Absolute Value

Media piqued at Google . . . for being Google

2006-06-07T09:40:00.000-04:00

It's an interesting point in Om's post about Google wasting Genius Cycles, but much of the talk is short term thinking.

To me the key is whether Google will can convert innovation into success to be come the un-Xerox Parc. I don't know if they even know what the results will be, but they're making the highly logical bet that:

bigger brains x faster cycle times = more raw material for success

Then it's up to the corporate "GOOG" to monetize, but more importantly not to miss a huge opportunity.

There's in interesting parallel to MSFT here. Are they sorry they aren't the first to market in any of the markets they're in?

Nope! And Google isn't either.

Google suffers from a (self-made) PR problem of being innovative as to execution but a follower with regard to new concepts. The media can's separate the two concepts.

Syncrhonized Firefox with Foldershare

2006-03-22T11:47:00.000-05:00

I realized that I was suffering from split personality when I switched among three computers that I use, plus a portable version of my online life I put on a USB flash drive I use for travelling.

So after keeping up the juggling act of re-personalizing my buttons and bookmarks on an almost daily basis, I decided to try to simply use portable firefox (customized with all my must have greasemonkey enhancements) from a FolderShare folder instead. Foldershare is already an amazing convenience with drag and drop ease for any documents that I need to synchronize among work, home and mobile, immediately available.

Then, whenever I want to travel lite (that means not lugging a notebook computer around - mostly because I know there will be a decent setup at my destination mostly likely in Asia) I can just copy my app folder to my USB flash and be ultra-mobile.

I'm already using Web-based apps like writely and gmail and they are more than good, but without my browser setup the way I want it, I'm still not productive enough.

Let me know what works for you.

Google Stock Site makes Sense for me

2006-03-21T11:15:00.000-05:00

With all respect to Om, Paul and Charlene, I don't think it takes much to switch finance sites, even for small improvements.

Google Finance does the job for 90% of what I want from a stock site, with only the lack of portfolio support as a major functionality gap. Unless you are going to enter into a transaction like getting a mortgage or exchanging currency, most of the offerings of Yahoo Finance, which I still use constantly, are just like Edward Tufte"chart junk", distracting, irrelevant and unnecessary.

No, mostly what I want to figure out is where a stock is, where it has been and why. So tying news on a company to the stock chart is key for most of the time I spend and that is exactly what Google Finance delivers.

The big question is more whether this is a beta product that will languish like so many other worthy Google projects, or whether it will continue to improve. Comparing the just launched Google offering to Yahoo is shortsighted if Google can focus for once to make it's offering clearly superior. What notable improvements has Yahoo Finance made in the last, say two years?

Since the Google product manager, Katie Jacobs Stanton, comes from Yahoo Finance as reported by John Battelle on Searchblog, I give Google Finance good odds over time.

I am willing to wait because until now, there really hasn't been an alternative.

Y Combinator Launches (so far)

2006-03-17T17:13:00.000-05:00

I just love what Paul Graham is doing with Y Combinator, and if I weren't just a "useless" business guy, I'd jump right it.

Anyway, I really like Reddit because it strikes the right balance of tech/non-tech articles and there is always something interesting to read there.

It seems to me the pace of launches is picking up and it will be interesting to see how the various companies fare. However, I haven't seen a comprehensive list of Y Combinator launches out, so I thought I put one together.

Reddit
Pixoh
Kiko
TextPayMe
YouOS
Infogami (merged with Reddit)
Wufoo
ClickFacts
Inkling
Flagr

It seems like the Winter Founders program has yielded more launches than the previous Summer Founders program, but that's to be expected given that Summer was the first one.

The ones I give the most chances of success to are Reddit and ClickFacts, which is in a great position to capture dollars from a hypergrowth market. It's like that old saying that half of your advertising works and half is wasted, but you don't know which half. With Adwords, it's the same (maybe it's 10% that's wasted here) and advertisers will spend an irrational amount of money trying to squeeze out that last bit of inefficiency.

My personal take is that clickfraud is like "shrinkage" in retailing: it's unavoidable, a cost of doing business and you'll never stop all of it, but somehow you make money anyways. What Google needs to do is come up with a better word for it. "Shrinkage" is better than "stealing," "pro-choice" is better than pro-abortion, so there should be some word that the industry can use better than "clickfraud".

Enough digression.

Let me know if I missed any. It would be helpful also to know about any failed companies.

I take it back, Xooglers rocks again . . .

2006-03-16T15:19:00.000-05:00

. . . when Doug posts.

He talks about the origins of "Ten Things Google Has Found to Be True" and how "Don't Be Evil" violates the prime directive of marketing: underpromise, overdeliver.

Even so the founders *wanted* it to be a public declaration of a high standard so that they could be held accountable for it.

As much as each oh-so-public slip hurts, I think the top Googlers expected the mistakes and yet chose their path deliberately, learning at an accelerated pace.

