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Search isn't over

A number of commenters have interpreted my winner-takes-all post as saying that I don't think startups have a chance taking on Google. Not at all. My point was that Microsoft and Yahoo have the same chance as any startup at that game. Maybe more so, because of extra resources and distribution; but less so, because it's hard to innovate inside a big organization; I figure those about cancel each other out. But the big "incumbents" don't get a special pass to win.

Bill Burnham says that search startups are dead. His points are generally reasonable, but I think it's a mistake to write off the category again.

Search was written off as 'done' before, in 1998, but it wasn't. There is far more depth here, both on the technology front, as well as new markets, that has not yet been plumbed. Google has got a great business because they are focused, for the most part, on the some of the most interesting computing technology problems we'll face for the next 50 years. This is no shallow vein. It is not just advertising. Rich ore is yet to be mined....and Google will not own it all.

Giving in to Despair

I knew industry people on the east coast in the early 90's who thought the fledgling Internet was essentially doomed because AT&T was going to own it, once they got their act together and woke up to the opportunity. That sounds absurd, I know, but the thing is, that there were people who really did believe this, and based investment decisions around that idea, based personal career choices around it.

Later in Silicon Valley I met people who thought the growing Internet was essentially doomed because MSN was going to own it. Once Microsoft woke up to the opportunity, they would surely just eat the whole thing, and nobody could stop them. The valley really had a conditioned fear complex around Microsoft. Well the despair that leaked into their thinking compromised the quality of the decisions they made regarding how to approach the net -- for product development, investments, career choices.

Now I see the same kind of despair in the search space, thanks to Google. Heck, I've helped feed it. Is the despair appropriate? Should it be influencing your decisions about investments, product development, career? Should we all pack up and move off to clean tech, or the once-and-future enterprise 2.0, or nano or bio?

I'm amazed that new ventures are launched in mature industries like beverages, airlines, or toothpastes.

Or that such an innovative leap is possible in a mature space like cellphones and PDAs.

Now you have a rapidly changing field like software, algorithms, extraction, AI... plus the rapidly morphing social composition of the Internet, the evolving composition of the net's content... all this change makes for opportunity.

Google puts its pants on one leg at a time too

Young companies on hypergrowth trajectories seem to inevitably stumble. The painful exercise transforms the company; the free-wheeling culture is clamped down on, process and bureaucracy are instituted. Then more nimble competitors can scurry around them. Who knows if the big G will be able to escape this trial but it sure is a common pattern.

Organizations are difficult to scale. Management gets a smaller and smaller rudder for the growing boat. Turning fast was a luxury of youth.

One of their current best practices, a strategy that seemed great in 2002-2003, such as red-zone hiring rates, 20% time, or vast build-outs of infrastructure, could bring significant challenges later.

Don't get me wrong, I believe Google is a fantastic company, as anyone who has read my posts knows. But to bet against the search startup space is equivalent to betting that Google is going to bat 1000. And nobody ever bats 1000.

Comments (3)


i think people underestimate marketing and brand recognition in this space. search is no longer simply about who produces the best results in the least time. there really is a bankable advantage to the brand and awareness of google and yahoo and other established players. i would conclude at this point that for yahoo in particular, gaining marketshare is more likely a function of consumer awareness than technical prowess...there is a time to shift resources from r and d to advertising and branding (though technical types are loathe to admit it).

search isn't a dead market, but it is in a coma for a while. there will be a window open at some point to challenge google, but there also has to be a reason for that window to open (new types of data, new interfaces, etc). at this point the window isn't going to open for someone who just has a 2% improvement or the ability to form a query from an english sentence (sorry powerset).

Consumer awareness is not Yahoo's problem. Yahoo is still the #1 site on the net; clearly they have the resources to drive trial of any new message or product like nobody else. They don't even have to pay a dime to do it.

Yahoo meant search in 1995-1998, the way Google means search now. Yahoo used to have that verb, and lost it because they were thinking like a marketing company instead of a product company. Search share has been steadily eroding, not because people on the net don't know they can search on Yahoo, but because the product isn't signficantly differentiated from Google's.

Having said that, I totally agree with you that minor differentiation isn't going to be effective here. And because the r and d chances of fixing this are so slim, yeah, you're right unfortunately, they should probably be thoughtful about how those resources are allocated.

A better search than Google is possible but it wouldn't unseat GOOG because it has a global advertising network of people and clients. GOOG can monetize search better than anyone else. If a better search engine came along, GOOG could simply partner with it, or simply acquire it and scale it instantly.

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This page contains a single entry from the blog posted on January 19, 2007 8:07 AM.

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