Why the Next Google … Is Google
If you’re one of those people who still believes the next Google is hiding in a garage somewhere, let me tell you the story of MapQuest.
If you’re old enough, or fluent in internet trivia, you recognize the name. Back in the day, say circa 2000, MapQuest was the destination for maps online. Then Google Maps happened.
Search Engine Land reported Oct. 4 that MapQuest was sold by Verizon (VZ) to System1, an adtech company. The value of the transaction was “not material enough for Verizon to file paperwork.”
MapQuest’s failure to remain competitive wasn’t for lack of trying. As the company struggled to compete with Google Maps beginning in 2005, MapQuest has been courted by several large internet companies.
Way back in 2000, AOL came calling. Ultimately, the first global internet company paid a $1.1 billion dowry to land MapQuest. And when Verizon became the parent company, via Yahoo! in 2016, the wireless company saw a bright future for mapping, too.
Executives made several attempts to revive the business with new looks, features and functionality. For a time, MapQuest was an important part of Verizon’s online plan.
In the end, it all failed. And that failure should be a lesson in the importance of scale in the current platform economy.
In a world defined by Google Maps, MapQuest simply could not compete for mindshare. Regardless of its design or utility, the company simply couldn’t get users to use its mobile application.
MapQuest product managers argue that Google used its dominant position in Search to the advantage of Maps. That’s probably true … but it doesn’t matter.
Maps is perceived as best in class. And a steady stream of research and development investment — plus acquisitions of smaller, nimbler firms — kept the product in the lead.
Crunchbase, an online database that tracks tech mergers, notes that Alphabet (GOOGL), Google’s parent company, has made 236 strategic acquisitions since 1999. The 2005 purchase of Where 2 Technologies became the foundation of Google Maps, according to Search Engine Land.
This is how the big got bigger.
Alphabet’s growth over the past five years. Source: Yahoo! Finance
Talented engineers with the best ideas were swallowed up in mergers. Holdouts were pushed between a rock and a hard place. Their ideas had to be niche enough not to disrupt the tech giants, yet important enough to warrant private equity funding.
Even today, that’s a tough spot smaller companies find themselves in. It’s debatable whether many enterprise software firms will ever make money. Most are building what amount to features on the larger tech giant platforms.
Unfortunately, the gatekeepers — Amazon Web Services, Microsoft Azure and Google Cloud — have shown a willingness to offer up those services as a free perk for using the platform.
It’s tough to compete with free …
For example, Alphabet paid 26x sales for Looker, a cutting-edge data analytics firm. The business will be integrated into Google Cloud.
And that’s the key takeaway:
The next Google isn’t hiding in a dusty garage somewhere in San Jose. It’s probably squirreled away inside Alphabet, or likely on a shopping list.
Competitors will either be acquired like Looker or meet the same fate as MapQuest.
So, perhaps the best way to buy the next Google … is to own Alphabet for the long haul.
Jon D. Markman