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Google looks Olive up and down, but then rejects it

Google has walked away from acquiring Santa Clara company, Olive Software.

We wrote earlier that Google was negotiating to buy Olive for $70-80M, to gain access to Olive's technology that helps transfer off-line content into a form where Google can search it (Olive converts PDF documents, microfilm and any other files to XML).

Turns out, Google has passed. Though the story is a bit strange, based on the accounts of two independent sources:

Google sent out a team of 15 people to Olive's Israeli offices (much of the company is over there) for over a week (staying at an expensive hotel), and interviewed each Olive person several times both in person and by phone interviews.

Google also sent a few Olive people abroad (England and US) for interviews because the Google people who needed to interview them hadn't gone to Israel.

It all seemed like a 'go,' but then the Google team suddenly decided the product didn't have everything they wanted. So why, one person close to the deal asked, did Google invest so much time and effort into the people, when it turns out they hadn't fully checked out the product first?

Is Google turning into a Microsoft? Checking out the goods, and then going back and building it themselves? Or hiring away the better employees? Here's what one person said: "Google learned a LOT about Olive... everything."

We actually don't know, and so no point reading too much into it. But we'll follow this one. Meanwhile, Google is opening up two centers in Israel (one in Haifa and one in Tel Aviv). The deal could have given Google a great base.

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The fact that Google may have gone thru and extensive "due-diligence" process to acquire competitive knowledge does not surprise me at all. The same thing happened to my company as well.

Start-ups out there should be VERY wary of Google's "we want to buy you" tactics. Ask them to put in writing they do not have a similar product in the works (they'll give you lots of legal reasons why they cant, but still ask),sign an iron-clad NDA (if they wont sign, walk) and make sure they can't hire away your best people (dont believe we "see too many resumes" loophole).

Withheld on May 8, 2006 8:23 PM
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What happened to not being evil?

Steve on May 8, 2006 10:34 PM
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Exact same thing at my startup. In the end google backed out of the deal but ended up hiring two of our best employees. Don't know how this was legal, but they did it. Watch out, google is taking over the world.

John on May 8, 2006 11:59 PM
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http://www.arcon5.com thinks google made a bad idea!!!

I personally dont!!!

tom on May 9, 2006 2:26 AM
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I don't think so~

太阳黑子 on May 9, 2006 4:05 AM
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Maybe startups should charge a fee for getting groped and dryhumped. They'd at least get to keep the ring, you know?

Tom on May 9, 2006 8:40 AM
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I happen to know someone who has had the same experience with Google. Since then I see them as an 'evil' company.

He has been several times to the US and even talked to Brin and Page several times, all seemed well but the Google engineers asked an awful lot of technical questions. My friend had to sign a paper forcing him to remain silent about this negociation process, but Google signed nothing!

Then all after some months all of a sudden he and his lawyer could no longer get in contact with either Brin or Page...

He has never heard of them since and 6 months later a similar product to the one he made was launched by Google!!!

Google = Evil

Backup on May 9, 2006 12:58 PM
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This seems odd. With Google's concentration of genius programmers, they should have more ideas than they have resources to exploit them.

Will on May 9, 2006 7:52 PM
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Wow, if this story and all these comments are for real that would be pretty bad. I don't agree with Will though, maybe they have more resources than ideas since a good engineer is not always a good 'idea person'. For that you need creatives (in lack of a better name) which, looking at their app designs, they seem to have a shortage of at Google.

Tijs on May 10, 2006 4:33 AM
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That's funny, we had been looking at Google Enterprise Hardware and decided to go with Olive for our needs. When Google rep asked me who I went with, I said Olive. He had never heard of them. This was about a month ago. Coincidence?

buddy1 on May 10, 2006 6:42 AM
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Wow, that's eerie.

Matt Marshall on May 10, 2006 6:58 AM
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All I can add to this is that we use olive software and we are very happy and impressed with them and the technology. They also have top/first class people and support. Maybe it was olive that rejected google and/or the offer? I can not see any company passing up on olive.

kumar on May 10, 2006 9:06 AM
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give us three years and we will kill them.

Bill G on May 10, 2006 2:30 PM
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It's saddening that a company who's mission is to "Do No Evil" acts in this manner.

Charlie Kemper on May 10, 2006 5:06 PM
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70M for a company that has been around ~7 years isnt much. With 300+ customers they probably have a headcount >100; so everyone in the company probably would NOT make out. The VCs dont get their 10x investment back. At this late stage for selling, most of the expenses are for sales/marketing vs. core R&D. So I'm not sure Olive s/w would say yes to the deal. The VCs wouldnt be happy, the employees wouldnt be happy; maybe some of the founders would make their millions, but if they have a steady revenue stream from 300 customers they may not need to bail immediately.

So now on to Google's perspective. The pricing seems low given the competitive advantage of their OCR; if it really works for general formats or is only good for newspapers?

I would guess it's only good for specific newspaper formats and was hardcoded in to some extent or else you would see this product in other applications ranging from insurance records, medical records, legal documents and so on and the valuation of 70M would be absurdly low.

Since their application base is narrowly focused around newspapers, catalogs, and magazines, I would guess their technology isn't really revolutionary or orders of magnitude better than current state of OCR s/w like Abbyy.

And, finally. They could get a better price than 70M no matter what perspective you take. 300 customers say this. Just iterate the technology some more.

monger on May 11, 2006 1:11 PM
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OF course, the interviews would be very detailed and thorough - this is not a matter to gloss over.

It is more likely that they wanted to be absolutely certain, unanimously, that the product did fully not meet their expectations. They invested alot just to get to that point of interviewing them; these are all busy people.
They were probably accessing the potential of the product, as well as the potential relationship with the current owners.

This is not a decison to take lightly!

Not being an audience to the interview process, no one could reasonably guess what conclusions were NOT reached by both parties.

Search Engines WEB on May 12, 2006 9:26 PM
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I looked at Olive products in depth - under the hood. It's old school ASP (not .net) and Flash. Much of the code appeared to be developed by a Russian outsourcing company. Poorly structured and absolutely no documentation. Server products only run on Windows - and require recycling often.

All in all, nice reader and some good OCR/scanning stuff, otherwise, I'd pass too.

Avi on June 2, 2006 12:14 PM
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