Analysis of the Deal - Zagat’s Tiger Uppercut


Today’s big news was about Google’s acquisition of Zagat.  A ton of people have asked me to comment because of my former affiliation. A few nice folks think my efforts directly contributed to the acquisition (Wired’s article has some highlights under 21st-century). I appreciate the sentiment. Everything I say here is based on my own personal analysis. It’s really about Google and the restaurant space. I have no knowledge of the deal.

If you want back-story, take a look at Gary Vaynerchuk’s “Thank You Economy” (note: Gary became a partner of my company Consmr well after this was published). In the first chapter he details the evolution of Zagat. He even talks about how Zagat was able to “punch back” against the Yelps of the world thanks largely to the partnerships (Foursquare, Foodspotting) and products (iPhone, iPad, augmented reality) I spearheaded. It’s a good read and I encourage everyone interested in this story to look at his analysis to better understand how we got to today’s acquisition.

It turns out that the Google/Yelp deal falling through allowed two things happen; a brand Yelp was challenging in the restaurant space got a payday, and their rival just added the type of credibility that takes decades to acquire. Don’t cry for Yelp though; their impending IPO is sure to make a lot of folks in San Francisco very happy.

This was all about credibility. I can’t see Google going into the print guide business or the sale of corporate guides. Their efforts with print advertising did not yield the results they wanted. I don’t have to share any stats about the print world. Just look at the closing of Borders. Imagine if The Daily started a print version?

It’s also not about acquiring content either. Google Hotpot yielded 3 million ratings in a matter of months (1/5 of Yelp’s total at the time). If anything, it’s more about how to filter that content moving forward. Why would you choose one review provider over another? Credibility. Imagine if you could have Zagat poring over Google reviews from every city in the US? If you pair the Zagat brand with the strides being made by Google in local, then you add a layer of credibility that Google couldn’t hope to produce on their own. The Google Places window decal instantly acquires meaning. And when Google needs to pitch small businesses on signing up for their products or selling some product in, they’ll have new-found credibility on that front too.

I believe that through Google Maps and Places, eventually Google’s local content would become the standard on Android devices. With Motorola they could ship devices with their Places solution embedded everywhere. Their mobile web enhancements were just the toe in the water. And with Zagat they’ve shown how serious they are about local.

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