It’s only few companies that achieve $5 billion in revenue in the first 5 years of its operations. One such company is Google. John Battle in his book “The Search” has used Google as a background and has narrated a beautiful account of the most important facets of the internet industry. He gives the reasoning that search as a problem is only 5% solved and says that innovations in search technologies is going to make web experience 95% more richer that what exists today. He views a world where search would enable to make a database of intentions and the web would easily facilitate Recovery of information and Discovery of Information to the user.
The book first describes the main components of a search engine which are, Crawler, indexer and run time indexer. Crawler as the name suggests crawls the web , brings various links and their context and stores them in a database. The indexer then creates an inverted pyramid where a set of key words map to certain URLs. These associations are then dropped in to a runtime index server from which the user requests are served. Much of the developments have happened in the indexing space from various search players and Google has a great advantage with its page rank algorithm which indexed various URLs.
The first search engine which was used by academicians and geeks was Archie, named so as it was primarily used for searching archived documents, papers etc. Then came Veronica which was similar to Archie but it was based on gopher protocol while Archie was based on ftp. A few others like Wanderer, Web crawler came in to existence but the use was more or less concentrated among the geek / academic community. The first widely used consumer search engine was altavista.com which was built by Louis Manier. This came as a part of development arm in DEC firm. However DEC being a big company was plagued by Innovator’s dilemma and did not realize the potential of altavista.com. Acquisition by COMPAQ sounded the death knell of any future developments of AltaVista. Meanwhile there were other search engines which started making noise as well as dollars. Lycos from CMU grads, Excite from Stanford grads, Yahoo again from Stanford grads became very successful search engines. Excite became very popular but made the mistake of selling the venture to @Home a cable company, instead of Yahoo. @Home was later acquired by Telecom Company and subsequently Excite did not receive a boost in the development.
Amidst all these search engines which were slowly morphing in to portals ( as it was widely believed that search as a destination portal had no revenue model by itself and portal with the help of banner advertising was the way to go ), Google came in to picture. Sergey Brin and Larry Page, 2 Stanford graduates as a part of their research found the search problem interesting. Considering the amount of search spam that was appearing on various portals, they felt that the citations and notations approach among the academic papers could be applied to the search problem. They started backrub , a search engine which would use page rank algo to crawl, index and respond to user queries. Backrub was a massive hit, first among the Stanford campus, then amongst the web user community. Once Backrub started receiving 25 million queries per day, it was decided that the time had come to make it a commercial venture. Google Inc was floated and the founders were fully dedicated to development of search engine. However with no business model in sight, google was blowing always of thousands of dollars every month in terms of the operational costs.
Bill gross is credited to be the father of the business model which was adopted by Google. Bill gross, a serial entrepreneur realized that there was a massive difference between good traffic and bad traffic, where good traffic meant those customers who would visit the sites and make purchases. He realized that suppliers would pay for the good traffic much more than the banner ads as the good traffic conversion rate would be much better than simply web traffic. Hence he created an intentional traffic engine where the advertiser would pay Bill gross only if the user clicks on the link, i.e. performance based ad spent from the advertiser’s point of view. Bill gross also made an innovative pricing – 1 cent per click. These two master moves led to the creation of Goto.com which was the first search destination site which had a good business model. The fact that it was a good business model came to be known only later when it started working. At its start though, all the industry folks scoffed at the idea of the pay per click. Goto.com became very successful and started to venture in to syndication business where it would provide search services on other sites for a fee split. The deal with AOL was a big blunder from Goto.com point of view and in the hindsight because the revenues from AOL tie up far exceeded that of goto.com site and hence the management decided to concentrate on the syndicate business.
Google at the same time was bleeding as there was no business model for the company. With the dot com bust, there was no scope for relying on banner ads as there proved to be useless for zillions of sites. Hence Google was in a way forced to look at goto.com model and hence adopted Ad words based model , a model similar to Bill gross model but where in there was no auction element and where the ads were more based on the relevance of site too rather than just the ad words. However Google realized the importance of auction elements and hence introduced ad words with auction based pay per click model. Google also entered syndicate business by released ad sense program which now provides 15 % of the total revenues.
In this book, Battle also explains the search economy which is characterized by Search engine optimization folks, Affiliate marketers, Click fraudsters etc. Google unconventional IPO is also very well narrated in this book. The most interesting part of the book lies at the end where several future scenarios are hypothesized by Battle. Some of them are Semantic web, Time archive of Internet information, Click stream analysis to provide better search results, Rise of Domain specific search engines, possibility of local and personal search engines etc.
I finished this book in one sitting. Actually once I started reading it; it was hard to put down because it was a wonderful narrative of the search space.