In the end their Don't be Evil slogan was a challenge to their future selves that can't be circumvented without betraying their own beliefs.

Inner Circle Line wins award at SXSW

2006-03-15T08:12:00.000-05:00

Congratulations to Eunhee Cho for winning a special jury prize for Outstanding Visual Achievement at South by Southwest last night!

When I saw her Inner Circle Line for the first time, I immediately felt its integrity as a film and loved the care she put into her characters and story transitions. I was happily surprised when the film made it into the Rotterdam Film Festival where it had it's world premier, amazed when it made it into the juried competition for Best Narrative Feature at SXSW.

To actually win an award is stunning. And I couldn't be there :(

And yes, I am a co-producer, but pretty much only in name.

Meetro, very cool, but needs to be mobile

2006-03-14T12:45:00.000-05:00

Installed Meetro and found it to be a very cool location-based IM. Technically slick, the program integrates all the major IMs. Unfortunately it misses it's market because when I'm at my computer, I'm usually sessile and when I'm on the go, I'm not logged in.

I can't wait for this to be GPS enabled on my mobile device. Until then, uninstalled.

Google's product production pipeline

2006-03-14T11:51:00.000-05:00

This is something I've been thinking about for a while since Google's pace of product launches is both exhilarating and exhausting and worse, accelerating.

At the end of last year, Google had about 5,680 fulltime employees. Let's say about half are business and half technical/engineering. Another rough guess that about half of the tech staff provides infrastructure and development support of existing products gives us 1,420 developers working on coding innovations.

I'm guessing that these developers work in teams of 5 or 6 people which means that there about 250 teams working on projects. This makes sense in the context of priorizing their "Top 100 projects" which I believe they do on a weekly basis.

Using their 70-20-10 rule, that means there are about 175 search/advertising projects and 75 related and unrelated projects, some critical like Desktop Search and others just because they're cool like Google Mars.

In any case, most the buzz goes to the new, non-search projects and even throwing out half of them as unworthy, that's 3 launches a month.

This just gets more distracting as they continue to hire.

One area that Google clearly needs to innovate is the way they launch products . . . they are already swamping out the good will and attention span of their fans. I thought the gmail launch was extremely intelligent (and of course viral) because it was controllable. Why don't they use a mechanism like that to make sure their launches go a little more smoothly?

The Writely Backstory and Google's "1 or 2 technical acquisitions a week"

2006-03-13T17:33:00.000-05:00

Surprisingly, there hasn't been much discussion of Eric Schmidt's comment during their Analyst Day (right after his discussion of the AOL transaction) that Google has been acquiring one or two companies a *week*. That's more than 100 acquistions in a year!

Just because we've all heard of Writely because it's been in the Web 2.0 spotlight and is taste fodder for the Google-Microsoft fight everyone wants to see, we don't see that this is another in a string of talent-oriented acquisitions, most of which don't have the benefit of the strong PR buzz around this one.

The Writely Back Story nicely demonstrates the true value that Google is attempting to capture in their acquisition strategy. The founders of Writely are an experienced development team that developed the underlying platform to Macromedia's DreamWeaver and prior to that developed other document oriented software.

Google isn't acquiring what Writely currently is, they are acquiring what the Writely team will develop over the next few years!

Xooglers jumps the shark

2006-03-12T23:30:00.000-05:00

In the long tradition of Google naysaying, the wierdest is this Xooglers post (written by a now cashed out and retired Google employee) about how "it has always been a bit of a mystery to me why anyone bought Google's stock" mainly because it will never pay dividends. I don't expect everyone (or anyone, actually!) to understand the stock market's gyrations, but I think the most notable thing about Google has been it's earning power and it's employees have had more insight into that than anyone.

I'm a huge fan of Xooglers since the first post for the insights into what the early days at Google were like from a very personal and entertaining viewpoint.

Lately, however, it's been slow posting with at least one strange extended sidebar on being stuck in Peru. Yes I know it's written by different folk and no I don't want them to stop, but this particular post struck a note of dischord into the otherwise fun reading that must have hurt the main Xoogler and marketing guru, Doug Edwards, more than the stock's recent fall.

Two other ways of looking at Google's Writely acquisition

2006-03-10T10:43:00.000-05:00

As much as all the talk on this has been about how Google is thumbing it's nose at Microsoft, I think they real idea has to do with enabling their role on mediating how online applications are really used.

When Google puts out a (lame) product like Pages, then follows up with a similar acquisition like Writely (closed to new registration), there must be something larger going on than playground taunting. And the key to thinking about it is how the products differ.

The key incremental things that Writely brings are:

1. A tag based file mangement system - they may call them "labels" but this is a great fit

2. Output to PDF - a great bridge for web content to be consumed offline, and

3. Wiki-like collaboration features - again, a natural evolution of what Pages should be

What Writely doesn't try to do is replace Word. MS word is for massive documents that need fine format control whose documents are really meant to be "published" in a polished form.

