to leave Google in 2009, for Twitter Inc. In October, he was named CEO of the social media website.
Eric Lunt, the other FeedBurner co-founder to depart Google, still has ties to the search-engine giant. Mr. Lunt was named chief technology officer of BrightTag Inc. in August. Chicago-based startup BrightTag has received financial backing from Google CEO Eric Schmidt through his TomorrowVentures LLC investment firm.
The Groupon deal would mark one of a few billion-dollar acquisitions in recent years for Google Inc. In 2008 it paid $3.2 billion in cash for New York-based DoubleClick Inc., and it paid $1.65 billion in stock for YouTube LLC in 2006.
But if size is any indicator, Groupon might worry about suffering the same fate as DoubleClick. Google eliminated 300 of DoubleClick's 1,200 domestic jobs a month after it acquired the online ad company from two private-equity firms.
YouTube had a smoother transition, with its 67 staffers being integrated into Google. Two of the three founders — one had left prior to the Google acquisition — remained as YouTube executives until recently.
How Groupon executives and backers would fare financially from a Google deal hinges on the terms of the purchase.
DoubleClick's $3.2-billion purchase was an all-cash deal, while YouTube's founders and investors received Google stock.
YouTube co-founder Chad Hurley received a total of 735,319 Google shares, valued on the day the deal closed — Nov. 13, 2006 — at more than $349 million. Co-founder Steven Chen received a total of 694,087 shares, with a value of more than $329 million. YouTube investor Sequoia Capital XI fund, which plowed $11.5 million into the online firm, got shares valued at more than $446 million.
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