Starting from 2001, Google has made 127 mergers and acquisitions till date.
Which makes it nearly 6 acquisitions for every 7 months over the last 12.5 years. It is expected now that this M&A rate is further going to accelerate with Google – for the first time – considering forging alliances with private-equity firms to help it structure deals.
During the recent Bloomberg Next Big Thing Summit, speaking about how Google evaluates a potential M&A target, Don Harrison – Google’s mergers and acquisitions chief said
“We apply something called the toothbrush test, which is we ask ourselves, ‘Is this something people use once or twice a day and does it solve a problem?’”
Thanks to its immensely sticky nature (and aided by the current rock star status of Google), this toothbrush analogy has seemed to have gained an instant global popularity and is shooting to newer heights in terms of recorded “interest over time” as we speak. I did a quick sense check myself by entering “the toothbrush test” as the search term and this is what I see on Google Trends:
While this sounded to me like a fascinating analogy that brings a powerful idea to life, the concept of The Toothbrush Test somehow didn’t quite fit in within the schema of what I had in my mind regarding so many things that Google does today. For e.g., I began to wonder – Is Google+ a ‘toothbrush’? i.e., does it solve a problem and is it something that people use once of twice a day? Or is Sparrow (acquired by Google in July ’12) a ‘toothbrush’?
May be it is. Or may be it isn’t. But probably for me there’s a missing piece to the jigsaw here.
That’s when I hit upon this very useful question that VCs are known to ask entrepreneurs. (source)
Is your product like candy, vitamins, or pain-killers for your market?
- Candy = a product that is a nice-to-have, that people enjoy and can be wildly successful if it becomes a fad (like Beanie Babies)
- Vitamins = a product that is a nice-to-have and serves an emotional need, used to augment and improve things but sometimes harder to quantify and has an unknown market
- Pain Killers = a product that is a need-to-have and serves an obvious need, or solves critical problems that need to be alleviated and has a quantifiable market and thereby immediately monetizable
While it might probably take a ‘marketing master stroke on steroids’ to sustain a successful company based on ‘candies’ alone, many product ideas can probably be placed in the continuum between ‘vitamins’ and ‘pain killers’.
In this context, as someone who blogs at the intersection of psychology, technology, and business – Nir Eyal at the Stanford Graduate School of Business posits that successful companies are known to be so good at embedding/implementing hooks in their products that they travel along the above continuum from being vitamins for ‘pleasure seeking’ consumers to becoming pain killers for their pain alleviation as they cement enduring habits in them.
In other words, a ‘cleverly designed vitamin product experience’ hooks the consumers and becomes so important in their lives that – because it becomes a habit, it becomes a pain relieving product. Flip through the following presentation by Nir to get a more comprehensive view on his theory of Hooked – The Psychology Of How Products Engage Us.