Author: John Battelle

Publisher: Portfolio Hardcover

Pub. in: September, 2005

ISBN: 1591840880

Pages: 320

Measurements: 9.2 x 6.3 x 1.1 inches

Origin of product: USA

Order code: BA00004

Other information:  

Battelle begins by identifying the information available through "Zeitgeist" - summaries of what our culture is looking for or finds interesting, and what was once popular that is losing momentum. Such a database could tell clients what people are buying, looking to buy, or avoiding. It also could be used as a surveillance tool, as could GMail, Hotmail, etc.), especially under the Patriot Act.

Tidbit: Experts see the future of search as more about understanding what is actually desired, rather than simply finding the results.

Search engines start with the efforts of a "crawler." Early versions of crawlers discovered and indexed only the titles of Web pages - today's also review entire Web sites. The crawler sends its data back to a massive database called the index. Raw indexes list all the pages on a site, as well as pertinent information about those pages - words, links, words around and within a link. The next step is to invert the data-base - to make a list of words associated with URLs. Analysis of the index then looks at the links on a page and the popularity of the pages that link to another page to construct a ranking. Indexes are also then populated with tags - eg. indicating they were written in a certain language, or belong to certain groups such as porn, spam, or rarely updated sites.

Search provides the most efficient and inexpensive way for businesses to find leads, and didn't even exist a decade ago. Google has over 225,000 unique advertiser relationships. The yellow pages are a $14 billion business that search engines are going after now - Battelle expects the yellow pages to be extinct in a relatively short time.

Behavioral targeting tracks one's search and browsing history to display ads that are most relevant. (Akin to what Amazon does it generating its "recommendations" for regular site visitors.)

Google's "secret sauce" was adding its weighting system. Originally, the intent was to retrieve academic papers, weighted by the number of citations referencing each paper. Google's initial development was hampered by difficulty obtaining enough computer resources (fortunately, the Web was much smaller then), and Web page owners upset because they thought the crawler was stealing their material.

Google incorporated in 1998, and obtained $25 million in capital - based on the attractiveness of its superior weighting algorithm. However, it did not come up with a viable plan to make money until '01, as its founders had decided to forgo becoming a portal, or offering banner ads (saw them as irrelevant).

This was resolved by borrowing an idea from another entrepreneur - he used Inktomi's search engine and lacked Google's advanced ranking system, but had introduced the concept of having advertisers pay/click - in effect, a performance guarantee. Also syndicated with others' web sites (split the revenues). In October, 2000, Google launched AdWords - with a credit card and five minutes one could quickly become part of Google's data retrieval. Google's contribution to "click-through" fees was to also incorporate this volume into their ad rankings - thereby increasing the value of the ads and Google's revenues.

Early on Google decided not to advertise - very expensive - instead they plowed the money into product improvements and relied on P.R. and world-of-mouth to gain volume. Another source of savings was their early use of distributed computing and stripped-down Linux (vs. "big iron" and Windows) - costing less and achieving greater reliability. Google doesn't talk about the number of PCs, etc. employed - outsiders estimate it at 150,000 servers, and perhaps 80,000 PCs.

News reports were added after 9/11 - though they lack any business logic other than to present a fully-rounded search result.

Another new product was "AdSense" - participating Websites (usually small, with no means of monetizing their traffic) were scanned and contextually relevant ads placed next to the context. (E.g. A site about flowers would receive ads selling flowers.) "Gmail" was still another - users were offered very large amounts of free storage space, and in return, ads based on the message's context were inserted, creating a privacy furor and threats of legislation in California.

"Click Fraud:" AdSense publishers using robots or low-wage workers to click on all ads in their site to increase revenue. Vendors estimate that about 25-30% of clicks are fraudulent - a problem not just for Google, but all with similar business models.

Google's founders determined that they would avoid the "hiring spiral" they had seen in other startups. This involves a cascade of hiring decisions in which the initial hirees were very strong, but then hired underlings somewhat less capable (and threatening) down to the bottom run. Their solution was to make hiring decisions through committees.

Tidbit: Spam is an on-going problem with search engines. One trick involves hiding high-traffic words like "car" all over a site (eg. small white letters on a white background) - thus, getting the search engine looking for "cars" to instead retrieve e.g. porn. Google periodically revises its algorithm to deal with spammers' latest gimmicks - thus, what may top the information retrieved for a search today may lie 50 pages down tomorrow. The "bad news" associated with this is the legitimate businesses utilizing purely honest means of boosting their search ratings may suddenly find themselves out in the cold.

Google eventually went public - inevitable, given the amount of venture capital funds involved in its startup. Again, Google did it differently - without underwriters and their huge fees. Instead, the shares were auctioned off - $85 was the initial price. Company also used two classes of stock, allowing the founders to retain control, and refused to provide Wall Street with earnings guidance or to smooth earnings like many other firms. It's price now exceeds $400 (P/E/ ratio exceeding 84), and some expect it to reach $600 in 2006.

A truly excellent and informative book! (From quoting Pragmatist, USA)

Target readers: Technology and internet entrepreneurs, general business and technology readers, as well as anyone who feel inspired by the success of Google.

Better with Direct from Dell, Strategies That Revolutionized An Industry :

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