August 29, 2005

On Bullshit

Storytelling expert Steve Denning has an amusing post on Bullshit. Steve cites a New Yorker article that argues that we live in the Age of Bullshit.
Bullshit, we learn, is different from lying. A liar knows what he is saying to be false. A bullshitter, on the other hand, simply doesn’t care whether what he is saying is true or not – it’s what he can get away with.

That certainly defines what I just cited in my previous post.

Read Steve's post. It goes on to describe why truth is important and how to avoid bullshitting.

The Age of Bullshit

In Defense of Google

Joseph Lazlo, a Jupiter Analyst attempts a funny take on Google's reasons behind launching Google Talk. You can find the post here.

I'm sorry Joseph, what you write is not just not funny, it's irresponsible. Please don't take shots at an amazing company in the garb of Friday afternoon humor. You want to learn how to do a funny, sarcastic story on Google and do it gracefully? Head here.

I'm particularly annoyed with your reason #1. Actually, its quite tiring to keep hearing about the CNET story. I marvel at the restraint that Google and Google employees have shown regarding this especially when the urge to respond must have been so strong.

Since taking shots at Google seems to be everyone's favorite pastime these days, I decided to do the opposite. In defense of Google, here are my comments on Joseph's top 5 reasons for launch of Google Talk:

> 5. Larry and Sergey got tired of yelling across the office at one another.

Larry and Sergey share their office like most people at the Googleplex. Please do some research (yes, even for your jokes).

> 4. Skype’s profit margins just too tempting to pass up.

Skype has no profits worth talking about and their margins per user are microscopic. Please do some research.

> 3. Felt they just hadn’t confused the market sufficiently in the past couple of days.

Only the clueless are confused. People who understand Google are not. Please do some thinking.

> 2. Google doesn't know you intimately enough just reading your e-mail and peeking at what kind of naughty pictures you search for.

Google doesn't include personally identifiable information in usage data they collect to improve their services. Please know what you're talking about.

> 1. Wanted yet another communication channel via which to refuse to talk to CNET.

Please don't be a moron. Anyone who mentions the CNET episode is a moron. Here's why: Google is a damn good search engine. Like any damn good search engine, its job is to make accessible all the information that exists on the web. Everything that you can find through Google, you can find through any search engine that does its job well.

It's like this, you can cut vegetables using a knife or you can choose to slit someone's throat. If you choose the latter that makes you the murder... the knife's just a tool, its job is to cut.

Blaming Google for making everything on the web accessible is like blaming the knife for its ability to cut.

August 21, 2005

Idea Or Execution?

Rob, over at BusinessPundit blog says execution is superior to idea. I challenge this thought. While I agree that execution is usually undervalued and that entrepreneurs are naively overprotective of their ideas. I don't believe however, that execution is more valuable than the idea.

Rob cites a post by Derek Sivers, who's an entrepreneur and probably an angel investor. Derek has an equation he uses to cite the importance of execution. He says that businesses are multiples of idea and execution and argues that if we peg an

Awful idea = -1
Weak idea = 1
So-so idea = 5
Good idea = 10
Great idea = 15
Brilliant idea = 20

No execution = $1
Weak execution = $1000
So-so execution = $10,000
Good execution = $100,000
Great execution = $1,000,000
Brilliant execution = $10,000,000


The most brilliant idea, with no execution, is worth $20.
The most brilliant idea takes great execution to be worth $20,000,000

First, there's no reason to believe that such a relationship exists between idea and execution but lets assume that for a moment. Does the above conclusion prove that execution is superior to idea? QED? Wait, the same arithmetic also shows that a business with the most brilliant execution to an awful idea will leave one with a loss of $10,000,000... far worse than the brilliant-idea-poor-execution scenario cited above!!

Rob said: "That's why ideas only get funding if the entrepreneur has a history of execution."

True, but is this the right way to pursue ventures? Does this always work? How many VCs talk about ideas they passed over but which went on to become great companies?

Ok, let's look two companies; one that is arguably internet's greatest failure and another its greatest success story - Webvan and Google, respectively.