You know what? Sometimes I need that, but most of the time I don't. Just as photos are now mostly digital and meant for web or digital consumption, I believe that written content is the same: mostly meant for digital consumption in blogs, on web, on mobile.

One example, how many resumes do you read in digital form vs. printed out. When I was looking for a job out of college, it was all about the font and the nice paper you used when you mailed out your resume and the cardinal rule was that it needed to fit on one page only.

These days, I read resumes mostly as email attachments or web pages. By the time I interview someone, I've already know what a resume is going to tell me. If someone gives me one, I usually give it back because I don't need it. I admit that sending a nicely formatted resume in an envelope through the mail is becoming rarer and may get yours looked at, but only for certain jobs where presentation of written materials is key.

I think that Google is getting 4 hot developers, locking them in with a restricted stock grant of not a lot of money after being able to see their product and having demonstrated their hunger and creativity. Putting these features into Pages and giving the project to the Writely team is a huge long term win for them.

Phil Sim has a good insight into this as well, speculating that the Lighthouse project is actually about file management and how the Writely acquisition fits in.

Search advertising crash doomspeak misses the point

2006-03-09T13:54:00.000-05:00

Trying to measure the value of search advertising against time spent or "stickiness" in Scott Karp's post misses the point and uses the wrong measuring stick at the same time.

It doesn't matter how long someone spends on a page if their intent is not commerce. Google is the big search winner precisely because they more their users to their destinations faster than the competition.

What search advertising does so well is capture traffic of good intent as I research and price purchases. The real question is really one of "response marketing" vs. "brand marketing" and whether the dollars are being spent effectively. I'm not sure how useful it is to interrupt me while I'm reading the news or my mail with a floating ad that obstructs my view of the content.

More interesting is whether the new demographic targeting capabilities of AdWords will enhance clickrates and conversions by allowing advertisers to spend their money more wisely. More effective response marketing doesn't mean that fewer dollars are spent . . . in fact by increasing sales based on the same dollars spent, it enables companies to grow faster and spend more in the future!

Click Fraud not an issue that could hurt Google according to analyst ?!

2006-03-09T11:10:00.000-05:00

It's surprising to me that any analyst would not think click fraud is an issue that could hurt Google.

SG Cowen analyst Jim Friedland today said:

'There are a number of issues that could hurt Google, but we believe click fraud is not one of them,' said Friedland. 'We continue to expect near-term sentiment to be negative and the stock is likely to go down on this news item.'

The settlement is a good first step, but there's still future fraud and international suits that are out there. . .

Google Calendar doesn't succeed until it integrates commerce

2006-03-09T09:51:00.000-05:00

Sure Google calendar is going to be integrated in to Gmail. That makes it competition for Outlook, and everyone wants to see the two big dogs fight.

But, the reality is that even managing your calendar on Outlook isn't a natural activity: it takes discipline that most of us don't have to be truly useful.

With an API, someone else can integrate Google's CL2 to their application, but while these mashups are good prototypes for what you might do, I don't know any examples of mashups that graduate to products, except for those embraced by their platforms with full integration efforts.

The web 3.0 use for a calendar that is natural is for commerce knows date, time, place and context:

1. If I buy something, I want the shipping date on my calendar with a tracking link

2. If I'm making a reservation, I want to have that on my calendar with links to directions, reservation number and contact information for invitees

3. If I'm using a service, I want to have the appointment date, contact info, reference.

Of course this is hard, but anyone who get's a critical mass will have tremendous network effects.

Google's opportunity here is to tie its

Smart move on settlement, but there's too much noise in the market

2006-03-09T09:36:00.000-05:00

Very good outcome to the clickfraud lawsuit that just shows how weak the class action case was to begin with. Sure, $90 million i s a lot of money, but it's much less than 1% of ad spending as Google claims.

With this, Google gets a lot done:

1. Puts a low percentage on clickfraud
2. Removes a legal cloud over their earnings
3. Sets a good precedent for future issues
4. Most importantly learns enough to further mitigate legal issues in the future.

Most important, it's $90 million in credits. You know that trick, you have to spend more to use them! That's otherwise known as backlog.

In the meantime, the market won't recognize the significant value of this settlement until all the other extraneous noise about leaked presentations, calendar, etc. dies down.

$10 billion GOOG revenues not good enough

2006-03-08T12:52:00.000-05:00

This has happened before.

Google communication problems raising concerns about management and impacts stock price: that is the story of why the IPO was a screaming buy. Because in the end, this is a company that is putting up amazing numbers and still relatively new at communicating but in a way that I believe is a fundamentally honest effort.

After all, why publish the powerpoint so rapidly except in an attempt to communicate better? They sure won't make that mistake again. And the analyst day was a dramatic improvement. I predict next year's will add the humor that was lacking this time around and it will be close to perfect.

The good news amidst all of these self-inflicted wounds is that they can improve their communications and it will all be water under the bridge.

