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Small startup hits Google paydirt Add to ...

Early this year, top brass at Google’s Waterloo campus received word from headquarters that they would begin working on a new project–one that the company has yet to even disclose publicly. But it was clear that the new service Waterloo was being assigned to work on was focused on Google’s growing interest in social networking. It has made several forays into the social Web as of late–including Wave and Buzz–but it has yet to capture the public’s imagination the way Facebook, Twitter and other such sites have done.

This new project would try to do just that. It would bring together the experience of socializing, perhaps even gaming, and mobile platforms. “It became obvious it would involve the kind of experiences the SocialDeck guys had,” Woods says.

Initially, the plan wasn’t necessarily to buy SocialDeck outright. Woods says the company considered taking SocialDeck on as an early adopter of its new service, or perhaps helping to fund SocialDeck through Google Ventures, the company’s venture capital arm. As talks progressed, however, it became clear the two sides had a lot in common. After discussions with various engineers and managers at Google whose work would be impacted by the acquisition, the company decided to make SocialDeck an offer.

Acharya and Patel remember the day in June when they heard the news. The two had just finished a meeting with a SocialDeck board member in the Yorkville neighbourhood of Toronto when they received a three-way call. Acharya walked to the other side of the street to avoid the echo from Patel’s cellphone. Standing there on opposite sidewalks, the two heard the news: Google had just sent over a term sheet.

Although the information has never been made public before, there were other companies looking to buy SocialDeck. According to people familiar with the deal, game-maker Zynga put in an offer. RIM also showed some interest, but SocialDeck’s brand of social-mobile apps wasn’t as high on the company’s priority list as it was on Google’s. Google moved first.

“Anish and Jeson, they didn’t immediately want to sell it–they had to think really hard,” says John Albright. “But they haven’t had money in two years. Next time, I think they won’t sell so soon. I think they’ll take more risks.”

But while Albright says SocialDeck would likely have received several million dollars more from the fund over time had they not sold, he concedes that many small companies have little choice when a massive tech firm comes calling. “Now they’ve indicated they want to go into your space, and if they don’t buy you, they will buy the next-best guy and they will compete directly with you.”

Today, Acharya and Patel spend much of their time travelling between Waterloo, Toronto and Mountain View, learning the ins and outs of their new workplace. Google is the kind of company where engineers print out pages of programming manuals and stick them on the restroom walls above the urinals, and it often takes new employees months to learn exactly how the company likes its software coding to be done. The SocialDeck founders have been given amorphous “product manager” titles, and they will likely get to work on the kind of projects that interest them–Google employees are given 20 per cent of their work time to pursue independent projects.

But it remains the case that SocialDeck’s leap from small Canadian start-up to Google property is akin to a basketball player’s leap from high school to the NBA. In Canada, where resources are considerably more sparse than in the United States, an already difficult task is made even more so. “Canada is fairly radically underinvested,” says Woods. “It’s very difficult to raise money in Canada right now.

“Good ideas in Silicon Valley are funded in a way that’s valuable to the entrepreneur,” he adds. “In Canada, there’s been some independent attempts to do that, but early start-up funding is almost non-existent.”

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