Webvan. They raised all the money in the world through VCs and the IPO route -- $850 million in total, to be precise. Put together a great logistical infrastructure including state of art warehouses, own fleet of delivery trucks that provided service in eight US markets with plans to expand to 26 more. Had a functional website. And they went bankrupt. Why? Certainly not for the lack of execution but because their fundamental business model of selling groceries through the internet the way they did was inherently flawed.

Who founded Webvan? Louis Borders. Who is Louis? A 57 year old veteran of retailing who co-founded the Borders bookstore chain back in 1971. When he started Webvan, he had quarter of a century of relevant startup experience. Could there be anyone more qualified and experienced for that job? Unlikely. Did it help? Perhaps, but in the face of an inherently bad idea, no.

Google. Close to $80 billion in market cap after an year of going IPO and still no signs of fading away. Per employee revenue of about a million dollars. A spectacular business success if there ever was one.

Who founded Google? Sergey Brin and Larry Page, two college students in their 20s who had no experience whatsoever when they started out. No qualifications in the media or advertising business. Just a brilliant idea about a new search engine that gave relevant results. They weren’t interested in VC money at that time and most VCs weren't particularly interested in them. Ask the good people at Bessemer Ventures who passed on an investment in Google back in late 90s when it was dirt cheap.

So there you have it. A brilliantly executed but bad idea becomes a massive failure and a brilliant idea founded by people with no experience in execution becoming a spectacular success.

Sure execution is important, Google, after all is brilliantly executed as well, but you just can't go too wrong when you have the right idea whose time has come.

Rob's post at BusinessPundit: Ideas vs. Execution
Derek Sivers: Ideas are just a multiplier of execution

August 08, 2005

Overthrowing Google

A Google Killer is more likely to come in the form of a new online advertising model than a new search engine. AlmondNet could be that Google Killer. Surprisingly, little is being written about it.

It occurred to me that the two ideas I discussed in the previous post (How Google Came Into Being) are not just founding ideas of Google, they are the two fundamental pillars on which the company's business stands today. Shake either of these and you shake the foundation of Google. Hypothetically, if a start-up (or an established company) wanted to beat Google, it could do it by excelling at either of these areas:

  • A vastly superior search technology that pulls away Google's users

  • A vastly superior advertising model that pulls away Google's advertisers.

Most mainstream media articles while assessing Google's threat focus on the former and completely ignore the latter. Invention of a vastly superior search technology by a competitor that takes away Google's users is a near impossibility as I explained in the past in Google and the Great Mousetrap Fallacy.

It's much more likely, relatively speaking, that someone comes up with a superior advertising model. If an innovative, more efficient online advertising model develops that promises the advertisers vastly superior returns, they will not hesitate to leave Google. Whether the new ad serving model might create a whole new market by itself in addition to the search industry or it will take away advertisers from Google or a bit of both depends upon how efficient it is and what segment of audience it targets. But relatively, this is a more plausible scenario for a Google Killer and one that most people miss completely. [1]

When Microsoft launched their MSN search beta last year and then formally released it in Feb, the newspapers and blogospehre was full of speculation of how Google has more competition now and how MSN will lure users away from it. Hundreds of articles appeared everywhere. Five months later when the results of market share of the search engines was announced, MSN was the only major search engine that actually lost its market share since January. [2]

Now when we hear about AlmondNet, a start-up with a brand new ad serving model that could well pose a real threat to Google, there's almost no news coverage at all. AlmondNet is a "post-search" behavioral ad network that can revolutionalise online advertising if it can overcome the obvious privacy concerns of its users. AlmondNet's patented model solves the problem of two gross inefficiencies in the two main forms of online advertising prevalent today:
  • Search advertising is visible to people only during the 5% of their browsing time. People spend 95% of their time online on other kinds of activities - content, communications and commerce.

  • In impression based advertising, 70-80% of ad space inventory on the internet is sold as low as $0.20 CPM. So, when a person on a high profile $100 CPM site moves to an unknown site, he is suddenly valued at hundreds of times less than he was moments ago.

To learn how exactly AlmondNet exploits these inefficiencies, read the excellent overview of AlmondNet by Danny Sullivan written back in January, when the service released and this recent Wired article. And here's John Battelle's initial take on it (notice the comments section, where none other than Mr. Nielsen chimed in to say he predicted it).