The notes on the revenues say precisely:

" . . . projected to grow from $6bn this year to $9.5bn next year based purely on trends in traffic and monetization growth"

and

"Execute well on our core ads projects to help us exceed the $9.5bn target . . ."

So the company had an old target of $9.5 bn which may even have been a number based on analyst estimates for 2006. And analyst Jordan Rohan thinks this should be $10 bn including AOL saying "If the timing of the leaked information is correct, it would exclude about $450 million in gross revenues from AOL."

Also, if the Adsense margin squeeze also dated from that time, then the AOL deal certainly mitigates Adsense margin risk.

Based on these numbers, Goldman lowers it's target for the stock by 2% (!) from $500 to $490. That's like the daily fluctuation! Come on, if you think monetization enhancement has really run it's course per George Reyes pre-Analyst day, you can be a little more daring than that.

Hey, this is a volatile stock and anything can happen, but if we're on track for a decent Q1 what do you bet that all will be forgiven and this will look like another buying opportunity?

Original Analyst Meeting Powerpoint

2006-03-08T11:52:00.000-05:00

Posted here. Get it while you can.

Who do you trust more, Google or the Feds?

2006-03-08T08:17:00.000-05:00

When I read about Google moving data out of China, I immediately thought of the amazing Neal Stephenson book Cryptonomicon and its offshore data/value haven. After all, is an alternative future where Google joins or forms such a place outside of the clutch of data hungry, civil liberty violating, privacy disregarding governments a natural step?

Ignoring the glib response of the "blogsphere" to this step, if you're Chinese do you use Baidu, the Chinese company that is completely beholden to the government, or Yahoo? I predict a nice shift of market share to Google on China. Sure they're used to censorship since this generation grew up with it, but why take chances when the stakes are life and death?

What if there were an offshore data haven, not of course owned by Google directly, but used by them to store our user data? Sure they would need high speed connections, infrastructure, etc, but they could encrypt the data, physically secure the facility and add a certain years long delay to any discovery attempt. Leave the business, infrastructure, IP and people in the US or wherever (moving the company out of the US for tax reasons would be evil, after all). If it's Google vs. the Feds, I know which way I lean. The Feds aren't trying to avoid being evil.

That's not even considering the Cryptonomiconian (forgive me) next step of securing a free currency with a data haven. Let's first see Google Pay before postulating Google Money.

So let this play out a few years and let's see how Google continues to protect us from the inevitably embarrasing vapor trail of our own online activies, but in the meantime all you have to do is read BoingBoing for the almost daily efforts of our governments to use our own data against us to start to feel this might be a good idea.

Sorry Google

2006-03-07T21:49:00.000-05:00

Just noticed that GOOG had to file an 8K with the SEC because of their powerpoint gaffe. In it they state:

The statements regarding $9.5 billion in 2006 ad revenue and AdSense margins were not speaker notes prepared for the Analyst Day presentation, and were inadvertently included in the Analyst Day slides. These statements were instead speaker notes prepared early in the fourth quarter of 2005 for an internal product strategy presentation. These notes were not created for financial planning purposes, and should not be regarded as financial guidance. Consistent with past practice, Google is not providing revenue guidance. In addition, the statement with respect to AdSense margins does not reflect Google’s current expectations.

It's unclear whether they think the $9.5 billion in ad revenue should be higher or lower based on Q4 '05 results. Piper projects 2006 ad revs at $9.3 billion, but internal sales targets are always higher than what you'd put out to the public.

Analyst Day Slide Comments

2006-03-07T11:21:00.000-05:00

Putting the powerpoint slides in their raw form on the web was clearly a huge mistake since the company effectively "published" the comments to the world. Ah, the power and danger of the web!

I personally hate Adobe Acrobat as memory hogging bloatware and as the single biggest source of crashes from my otherwise stable system, but this is why the PDF format exists.

Google, how about solving the publishing problem in a better way than Adobe's? There's a clear need and it wouldn't be hard to create a dramatically better solution. GDF anyone?

For those of you interested, here are the slide comments from Eric Schmidt's Analyst Day presentation:

Slide #2 – Globe Slide

So what I thought I could do today is talk about how we think about these very big shifts in media and advertising. And let's just be candid here – there aren't just big shifts in the industry, there are some pretty big problems and challenges facing every significant player in the ecosystem. And the way that we at Google think about these problems is a little different from lots of the other ways that people think about things.

One way to think about it is that Google set itself out to work on problems that involved people – problems that mattered about information at scale – building products and services for the whole world.

I'm a computer scientist. I don't have the media and marketing backgrounds that you all do, so I look at the industry and how it's changing and think this is an opportunity for using technology to solve problems that have never been solved before… or never needed to be solved, until now.

Slide #3 - Big Problems

We have some basic guidelines we use to solve big problems -

We try to identify when our technology can solve an existing problem at worldwide scale.

