This week we watched Google, the search engine monster with the mountain of cash from Mountain View, be rejected by Groupon, the little startup that could (as in “could” be offered a huge number to be purchased). Most of the industry couldn’t get over the number that Google was willing to fork-out to get the daily deal site, reportedly $5.3 billion with a $700 million earn-out.
Now, I am not a venture capitalist, so I don’t pour over numbers and see just why this deal worked or didn’t from the financial side. In fact, it is being reported that the “kill fee” amount wanted by Groupon was too rich, because they feared regulatory hurdles in getting the deal done. That seems a bit flimsy and it is likely that Google was feeling pretty confident this deal would get through the government red tape.
So why did this all happen? Greg Stirling has been writing some good articles this week that looks at what this deal could be truly indicating about Google. The company has decided that it wants to be the provider of all things Internet marketing to the SMB crowd. Really, everyone does, too, but Google has the chops to actually deliver it. That is, if they turn into something they are not and that Groupon most certainly is: a sales organization.
Groupon has 1,500 sales reps scouring the landscape for SMBs that are willing to give up a significant portion of their revenue on a deal to get new business that many say is questionable. With Groupon taking so much money on each deal and the type of client that is attracted to this kind of offer (read: existing customer looking for a deal they usually wouldn’t get or someone who is just plain cheap), Groupon serves almost like a Payday loan service for the SMB. Considering the times we live in, when credit opportunities for SMBs are harder to secure than ever before, this can be appealing.
But back to Google. Google is seeing that in order to play in the SMB space, they cannot be only a self-serve company. No, in fact they are going to have to do something that either they have decided never to do or have just been reluctant to do: offer real people to sell all of their products and provide some level of customer support besides forums run by other people asking the same questions people have.
This is the equivalent of a tectonic plate shift in the earth because Google is just awful when it comes to helping people with their products. They have this pathetic approach of “We have built it so now you must figure it out and pay us handsomely in the process” attitude, and a machine that has worked until so far but now but is being exposed as their true Achilles Heel.
You see, most SMBs are not tech savvy and will not even be able to do the basic things that most Googlers think are akin to breathing. They will need real assistance and hand-holding and they will need people to answer real questions. The more I think about this, the more I think that Google might be in some trouble.
Google has already made strides in the sales area. They have apparently hired about 300 salespeople to push products like Tags and Boost to the SMB market. I wonder if these are the same 300 people that were rumored to be part of Google’s backroom efforts to clean up and “support” their Place Pages. Originally, they were supposed to be a way for people to have some kind of resource that could talk to help with Place Page issues. Maybe they morphed into a sales team because they sure as heck aren’t supporting efforts to help people get Place Page answers.
This whole Groupon process reveals that Google is starting to think less in engineering terms and more in people terms in order to get revenue rolling in other areas of the company beyond pure search. They have had reps and some support around AdWords and AdSense, but let’s face it, that’s their lifeblood. I think they are seeing that if they don’t get their offerings beyond these two cash cows (really it’s more like a pasture of cash cows), then they really are a one-trick pony, albeit it’s a very effective trick.
Personally, I think they need to put a human face on the company. That is not Eric Schmidt, Matt Cutts, or some other executive that plays to the press. That’s not help, that’s PR. If they don’t, then there is a chance (which might be slim but it does exist) that they could stub their toes badly enough like so many others in the past (IBM, Microsoft etc) to put a dent in their dominant market position.
What do you think? Should Google invest in becoming a more customer-centric company or can they continue to thrive with their engineering first, second, and last approach going into the future?
