Google's buying spree continues. It just picked up wiki startup JotSpot for an undisclosed sum. Earlier this year, we named JotSpot as one of our original Next Net companies in Business 2.0. Since that article, this is now the third Next Net company to be acquired by Google (the other two being Writely and YouTube). I caught up with JotSpot founder and CEO Joe Kraus on the phone this morning to talk about the deal (here is his post about it on the Google blog). JotSpot has more than 2,000 paying corporate customers for its wiki products, with more than 30,000 paying subscribers (and a whole lot more free users). For an online enterprise application, that's not bad. Here is his explanation of why he sold to Google:
There were definitely several companies that were interested, some of the usual suspects. The more that Google started doing things in this category—with Writely, Spreadsheets, and Google Groups—it was obvious we were interested in the same things.
It is much easier to get a product to market these days. But getting a product to market and building a successful company are two very different things. Being acquired now is the most likely path of liquidity for any startup. The public markets are just not open.
Expect JotSpot to eventually be integrated with Google's other Webtop apps like Docs and Spreadsheets, which is under the responsibility of senior engineering exec Jeff Huber. Acknowledges Kraus:
Sergey is on record as saying they want more features and fewer independent products. So there is more emphasis on integration.
The last time Kraus sold a startup, it was Excite, which was sold to @Home during the bubble for $6.5 billion in stock. You can be sure JotSpot went for substantially less. Kraus wouldn't say what Google paid, but it if I had to hazard a guess I'd say it was closer to tens of millions than billions. However, Kraus did compare the two different experiences of building Excite and JotSpot:
Excite grew up and blew up in the heat of Bubble 1.0. It was expanding about as rapidly as possible, the employee base was hundreds of people at the time we were acquired, we were public, and the revenues were larger. I always had this persistent feeling that the company was about to blow up. We were running so fast that I never felt we had solid ground beneath us.
With Jotspot we wanted to stay small as long as possible. We wanted to get profitable as quickly as possible (we got close), and did not want to raise tons of money. Excite took $3 million to get from concept to the market and JotSpot took $100,000. We later raised $4.5 million from Redpoint and Mayfield. But you can get a product to market so much cheaper these days. Hardware is so much cheaper, offshore labor is available, and there is AdWords.
But he warns that a product is not a company. And while Kraus himself has been on the record saying that it is easier and cheaper to get a product out the door these days, the next stage of company building (which involves sales, marketing, distribution, and customer support) is not necessarily cheaper than it has been in the past. That's where Google comes in.