Google Catches The Wiki Wave
Rachel Rosmarin, 10.31.06, 4:30 PM ETBurlingame, Calif. -

Joe Kraus, chief executive JotSpot, joined an exclusive club Tuesday. All 27 employees of his tiny company, which creates "wikis" and other online collaboration tools, will pack up and move six miles from Palo Alto, Calif., to Google's Mountain View headquarters.

Kraus' company joins a select roster of startups that have found new homes at the Googleplex in recent years. “Since we're just getting started on a long and exciting road in online collaboration for both consumers and our enterprise customers, joining forces with the JotSpot team comes at a great time,” wrote Google Vice President of Product Management Salar Kamangar on the company’s blog. Terms of the deal were not disclosed.

“It feels liberating,” Kraus said Tuesday afternoon. “Now I’m not the only one whose problem it is to figure out the business model.”

Three months ago, Kraus’s company was just one of many trying to figure out how to make money by giving consumers and corporations a place to edit and store files together online--and fending off competition with deep pockets.

“This is so hard as a startup,” Kraus told Forbes.com on Aug. 31. “It means you’re competing for early adopters--which means competing with Google. And Google doesn’t need to have its products make money.” (See: "Office 2.0 Redux.")

Now that he’s joined his competitor, Kraus’ company has stopped charging its 30,000 paying customers, who previously forked over up to $200 per month. JotSpot also has several hundred thousand users working with its free offerings; the company will retain relationships with corporate customers like Intel, Symantec and eBay.

“Google will ultimately figure out a successful business model from its whole suite of collaboration technologies, whether that’s advertising or something else,” says Kraus.

After acquiring online word-processing product Writely earlier this year (see: Google’s "Office Invasion Is On"), Google merged it with its own online spreadsheets program into one service. JotSpot also makes online spreadsheet software, which means Google will likely combine the products or eliminate one of them.

Google is clearly interested in bulking up it office software offerings. In addition to word processing, the company now offers a calendar, Web page design software, e-mail and spreadsheets. The price tag: zero. Much like Google's YouTube acquisition, the move is a no-lose proposition for Eric Schmidt and crew--if the gambit fails, the company has invested only a tiny fraction of its enormous resources. And if it pans out, it means more users will spend more time on Google sites, which means more revenue for the search giant and big headaches for software giant Microsoft.