Google is important to the world and we use that to advantage:

We tackle important problems people really care about

We address large markets with big opportunities

We will make sure everything and everyone has access to Google

Its clear to us that we are just at the beginning of meeting our mission of "Organizing the worlds information and making it universally accessible and useful” We believe that we have less than 5% of the information we should be able to get into our indexes, and we believe that the technologies we will develop will significantly expand the definition of search and the scope and scale of our worldwide business.

For example,

. Video and Print – filling a void in our search products and making sure Google Search has high utility; increasing time users spend with Google; building a competitive advantage in information acquisition and storage; can ultimately lead to niche, extremely targeted/valuable advertising opportunities

. Gmail – reinventing email management; email is where consumers spend an inordinate proportion of overall time online

. Picasa – provide better organization for our digital lives and with the release of online photo management, organize/store more of our important/cherished data with Google

. DesktopSearch – provide high utility and make the access via Google of public and personal information seamless

Think of Google “as ubiquitous as brushing your teeth.”

With 56% of Internet search referrals, Google is the world’s largest search engine.

We are spending 500m+ in CapEx and innovating in products like automatic machine translation in order to make this happen.

We’re taking this learning to advertising and reaching end users………………

Slide #7 -Lead in Search

As the market leader, we need to ensure search doesn’t become a commodity. Our focus on search is nothing new. We built our brand on being the best search engine, with the best results, and as our competitors have caught up to us, it’s become even more important for us to focus on:

1) Speed

•Solve international speed issues and bring international users to US performance

2) Comprehensiveness and freshness

•“All webpages included in the Google index and searched all the time” – Teragoogle makes this possible

•Expand to other sources of data

•Become the leader in geo search (any search with a geographic component).

•New forms of content – video, audio, offline printed materials

3) Relevance

•Leverage implicit and explicit user feedback to improve popular and nav queries

•Introduce new personalization elements

4) User Interface

•Experiment with several new UI features to make the user experience better

Slide #8 - Drive Search Innovation

To really make good on that last part – improving the user experience, we need to drive search innovation.

For example, we need to provide unified search experience by integrating multiple verticals & data sources through UI and ranking solutions

•Add features, not properties and make it really easy to use

Guide users to help them search better

•Make query interpretation transparent through UI elements and help users refine queries

Encourage our large user base to actively contribute metadata that leads to better search results

•Wiki of search: empower users/experts to improve search results in their domains of expertise — create a million verticals

•Effectively integrate user feedback (ratings, comments, tags) into search

Slide #9 - More Complete Ads System

Now let’s look at another core element of our business: advertising. Consider that today, 1 in 4 retail dollars is spent online, and you’ll immediately understand the tremendous opportunity before us.

Our ads business for the moment is healthy and growing and we’re on a strong trajectory

•projected to grow from $6bn this year to $9.5bn next year based purely on trends in traffic and monetization growth

But strong competitors are attempting to aggregate traffic

•AdSense margins will be squeezed in 2006 and beyond

•Y! and MSN will do un-economic things to grow share

•The ad network will be commoditized over time

So, we need to build a more complete ads system that is characterized by two words: wider and deeper. That is, cast the net wider to attract new customer types) and deeper to enhance our relationship with existing customers.

Slide #10 – Picture of Cow / "Collective Wisdom"

What does a cow have anything to do with this?

If you haven't read James Surowiecki's "Wisdom of Crowds," I highly recommend it. In the book, Surowiecki tells a story about an experiment done in the 19th century. It was by this British anthropologist named Francis Galton.

What Galton did in the experiment was go to a county fair where he had close to 800 people guess the weight of an ox by writing their guess on a slip of paper. Among the 800 or so people were a lot of ordinary county fair goers but there were also some experts – butchers, cattle farmers, you know, the sort of people who would have a reasonably good idea how much a particular cow should weigh.

The remarkable outcome of this experiment is that when Galton tallied all the guesses, the average guess, that is, the collective guess of the crowd was significantly better than the guess of any individual within the group. Think about that. The crowd was wiser than any individual, and that included the experts.

This principle has proven out over and over. And you see it everywhere: financial markets, political elections, and even the synchronization of traffic.

So let's go back to the Hustle and Flow graph I showed you earlier. But instead of just Hustle and Flow, think about every single piece of content ever created and owned by CBS. Now let me ask you a few questions – these are rhetorical:

* Do you know exactly how many assets you have? By assets, I mean all the content you've ever owned or created. Do you know exactly? Do you have the count? (Remember, I'm a computer scientist. I have to ask these things.)

* What percentage of your assets is currently available to users such that they can access it any time, view it, enjoy it any time? And I don't necessarily mean on Google Video, but it could be on your own web sites. What percentage? Pretty small?

