Archive for July 19th, 2007

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Search is still a crucial paradigm and so all the Internet bigcos continue fighting for position – and some of them ultimately aim to usurp the search leader, Google. In this article, we take a closer look at the competitive advantages of Google Search and try to find out whether Google is really beatable.

Google’s Competitive Advantages

 1. Free SEO Labor

Google’s work force is not limited to their PhDs and 15,000 talented employees in Mountain View, New York and Dublin. SEOs from all around the world can be considered a free labor force for Google.

In order to get their sites promoted on the world’s number one search engine, SEOs optimize their sites according to Google’s rules, register their sitemaps and ping Google’s services whenever a new page is created.

This gives Google a huge advantage over the other search engines, because other engines don’t have the same level of feedback. Google caters to this crowd very well too, because it offers SEO friendly tools and advise.

2. Extra data – Google Co-op, Image Labeler, etc

3. Google knows everything about your site

Google made a very smart acquisition back in 2004. They bought Urchin and converted it to a free traffic analysis add-on for your site, Google Analytics.

Google would no longer need to compute pageranks, as it would have the most accurate access to site popularity possible!

4. Google knows a lot about you – Personalization

Gmail, Google Toolbar, Google Docs and others. They all give clues about your personality, your interests, likes and dislikes. Consequently, you end up with more personalized search results.

5. Google offers UNIVERSAL search

6. Google has psychological dominance

Psychologically, you feel that you lack it when you try other search engines. Especially if your query is indefinitely motivated – e.g your purpose is more about researching than finding – then you always want to try your search on Google as well, even if you were already satisfied with other results elsewhere.

7. Google is everywhere

8. Google has looooooots of ca$h

Competitive Landscape

The real question is: does this all mean that Google is unbeatable in terms of market share? Even though Microsoft’s Don Dodge said that even a 1% share in search market is very valuable, the fact is that Google dominates search. And that dominance brings monopoly and privacy issues to the fore.

I don’t think Google is unbeatable (although you may think I’m completely biased, as I work for Hakia!). Google can be beat. On the algorithm side we are seeing intensive semantic methods emerge, which may in time challenge statistical methods like pagerank. But even outside the algorithm, bigcos continue to fight Google – especially Microsoft, which has the necessary cash and single sign-on power to potentially win the search space.



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As it stands now, there are things about the model that do not align the wants and needs of VCs with entrepreneurs. For example, VCs need exits at certain time intervals because their funds only last 10 years (for the most part) and entrepreneurs are sometimes forced to grow too quickly or be acquired too soon because of this. While the structure of VC funds probably isn’t going to change any time soon (after all, the people that invest in VC funds need their money back to pay pensions and do charitable work) the question is: What can be changed? The answer: deal structure.

There is a fundamental problem between VCs and entrepreneurs. VCs want entrepreneurs to shoot for the stars and to be the next Google. Sure, entrepreneurs want that too.

Let’s take Flickr for example. The founders of Flickr built the company on a shoe sting in their spare time. Network effects began taking hold and before they knew it they had an incredible company on their hands. At that point the founders needed to make a decision: do they take capital from a VC and scale the business like crazy possibly gaining nothing or do they take the “sure thing” offer on the table from Yahoo! and cash out early possibly leaving money on the table but also taking in enough money to live comfortably forever? In this case the founders took the Yahoo! deal and probably regret it today but can you blame them? They were looking at a lot of guaranteed cash or getting their ownership diluted possibly for $0 return.

more here with interesting comment

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