One of the funny parts of Founders at Work is Nathan Myhrvold, paid to be the smartest guy at Microsoft, saying “Search is not a business” to the founders of Excite in 1995 (page 68). Joe Kraus goes on to say “By 1997, everybody was diversifying into portal stragies, because nobody knew how to make money from search. Search was viewed as the traffic director to other more profitable businesses…”
More wisdom from Kraus:
I see way too many people give up in the startup world. … Recruiting is a classic example. I don’t even hear the first “no” that somebody says. … It’s hard to identify talent, but great people don’t look for jobs, great people are sold on jobs. And if they’re sold they’re going to say no at first. You have to win them over.
I dunno, Google is well-known because they have a great search engine, but they’re rich because they sell ads that people actually want to click on.
The portal thing was a bust from day one, yet companies are still trying it. If you go to Excite.com now, the only thing distinguishing it from one of those pages put up by URL-squatters is the Excite logo. For some real nostalgia, check out Hotbot.com.
Sean, I think that Philip (well, actually Joe’s) point is valid. I mean, the major reason their ad network is successful is because of their great search engine. Their ads sell precisely because advertisers know that users are presented (on average) more relevant ads based on the user’s search results.
“If you go to Excite.com now, the only thing distinguishing it from one of those pages put up by URL-squatters is the Excite logo.”
That’s because when Excite went belly-up, the domain was sold to IAC, which is not far removed from a “URL squatter,” in my opinion.
Strange that people tend to think alike in similar situations.
They thought the same thing in 2005 concerning MySpace if it worth the money was bought for.
The same thing earlier and after YouTube’s acquisition in 2006.
“YouTube is never going to make any money”
“How is Google going to make money out of it..” etc
Now the predict in 2008 internet video will become 1 billion dollar market.
Maybe the secret behind the next big thing is doing something everybody is defying.
“Founders at Work” is a great book and Krauss’s story was an interesting one (as almost all of them where). I had a slightly different take-away from that snippet though.
On the one hand it was great that they didn’t give up so easily. On the other hand, it was mostly Vinod (K.P. partner) who didn’t give up, not Krauss who sounded like he threw in the towel. Furthermore Excite didn’t win over Netscape (their first major deal). The other guy (MCI, I believe) couldn’t deliver so Netscape decided to accept their bribe instead! Also I never quite understood the bit about great people saying “no” when they are already sold. I understand companies having to win great people over since they have lots of choices of where to work, but why would these people say “no” when they’ve already been sold on the company?
Nonetheless it was a great book, including the chapter on ArsDigita. It’s interesting to see that issues such as programmers being reluctant interact with customers or write docs affected you guys too.
“Maybe the secret behind the next big thing is doing something everybody is defying.”
Almost. It is doing something everyone says you can’t make money doing, and proving them wrong.
Because, you know, many things that get dismissed as stupid ideas actually *are* stupid.
And, in many other cases, whoever originally comes up with an idea that is initially dismissed but is ultimately shown to be valid is not the same person who figured out how to actually make money with it.