* Now let's say you could suddenly make all your assets available to users worldwide. If this happened, do you know which of your assets would be most popular? Would it be last season's Survivor finale? Or would it be a segment from 60 Minutes that might have aired 10 years ago? Do you know which assets would be most popular in Miami vs. most popular in Ft. Lauderdale? Or in the U.S. vs. in Cambodia? Or on Wednesday mornings vs. Sunday nights?

Here's a fact that I've learned while at Google and I want to share it with you: a company is not smarter than the consumers of that company's products.

Slide #11 - More Complete Ads System (continued)

By Wider, we mean:

•Simplifying the experience and streamline advertiser acquisition for small and medium-sized businesses

•Developing a great branding product for large online advertisers and for offline advertisers of all sizes

•Expanding offerings to include print, radio, TV, and direct mails

By Deeper, we mean:

•Providing Advanced Tools & Reporting for sophisticated advertisers (e.g., API, bid management, ad scheduling)

•Expanding AdWords from clicks to conversions (e.g., Landing Page Optimization, Google Analytics integration)

•Tightening integration with other Google products (e.g., SiteMaps, GoogleBase, Local)

To really get down to brass tacks, we’re going to:

Execute well on our core ads projects to help us exceed the $9.5bn target (and backfill any AdSense partner loss) and drive advertiser satisfaction

•Simplification

•Quality initiatives (e.g. landing page quality)

•Fight hard to maintain share in the AdSense network

•Aggressive guarantees

•Increased monetization on existing pages

•Expand inventory rapidly through:

•Support for new ad formats

•Targeting other types of media

•Developing market-leading/”hit” Google properties and consumer applications

•Extend into adjacent SMB services (CBG is only a first step)

•Treat advertisers as full-fledged businesses with a broad set of needs (not just advertising)

•Ensure that we are not supplanted in the consumer buying cycle by eBay, AMZN, Yahoo in their effort to become one-stop shops in the full buying cycle

•By bringing more product information to Google (e.g. via Base)

•By providing users with a richer search experience (e.g. attribute search, vertical search, and richer product information and reviews)

•By leveraging CCC apps to provide users with the product/service information they care about when they want it

Slide #13 - Solve Big Problems

In the US alone, there is $250B spent in advertising. Is there a problem here? I’m guessing that the title of the day today has something to do with it – can you make $250B more accountable?

Accountability in marketing, having run another F1000 company, generally came from my Mom. I would spend $100M on TV ads and the only accountability I had was my Mom calling to say she liked the fish we used in our ads.

Appendix

The U.S. Advertising Marketing (2005E)

Internet is $11.3B, and of that Search advertising was $3.84B 2004 and projected to be $4.7 B 2005E

Source: Universal McCann, 12/05

Of this roughly $4B total search revenue; Google has 79% share, which is 27% of the total U.S. Internet advertising, or 1% of all U.S. advertising

Source: eMarketer February 2005, eMarketer May 2005; Note: U.S. Search – comparative estimates from 5 sources; U.S. Online – comparative estimates from 12 sources

Given current growth rates, online advertising will approximate the size of
cable TV today, in 2007; and online advertising will be the size of
radio advertising today, in 2009

Internet growth is the most aggressive, with cable the second most aggressive; other media are trying to keep single digit positive growth

Additional soundbites:

How long it took to reach 50M users of various media

Radio took 37 years to get to 50M listeners

TV took 15 years to get to 50M viewers

Cable took 6 years to get to 50M viewers

Internet took just 3 years to get to 50M users

And how long it took to reach $1B in advertising spending on various media

Radio took 45 years to get to $1B in ad spending

TV took 10 years to get to $1B in ad spending

Cable TV took 7 years to get to $1B in ad spending

Internet took just 3 years to get to $1B in ad spending

Source: Morgan Stanley Technology Research

"Other" includes outdoor, product placement, satellite radio, movie trailers, video games, specialty marketing

Slide #14 - Consumer Products and Services

In a world with infinite storage, bandwidth, and CPU power, here's what we could do with consumer products…

Theme 1: Speed

Seems simple, but should not be overlooked because impact is huge. Users don't realize how slow things are until they get something faster.

Users assume it takes time for a webpage to load, but the experience should really be instantaneous.

Gmail started to do this for webmail, but that's just a small first step. Infinite bandwidth will make this a reality for all applications.

Theme 2: Store 100% of User Data

With infinite storage, we can house all user files, including: emails, web history, pictures, bookmarks, etc and make it accessible from anywhere (any device, any platform, etc).

We already have efforts in this direction in terms of GDrive, GDS, Lighthouse, but all of them face bandwidth and storage constraints today. For example: Firefox team is working on server side stored state but they want to store only URLs rather than complete web pages for storage reasons. This theme will help us make the client less important (thin client, thick server model) which suits our strength vis-a-vis Microsoft and is also of great value to the user.

As we move toward the "Store 100%" reality, the online copy of your data will become your Golden Copy and your local-machine copy serves more like a cache. An important implication of this theme is that we can make your online copy more secure than it would be on your own machine.

