Why Google Wave failed - answered on Quora

The story about Lars Rasmussen told by an anonymous user is quite interesting. Copied below:

I did not directly work on Wave but here's the story to the best of my knowledge:

Lars Rasmussen was getting ready to leave Google and Google was highly motivated for him to stay on board so they bent a lot of rules and handed him the Google Wave project with very little oversight or control from the Google HQ.

Part of the deal initially was that Wave would be compensated much like a startup, base salaries were supposed to be low but with heavy performance linked bonuses which would have made the Wave team rich upon Wave's success.

During the course of negotiations and building the Wave product, the "heavily reward for success" part of the equation remained but the "punish upon failure" got gradually watered down into irrelevance, making the entire project a win-win bigger proposition.

Because large parts of the performance bonus were tied to intermediate performance goals, the Wave team was more motivated to hit deadlines than to ship good product. Product began to suffer as the team pushed to fill in a feature checklist on time.

The Wave team also largely dogfooded the product only internally within the Wave team who were already familiar with the basic paradigms and any outside user testing that demonstrated problems was carefully marginalized.

Lars was also a true believer and genuinely did believe Wave would become a massive success.

Upon Wave's cancellation, Lars stayed around just long enough to make sure his team was "adequately" compensated and then immediately decamped to Facebook.

In short, Google was experimenting with a drastically new model in an attempt to retain key talent and ended up getting the incentives so perversely aligned that it both directly contributed to a failed product and also compensated that failure more than what a moderate success would have been.