Google has just announced a new service called Google App Engine. “Google App Engine enables [developers] to build web applications on the same scalable systems that power Google applications.” Basically GAE is a scalable web application back-end with a nice API. So what does this mean for web startups?1 Because web startups commonly have an exit strategy based on being acquired by Google or a similar company, and because web startups are bounded financially in growth by constraints such as scalability, GAE means a lot.
Google App Engine Effects on Google
Previous to GAE, Google only directly benefits from startups by acquisition. After an acquisition, Google must spend time scaling the acquired assets to Google proportions.
Now with GAE, Google will profit more directly from startups who pay for GAE services, allowing profit in numbers. Also, if Google chooses to acquire a certain startup, the startups assets are already generally fitted to work with Google’s internal scaled systems.
Google App Engine Effects on Startups
Previous to GAE, startups really only truly ever made big money if they are acquired by Google or, by chancing the storm of scalability investment and try to break though the scalability investment wall like Facebook and Digg. Breaking through is obviously extremely rare and few startups even consider this a valid “exit” strategy.
Now with GAE, startups don’t have to avoid designing their systems to scale up, right from the beginning (a previously extremely expensive and questionably worth it endeavor). GAE’s inherent scalability dramatically reduces the dependency for startups to be acquired as an exit strategy. Growing big is much more practical than in the past.
How’s the Model Changed?
So, is the startup-Google bond being loosened or tightened. Breaking the situation down, it seems that Google is spreading their endeavors more thinly. Without GAE, the startup-Google bond is an “all eggs in one basket” situation. With GAE, startups will be less likely to sell out to Google but, Google’s made more money in the numbers of startups using GAE.
- None Found