Another important implication of this theme is that storing 100% of a user's data makes each piece of data more valuable because it can be access across applications. For example: a user's Orkut profile has more value when it's accessible from Gmail (as addressbook), Lighthouse (as access list), etc.

Theme 3: Transparent Personalization

The more data, access, and processing Google can handle for the user, the greater our ability to use that data to transparently optimize the user's experience.

Google Desktop w/ RSS Feeds is a good first example: the user should not have to tell us which RSS feeds they want to subscribe to. We should be able to determine this implicitly.

Other potential examples: User should not have to specify the "From" address in Google Maps; user should not have to specify which currency they want to see Froogle prices in; user should not have to manually enter their buddy list into Google Talk.

Slide #15 - Google Evolution

How we plan to use our past experience and advantages to help advertising………

Google’s strategy is built upon the same foundation as all of our products and services:

1) Lowest cost, highest performance hardware infrastructure

•New computing designs, communications and data center infrastructure

•100x better than industry network size

•

2) Worlds best memory-based software architecture

•Making programming easy and reliable on this new model

•Making execution as reliable as storage is today

•Making large scale computation made very easy

•Automatic and market-based machine allocation with real economics

This foundation and framework will enable Google to set new standards for innovation and comprehensiveness. We plan to:

• Get all the worlds information, not just some

• Crawl everything online (crawl and feeds)

• Use our distribution to get their information and also get it structured; make it easy to give to us

• Offer good tools for web masters to help understand their inclusiveness

• Expand to include other, new information: Video, Print, Photos.

Slide #16 - More details on mobile devices and the global market

In this context, mobile devices play a key role.

When you look at really important developing markets like India, China, Latin America, mobile phone penetration by far outpaces PCs and laptops. In these regions especially, we need to build products for the next billion users and build stronger relationships with mobile service providers to make sure people have access to them.

Consider this: 1 in 6 people in the world live in India
1/3 of the world's population is in China + India

4B people in the world have never made a phone call

This points to an extremely compelling need to localize our products and make them available and relevant to people who speak languages other than English, and who don’t have ready access to PCs.

Furthermore, 79% of Internet users are outside the US and 67% of them primarily speak a language other than English – the bottom line is we’d be doing our users and our company a disservice to not focus on making our products relevant and compelling to a non-American, non-English-speaking audience.

Slide #18 - The Seven Themes

I’ll cover each of these areas in greater detail in this presentation, but our strategy can be divided into seven main themes that cover our entire business:

1) Lead in Search: Deliver on Search fundamentals, and innovate new Search models

2) Provide a more complete Ads system: Wider and deeper (best user experience and best ROI)

3) Solve users’ needs and desires beyond Search: Create, Remember, & Share

4) Build the best hardware & software infrastructure: Leverage our lead in hw and sw to our increased advantage

5) Build the biggest footprint: extend Google services to users wherever they are

6) Scale to our huge opportunity: hire the best, leverage bottom-up innovation, grow with core values intact

7) Establish thought leadership position in industry and beyond: work with extended partners, regulators, media and centers of influence

Google Product Theory

2006-03-07T09:15:00.000-05:00

I realized something about Google that might be meaningful while watching the Seth Godin talk at Google, which is required watching for a Google fanatic like me (and probably anyone actually).

There has been a lot of quick judgement of their beta release strategy that I am sure would be unavoidable for a company of their size and position. In the end though, what Google has been doing is recreating basic web tools in new, more useful variations or webifying basic functions such as the database.

But that is exactly what they did with search, the "first" web native tool. What made Google was a three step process:

1. Create a better basic tool (search) with a dramatic difference from existing tools: Innovation

2. Build user loyalty and exponential growth through focus on user benefit (also remove barrier by making your product free): Branding

3. Careful monetization that does not impair user benefits: Value capture

Somewhere along the way Google was able to elevate the tool (search) into a product and this is the real key to their success. Everyone that worked with Google early on from Yahoo to AOL thought they were partnering with a tool company that would rapidly be replaced by a better tool down the road. The magic of Google was turning the tool into the product.

But in order for Google to become what it has become, there was a second key innovation: Adwords.

My thought on Adwords is that its development was highly unlike search in that it was more a method than a tool and that its development was directed toward finding a balance between competing demands (user attention vs. money) rather than the pure pursuit of the "right answer". Some of us have a harder time than others in accepting the slight of hand that enables Google to say that Adwords improves search effectiveness, but I personally don't mind it.

Aside from the dollars themselves, Google's focus, ability and drive to develop Adwords is what makes it a compelling business and (partially) justifies the stock price.

So when I see the "me-too" beta products coming out of Labs, what I see is just the first of three steps in the high attrition game of Google product development: creating a tool that has the potential to become a product. Google's fanbase is probably enough to allow the product to achieve enough critical mass to begin a virtuous cycle of product enhancement.

