I say this simply as someone who was, at the time, outside looking in. I know little more than that but it had all the hallmarks of what happens when engineers are running the asylum. Here's this communication medium in which basically all other communication media can be implemented (Email, IM, forum posts, Twitter, etc). It's the kind of general solution that engineers come up with it.
I read a post from someone else (can't find it now but I think it was on Quora) who was familiar with the matter and they were saying the risk-reward thing (which this poster mentions in passing) was all messed up. Basically the incentive structure rewarded mediocrity.
I can't speak with any knowledge of those matters but I can believe it. After all, in a startup what happens if the startup fails? You find a new job. There is a strong incentive to make your runway last and get to your next funding round (or, Heaven forbid, profitability). Inside somewhere as cashed up as Google, those incentives (IMHO) disappear.
If the "startup" fails, what happens? You just move to another part of Google. What do you think the odds were that with Wave going away, any extra Wave incentives became worthless (as would happen in a startup)? Basically zero (IMHO).