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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

May 25, 2011 at 2:53 PM

Interview: Why and how Google bought Sparkbuy

Networking really is worthwhile for startup entrepreneurs, or at least the ones who want to sell their companies to Google.

Dan Shapiro said friendships and chance encounters helped him start comparison shopping site Sparkbuy last year and sell it to Google in a deal announced on Monday.

Shapiro and Scott Silver, site director of Google’s Kirkland campus, explained in an interview how the deal went down and a few more details of what’s next for the Sparkbuy team.

They also left the strong impression that Google is still hunting for startups to acquire in the Seattle area and beyond.

Google may have to pick up the pace if it wants to meet the aggressive growth projections it laid out at the start of the year. It bought 48 companies last year, but only 10 so far this year, as it approaches the mid-year point.

Maybe that’s why it moved so fast on Sparkbuy.

Silver kept an eye on the company since it was just an idea Shapiro was batting around with friends. Shapiro had had trouble shopping for a new laptop and thought there was a need for a new comparison shopping site. He floated this idea while having dinner with Silver in early 2010, and heard the magic words.

“He said that’s really interesting from a Google perspective,” Shapiro recalled.

Later, Shapiro received more encouragement when he happened to sit next to another Google employee on an airplane and talked about the startup. Sparkbuy launched a beta version in November and formally launched March 29.

Shapiro is a veteran of Microsoft and RealNetworks who started mobile photo business Ontela in 2005. It merged with News Corp.’s Photobucket in 2009 and Shapiro left his management position there in February 2010.

While starting Sparkbuy, Shapiro also stayed in contact with Jonathan Sposato, another Seattle entrepreneur who sold his company, Picnik, to Google.

“One of the things that was really encouraging was that going to Google wasn’t something totally unfamiliar — there were a whole bunch of people I knew and respected,” Shapiro said.

It wasn’t confirmed during the interview, but I wonder if Sposato’s a model for what may happen to Shapiro at Google.

Sposato was chief executive of Picnik, a photo editing service, when it was acquired in March 2010. He’s since been promoted to lead not just Picnik but all of Google’s photo business, including a team in Santa Monica, Calif.

Shapiro downplayed the chance he’ll play a larger role. “I’m still learning how the conference phones work,” he joked.

(Although Sposato had a similarly awkward entrance — on his first visit to the Kirkland office, he smashed a Segway scooter into a drink fridge, throwing him off and marking his arrival with a big dent in the appliance.)

Silver said the acquisition is one of the benefits of having a big engineering presence in the Seattle area. The company employs more than 800 in Kirkland, where it occupies about 150,000 square feet, and in Fremont, where it’s expanding to 78,000 square feet.

“I wish Dan had agreed to join Google six months earlier from my perspective,” Silver said.

Silver, a former manager, said Sparkbuy fits with Google’s broad mission of taking information that’s available online and making it useful for customers.

“Dan had a novel take on that and we realy liked what we saw,” he said.

Although Sparkbuy’s shopping site was shut down when the deal was announced, Silver said Google was acquiring more than just three talented developers.

“From my perspective I wanted Dan to build his business at Google and not outside Google … this isn’t about talent, this is about the ideas and executing them,” Silver said.

Terms of the deal weren’t disclosed. Shapiro would only say “this was an unexpected but delightful outcome.”

Shapiro said it usually takes about six years for a startup to have some sort of exit. Being able “to proceed directly to the ‘build a business at Google scale’ while skipping a whole bunch of those intermediate years of financing and fundraising and everything else, that was just too great an opportunity.”

The Sparkbuy team is going to work with a group in Kirkland that last week released Advisor, a site where consumers can comparison shop for loans and credit offers.

“This problem is not an easy problem,” Silver said. “It’s very hard to figure out how you get enough information about services so you can help consumers make decisions about complex financial products.”

Sorting through the options available on different laptops is similarly complex, they said. Shapiro said the “next great frontier” is using online information to directly answer consumers’ questions and help them solve problems.

Google hopes to continue tapping the local cluster of expertise in online shopping, which includes companies such as, Expedia, REI and Nordstrom.

“Seattle’s just a gold mine for expertise in these areas,” Shapiro said.

Comments | Topics: Google, Startups, Tech work


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