One problem I see that probably already hurts the chances of some of these efforts is the lack of consistent focus on the product that Search enjoyed and enjoys. I wouldn't be surprised if teams rotate on and off of projects more rapidly that a complete product cycle, like kids running from seesaw to jungle gym to sandbox at the park, disrupting the tool-to-product effort.

I think you also see that in acquisitions that don't immediately integrate into existing efforts like Blogger. Some products are also fill-in products (blog search) that don't really require passion, but are part of the "grand vision" and will never make the jump to the big time on their own.

In any case, everything that Google puts out will certainly get so much attention and attracts so much competition that they will never get the three year breathing room that Search had.

First Snapshot of Snap Financials

2004-11-30T08:23:00.000-05:00

SiliconBeat has reported on the Idealab search engine Snap's financial transparency. While it's easy to take a pot shot at the relatively low dollars and traffic they are reporting, I give Snap credit for a quick start out of the gate.

After all, the relevant comparison is with Google or Jeeves in they're first month after launch. On that metric, I'm sure Snap compares favorably.

Gotta give credit to Bill for trying something new that enhances the user experiences, too. He's no fool in launching at Web 2.0, which got Snap huge national coverage. I know that's where I first heard about it and gave it a try.

I think Snap finds it's niche of devotees who like the transparency concept and aren't loyal to another search.

Whether this makes for a good investment is another question altogether . . .

Wine-searcher.com

2004-10-22T13:20:00.000-04:00

I know I'm spending ahead of the curve, but we've started really enjoying a bottle of wine at dinner every night. We're just learning, so I've tried my share of bad wine, but we're at the point where there are a few wines to begin to stockpile.

So of course, I go to the web to find what's out there, but I only know www.wine.com, the old Virtual Vineyard. Only they don't have the inventory I'm looking for and it's not much cheaper than my local winestore.

But then I find www.wine-searcher.com and it's awesome. Even googling for online wine was too much for me, searching but not finding. But here's a site that gets you exactly what you want in seconds.

It must be new, because there are no referrer links in Google yet, but it's my find of the day!

Skype shows up at my doorstep

2004-10-22T10:47:00.000-04:00

I check my email this morning and what's there but my brother-in-law from Taiwan sending me a link for PC Home Online and asks me to download Skype.

Like everyone with overseas family, we've been happy with the lower cost of long distance these days. We only pay 5 cents per minute for great service from EOT. Only a few years ago it was more than 25 cents per minute.

Asia is adopting technology rapidly, particularly Taiwan. They immediately put it to practical use. Email (and spam) and the web are everyday tools for business. But it's not usually my relations pushing technology my way. Last time I was in there, I spent two days ridding a PC from CWS and teaching proper PC hygiene.

On downloading I ask myself why this isn't just another IM program. After all, they all have voice chat. But come to think of it, even though I've know it was there, I've never actually tried any of them.

So between the price (my favorite price is free) and the fact that I know that everyone that is using Skype will be able to accept a voice call (I guess that's why I never tried it before, I never found anyone to speak with) and the apparent huge penetration in Taiwan, I'm going to give it a try and let you know how it is . . .

Brilliantly Bumbling Google Earns a Bundle

2004-10-22T09:03:00.000-04:00

If you were smart, and who doesn't think the people at Google are smart, how would you maximize value?

How about creating demand, shortening supply, then pouring fuel on the fire with a blow out quarter?

Indulge me in a few numbers:

1.) Initial filing range $100 to $135 per share for 25.7 million shares.

2.) WR Hambrecht says that placed bids indicated an auction price of $97 per share.

3.) But the smart institutions realize that the correct strategy is to trash talk the stock to lower demand, then set a price to ensure the classic 15% IPO discount. The investment banks helped make this happen by keeping control over institutional distribution.

4.) Price at $85 per share, but reduce the supply of shares to 19.6 million. Sure, it's only 7% of the total shares outstanding, but it's also 24% fewer shares that can trade until lockups expire.

5.) VCs decide not to sell, top brass reduce their sales too.

Kleiner doesn't sell 2.1 million shares
Sequoia doesn't sell 2.4 million shares
Schmidt doesn't sell 368,965 shares
Brin doesn't sell 481,113 shares
Page doesn't sell 482,415 shares

So what happens when the company announces a monster quarter, something expected right after an IPO?

Well in a few minutes the stock will open at $170 per share.

That means Kleiner and Sequoia each made about an extra $150 million by not selling in the IPO. In itself that's more than a 10x on their initial $12.5 million investments. Sure, they're locked up for a little while longer. No sympathy here.

Now individuals are different that VCs and selling a 10% stake in one security that is your whole net worth is prudent. Also, while the VCs can distribute their shares to their LPs (and keep a nice 20-25% piece for themselves), management can't sell their shares easily while still running the company.

Still, this was all predictable (just as the IPO result was).

We'll see what the lockup expiration in November brings, but I'd say they've created sufficient demand today that any dip will be short lived.