Notes and Links
[1] That theoretical scenario laid out, I don't think Google will sit on their collective butts and let a startup take a bite at its core business. Google has a great infrastucture in place to launch such a network of its own. However, in AlmondNet's case its patent might come as a roadblock for Google.
[2] According to search engine ratings for the first five months of this year, Google gained its market share by 0.9% points and MSN lost it by 0.4% points after registering a brief but noticeable spike for the two months succeeding the launch.

AlmondNet website

August 06, 2005

The Birth of a Superstar: How Google Came Into Being

An upcoming book on Google traces two founding ideas behind the company to their inception

As Google Inc. stock price more than tripled in the ten months since its IPO, perplexing Wall Street analysts who are unable to decide "whether to be impressed, suspicious or amused" by the astounding growth (but continue to recommend the stock all the same)... here's a Google question to ponder:

Which one of the following inventions is the greater contributor to the phenomenal success that Google enjoys today?

  • Larry and Sergey's page-rank algorithm that powers the search engine which solved the problem of the poor search user experience of late 90s, acquiring fan following of millions of users in the process.

  • or

  • Bill Gross' pay per click advertising model conceived at (now Overture) that Google latched on to early in its evolution and ran with it, spawning a multi-billion dollar search industry.

If you think Google's great technology is behind its success, think again. What good would the search engine have been to its founders had they not found a way to make a business out of it? What if Bill Gross had not conceived the pay per click model that Larry and Sergey adopted? (Google was taken to court over the patented idea and eventually had to settle outside the court).

So how did Google rose to what it is today? Is it the technology or the way they made money with the technology? The answer of course, is both. You can't choose one ignoring the other. And these are just two of the many founding ideas that continue to drive Google's success. Some of the other, rather well known ones are the company's unique culture that fosters innovation, its stringent hiring practices that ensure they hire only geniuses and its intense focus on solving users most important problems with unique products.

I've been waiting for ages to read a book by a Google insider that would give a real insight into the minds of Larry and Sergey and the company they are creating. There have been quite a few books written on Google but these are how-to manuals on making the most of the search engine. I'm not interested in Google hacks. I want to know what kind of childhood Sergey and Larry had, about the capitalist dream of a business they have created and how it's influencing other businesses, how is it that they continue to do the right thing in every imaginable way, and whether so much of a good thing can really last.

John Battelle's upcoming work "Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture" is the first book that comes close to what I describe above. I can't wait to get my hands on it.

Back to topic, John's book carries detailed accounts of the two inventions I mention above that led to the creation of $80 billion of capital at which Google is valued today. Here are the two insightful excerpts:

Larry meets Sergey. They hate each other. They come up with page rank. (Wired)
Bill Gross discovers an arbitrage opportunity. Invents pay per click ads. (Battelle's blog)

Related Links
Recent story in The Economist on Google's growth
Google, competitors and the forgotten problem of poor search user experience
Cnet stories on the patent dispute: Overture Sues Google, Google settles dispute
John Battelle's Book and his blog

August 05, 2005 has just redesigned its product page. The changes appear within days "the king of usability" - Jakob Nielsen pronounced it "Lousy UI", "littered with extraneous features" in his popular Alertbox column.

The redesign was perhaps already underway when Nielsen's column appeared (Amazon changed the "Add to Cart" and "Buy with 1-click" button icon few weeks ago) but the latest change - that of doing away with the left bar seems inspired by Nielsen's write up. The space at left previously contained features such as, recently viewed items, 'listmania', 'So you'd like to...' guides and promotions of other Amazon sections unrelated with the product. Nielsen specifically mentioned this space and as always, used strong language to denounce the useless features.
Advertising on product pages. Amazon spends about two inches of each product page advertising other websites. Although this generates revenue, the average e-commerce site should be ashamed if it can't make far more money selling to a hot lead who's already investigating one of its own products.

Amazon has also redesigned product information area above the fold with a bigger product image, streamlined information and other changes. Compare screenshots of the product page from two months ago and the one reflecting the redesign as it stands now.


and now

Go to this page on and see the changes for yourself.