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Put yourself in these shoes: you're 37 years old, running a small tech company based in Waterloo, Ont., that makes browsers and e-mail programs for mobile phones, a venture you founded in September 2001 after spending a few crazy years in Silicon Valley. Three years on, everything is going well — sales are growing over 20% monthly, and you're wildly profitable. But you know this can't last forever. Competitors with deeper pockets start to encroach. You've got to grow, die or find a big brother.
Then one day, you hit the jackpot: Google comes calling. They want to buy you out. All your employees would keep their jobs; no one has to move to California. But there is a catch: the deal has to remain secret. No shouting from the rooftops. No vanity licence plate that reads GOOGLED. How long would you last?
This is the situation Roger Skubowius recently found himself in with his company, Reqwireless. Of course, he teamed up with Google. And, of course, news of this magnitude — that the world's hottest tech company has come to town — eventually got out. Waterloo, famously home to Research In Motion, has a growing community of tech entrepreneurs, but it's not a big place. Word surfaced in July that Reqwireless had been acquired, and separate rumours began circulating that Google planned to set up shop locally. But credit for connecting the dots goes to Gary Will, an independent business consultant who writes a monthly e-mail newsletter about Waterloo's tech scene: he noticed that Joanne McKinley, at one time Reqwireless's only other full-time employee, was appearing at a student conference as a Google representative, and her bio said she lives in Waterloo. After Will blogged that tidbit in early January, Google confirmed it in an e-mail statement to a newspaper. In all, it took about six months for the pieces to fall in place.
Now, it might seem strange that a publicly traded company like Google would not disclose the purchase of another company. But under SEC regulations, it needn't file paperwork if the acquisition is below a threshold of 10% of assets or contribution to the business. Likewise, the commission only requires disclosure if it's a material change. In Google's ultra-competitive world, where it is under increasing pressure to keep Microsoft and Yahoo at bay by releasing new services at a brisk pace, the risks of others being alerted to new assets far outweighed any promotional rewards. Even now, there are big gaps in the picture. Reportedly, the confirmation e-mail stated it acquired Reqwireless for "the talented engineers and great technology," and that it is "thrilled to have them here." That's it. Google is pretty much keeping its trap shut.
Skubowius, on the other hand, was willing to speak — just not about Google. "I don't want to get in trouble with the Man," he says. He does, however, have an interesting pre-Google story. Reqwireless was financed with $400,000 in seed money, mostly due to the legwork of his older brother, Jeff. It was founded with the intention of someday being snatched up, and purposely remained a small tech-focused operation, with no sales and marketing people. "A lot of companies like to just buy the technology, they don't want the fluff," says Skubowius. "If we could make it real easy for an acquiring company, that was more equity that we could keep internal."
So Reqwireless sold its wares — downloadable e-mail and web-browser programs for mobile phones — through third-party distributors, and also signed with wireless carriers to offer the software on their networks, provided Reqwireless got a cut of the subscription revenues. Another good call: Reqwireless programmed in Java, which was compatible with just one phone model in 2001. Now, Skubowius figures more than 500 use it. "Our applications were written to work on any cellphone," he says.
Apparently, it was all music to wireless-minded strategists' ears at Google, which has been recently expanding its slate of offerings for mobile devices. And in early January, Research In Motion announced it would be offering Google Local and Google Talk on its BlackBerry devices. Clearly, for Google, acquiring a team of people who know how to program for cellphones makes good sense. It also made Skubowius a new local tech hero — and now he can finally get that licence plate.
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