Google Gambles Big Bucks on Milk’s Kevin Rose

Milk ProtestDigg founder Kevin Rose will start work Monday at Google after the search giant acquired the entire product team of his latest venture, Milk. TechCrunch says they’ll work on social media products in their new jobs.

Facebook’s the loser here — they wanted the team, too. Milk’s backers are the winners — the deal’s worth a reported $15 to $30 million. Not a bad return for the investors who put in $1.7 million. The company’s social-recommendation app, Oink, was shut down yesterday, three months after it was introduced.

Not everyone thinks this is a good thing. Chris O’Brien at SiliconBeat writes:

Still, the return for such a short-term investment in a company and team that accomplished pretty close to zero seems disproportionate …  what is Google actually getting for its money that it couldn’t get from a stack of applications flooding its databases? It’s hard to see what makes these guys stand out, other than the brand name of Kevin Rose. And while the valley needs to encourage risk, it seems there wasn’t much risk taking going on here. Worse, it’s always dangerous when there isn’t some sense that rewards are at least somehow tied to performance. It reminds me too much of the dot-com days when people who started terrible companies that quickly tanked still managed to cash out millions before sneaking out the back door. It’s not really taking a risk if you’re going to get rewarded for failure, something that potentially encourages reckless risk taking.

The expense may be questionable, but Google could be angling for something it desperately needs: Engagement. AllThingsD’s Liz Gannes notes that Oink had 150,000 downloads in its first month. “That kind of ongoing fan engagement could be a boon to Google+, which has been  criticized for low engagement and tricky user accounting.”

Rose has an avid online following, stemming from his days as a host on TechTV and the long-running podcast Diggnation. Though Oink — which was a local recommendations app — may not have succeeded, it hit 150,000 downloads the month it was launched.

Google’s taking a leap of faith here. Rose was a popular Web TV and podcast host, but Oink was only out there for 90 days, which means it doesn’t leave much of a track record. No one will ever know if its popularity could be sustained. And, building a social following for yourself when you’ve got a video show to build on doesn’t seem as tricky as taking a network that’s something of a ghost town and enticing people to join. It’s hard to see where Rose and his team, talented as they might be, constitute of multi-million dollar magic bullet.

Photo: WSJ

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