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The ‘Toothbrush Test’ Google’s CEO Uses to Make Acquisition Decisions

Larry Page uses the “toothbrush test” to determine whether a company is worth buying. He’ll ask, “Is this something you will use once or twice a day, and does it make your life better?”

Google isn’t afraid to shell out a boatload of cash for the right acquisition. Just ask the smart thermostat company Nest, which it bought earlier this year for $3.2 billion.

In 2014 alone, Google has already made upward of 20 acquisitions.

According The New York Times’ David Gelles, CEO Larry Page uses the “toothbrush test” to determine whether a company is worth buying. He’ll ask, “Is this something you will use once or twice a day, and does it make your life better?”

Instead of diving into the nitty-gritty of cash flow and earnings, Page cares about usefulness and long-term investment and benefits. Nest might not be reeling in a ton of money right now, but Google sees it as an entry point to a potentially gigantic new market.

Read more: Business Insider

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