So-much-So-Quickly-from-So-Little. That’s the first thing that struck me while reading John Battelle’s, “the Search.” To a greater or lesser degree, we all remember the wild stories of Internet companies in the late-90s.
From the outside, it seemed start-ups that found a market of visitors could quickly cash in. They did this by either going public on the stock market or by getting bought out by a larger company. The bizarre thing was that it seemed many of these Internet companies did not even have a business plan that generated revenue. Yet, they raked in hundreds of millions of dollars when they sold or went public.
Those of us went to work everyday for a plain old salary wondered, “why couldn’t I have done that?” More accurately, I guess we thought, “well, heck, I should have quit my job and created a website. After all, I could use a Yacht about now!”
The stories included folks like Mark Cuban, who sold an audio and video web service called broadcast.com to Yahoo for billions. How was that possible?
Read Battelle and it makes a lot more sense. Back before web companies knew how to make money, the only obvious sign of value was traffic, right? Well, how do you get traffic when the web itself is the world’s largest unorganized mess? Obviously, step one is to find a way to organize the web. That’s what search does. It provides Internet visitors with a road map.
Ironically, the maps themselves became the most visited sites, even if the visits were brief. Investors noticed and thought that all that traffic must be worth something, so the valuation of search companies shot through the roof. The only problem was that the value of the companies far exceeded any actual revenues made by the companies.
So, gee whiz, what do you do if you have a bazillion visitors, but no way of cashing in on their visits? Battelle explains that for most search engines, the original answer was to try to get folks to stick to their site rather than to pass through its door. That’s the kind of decision that made Cuban a billionaire. Yahoo wanted to make its site sticky and purchased broadcast.com as a way to get people to linger.
Although ubiquitous now, Google was actually a late-comer in the world of search and Battelle points out that Google got its opportunity in part because the pre-existing search engines had forgotten to work on, well, search. He says they were so interested in becoming sticky sites that they forgot to improve on the core mission of organizing the web and sending folks to other people’s websites.
Google improved search and stole most of the market, but even with all that market share, it had a problem. Actually, it had the original problem faced by just about everyone in the search industry. How the heck do you monetize traffic that is simply flowing through your site? Battelle says Google existed for about four years before it found the answer. Sell the world’s most precise ads. Basically, sell ads that only go to people who are searching for an item related to the advertisement. Mine the search itself for profit. Google did that and became one of history’s most successful companies.
This brings me back to my introduction. So-Much-So-Quickly-from-So-Little. It is breathtaking to see how little Google (and the others) were when they began. Even in the world of over-heated Silicon Valley investment, the initial contributions to Google’s business were relatively small. The company literally existed in a garage during its start-up phase.
So, what’s the lesson that I draw from reading Battelle’s book? Dare to dream. Yeah, it might sound trite, but so what. Dare to dream. With luck, today’s brainstorm could be tomorrow’s Google!
Paul Adrian 