On a year on

I missed my one year anniversary on 8 May. It is just over a year since I wrote my first blog post On Yahoo. My blogging has waned in recent weeks, primarily down to the amount of things I have had on since the start of the year. Now however my flat is finally redecorated after the flood and our startup is edging towards launch.

It may be that I don’t have the time to blog as much or at all after we launch. What I found interesting about blogging was that it allowed me to think about areas outside what we were then working on (music and p2p). It was the early posts I wrote a year ago which led me to think more about advertising and what was wrong with it online.

My basic thesis was, Google apart, nobody was doing anything different from old media. Grab enough attention then try to cram ads in as many nooks and crannies as possible. Nobody really seemed to be thinking differently about showing people advertising when they found it useful and in a useful context. Everything was geared towards a bait and switch with he who had the most traffic winning.

What is interesting to me is not how many impressions you can show but showing people commercial information in a helpful way. Volume becomes far less important if you can show ads in a way that people actually find helpful. I always thought why interrupt someone when they are trying to do something else? Far better to capture their attention in the moment when they are looking for something. That is what Google does he best and the reason it is so successful.

Even though we were initially not interested in advertising at all blogging allowed me to pursue some interesting thoughts and ultimately led me to the idea which we are now working on as our main project. So, even if I never write another post, writing this blog has been hugely important for me.

On Marines and Twitter

Image via CrunchBase

I’ve been reading a book about maneuver warfare as practised by the US Marines. This is based on principles such as focus, surprise, flexibility, tempo and boldness. In each chapter examples are given and what I have found interesting is they give examples on either side. On the face of it one may think that boldness would emphasise taking action over not doing so.

Applied to the current rumours of Google buying Twitter it may seem like the bold move is to go ahead and buy, but it is not. The bold move is to pass. There is no question that Twitter is the hot startup at the moment. It gets the Daily Show mentions, the celebrity tweets and the avalanche of tech blogosphere coverage. People urge Google into doing the deed and that $1bn is nothing against the cost of missing out. It is true that Google needs another giant revenue stream to continue its growth and that it hasn’t really diversified away from its original idea despite many attempts. The problem is that Twitter is not yet a business. And Google has already been burnt spending 10 figures on another not to be missed startup when it bought YouTube.

If the bold move is to pass the really bold move is to buy delicious from Yahoo. I noticed that Google has added a ‘bookmark this’ button. It is hardly well publicised and I suspect nobody uses it. Unlike Twitter whose value is in the immediacy of its content, delicious has quietly built an alternative index of the web. It doesn’t matter that it is far smaller than Google’s robot built index, its value is that it was built by humans. I only bookmark a few pages each day, on a good day, but those I do have far greater value than something indexed by a robot because I can understand the content of the page far better.

Each page I bookmark links me to a group of likeminded individuals and I am always interested to see what they have bookmarked under the same heading. This is in embryo a ‘PageRank for web users’ rather than links. It has the potential to be a powerful search engine but delicious is not hot any more. It got swallowed by Yahoo and left to rot.

The bold move? Pass on Twitter and buy delicious. They already have Schachter, might as well rescue his creation.

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On searching and finding

Michael Arrington recently bemoaned the lack of ambition amongst those who would challenge Google. What I like about Arrington is that he is prepared to think big and try to see beyond what currently exists. He is not always right but he is bold. In this case I agree with him, I think we are in the infancy of search and for others to give up in the face of Google is not only bad for us but also bad for Google. Any good company should welcome competition as a chance to make them better. Watching a team trot to the title is boring and business is no different.

The challenge for Google will be what if people start searching in a completely new way? One of the reasons facebook is so highly valued is that it is essentially a huge marketing database. It is this reason that Microsoft had to take a strategic interest in facebook as they could not let another chance to develop their advertising revenues slip. I personally think that MS should think more carefully about what type of web apps are going to replace its Office suite and concentrate on those, but that is for another post.

Venturebeat has observed that Google is trying to do an end run around the MS/facebook deal by serving ads up inside widgets. The reason so much money is pouring into widgets is that they command eyeballs and eyeballs are worth money. I suspect the reason facebook is encouraging developers is so they can see if any of them start to make cash then start to tax their revenue for access to the facebook platform.

The real revolution will not come in search but in find. Searching is good if I already know exactly what I want but if I am less sure ‘find’ is more important and this is where facebook comes in. Beacon was a way of friends recommending things to other friends. It was a clumsy, annoying way of doing it but the central principle is there: when people don’t exactly know what they want, find is more important than search.

On Yahoo

From the outside Yahoo looks like a vessel slowly listing into the sea. Inexplicably, it still makes a lot of money but it is ultimately doomed as nobody really knows what Yahoo is for, Microsoft included. Its shareholders are furious with Jerry Yang for spurning the $33 per share offer and threatening action as Yang backpedals. Commentators are speculating whether Ballmer is playing a game and wondering if he will be back to the table, the answer is yes – after Yang & Co have twisted in the wind for a while.

Unfortunately when Microsoft get their hands on Yahoo all they will be able to do is manage its descent more efficiently. Yahoo’s real problem is search, being number two to Google is an uncomfortable position as Yahoo has spent a lot of time discovering. Why would anyone use Yahoo search when Google is around?

The reason Google succeeded is because Larry Page saw search differently than everything around at the time and the result was a search engine a hundred times better than anything else. Being 5% better than Google won’t cut it (assuming Yahoo could even get there) and being 5% worse, which more accurately describes Yahoo search, certainly won’t. The good news for Yahoo is that they already own the company which could save them.

Page’s great insight was that the links between pages mattered more than what was on them. He noticed that, in effect, website creators were peer reviewing each others’ sites and built a machine which could analyse that peer review to produce radically better search results. To outdo Google you would have to rank the internet in a completely new way. This may be needed anyway, as a recent post on TechCrunch speculated, the Internet is getting too big even for Google. Schonfeld said:

At a certain point, with billions and billions of Web pages to sift through, keyword search just won’t cut it anymore. It’s a needle-in-the-haystack problem, with the haystacks just getting bigger and bigger every second.

I don’t agree with him that keyword search is necessarily doomed but I think that more human interaction is required to sort the wheat from the chaff. This is the basic reason why even terrible ideas like Mahalo and ChaCha continue to attract funds. They should give up because the best human powered search engine in existence was invented by Joshua Schachter in 2003 and Yahoo already owns delicious.

Michael Arrington has already described delicious as his favourite search engine after Google and I think with some tweaking it could go one better. I am interested in the music business so I have tagged a number of stories on EMI. When I search for EMI on delicious I see all my own stories plus other users’ stories. Search results for the second group are not particularly great but delicious has all the raw information to make them much better. Through tagging I have already told delicious what stories I am interested in and it knows who else has tagged the same stories.

The beauty of delicious is that it can look into the mind of other people with similar interests to me, see what they have tagged and return more relevant results. Another advantage it has over Google is that delicious can also assess the strength of a link between me and another user by seeing how many times we have tagged the same page with the same tag.

All Yahoo has to do is analyse these links between users in the same way Google analyses links between pages and it will have a search engine which thinks differently and gives people a real reason to use Yahoo search over Google. If they crack it Yahoo will be worth far more than the $37 per share Yang wanted and they won’t need Microsoft.