That might have been more important than their search results in many cases. Design doesn't get better than that.
Startups would never get off the ground if their founders said "No" to everything. The next great idea would be killed long before it could be developed enough to prove its worth.
The critical piece is being able to say "Yes" to everything early on, and then critically look at everything you've said "Yes" to once they're on the table and say "No, no, and no" to the vast majority of them.
I would disagree with you that their products are not well designed. Of course they have many products, but the majority that I use are a step above their competitors.
As an example, in my opinion a big reason that Wave failed was that it had an awful user experience - people simply had no idea how to operate the interface. I think there was also a marketing failure in that people didn't even know why they were supposed to use it, but that's a separate issue. When I have multiple tech-savvy friends tell me they have no idea how to even use a product from a major corporation like Google, I worry a little bit.