Monday, November 28, 2011

Google Tells The Story Of Its Search: No, You're Not Mentioned

"History is written by the victors." - Winston Churchill

TechCrunch wrote today about a video Google recently released summarizing the history of Google's search engine:

It's a very well put-together video that does capture how Google is continually innovating , but I noticed a few things the video did not include:

Mayer discusses AdWords (starting 57 seconds in), and the timeline shown in the video says Google didn't have ads on its search results until September 2000. That's not true. RealNames, the firm Michael Arrington & I worked at, convinced Google to try our paid search ads - in late 1999. It is perhaps no surprise that Google omits the role a business partner played in convincing them of the value (both in terms of revenue to them, and value to users) of market-based pricing for search ads, but I'm here to tell you & future historians what really happened. Here's the Dec. 2009 press release announcing Google's partnership with RealNames:

AdWords API
Google is as big a part of our lives as it is today for two reasons:

1. They built the best search engines; and
2. Because they've been the best at monetizing our use of their search engine;

Had Google not out-monetized its competitors, other engines would have been able to secure key distribution deals, such that we'd be using AltaVista, Yahoo, navigating directly via Internet Keywords in the browser address bar, or various other services in lieu of Google. Way back in 2004, Google's traffic acquisition costs (TAC) were 79% of revenues, versus 24% today; back when search was wide open and marketshare much more evenly distributed, Google needed to monetize better in order to earn additional eyeballs. Perhaps Google only wants to tell the consumer-facing version of its search history, but to not talk about the AdWords API is to miss how fundamental it was to Google winning the monetization game. The AdWords API allowed many SEM tools providers (both existing at the time, and new ones thriving today) to bring scale and automation to SEM campaigns, subsequent to which Google's revenues grew from $1B/quarter when the API was launched into beta Q4 2004, to $10B this quarter. 83% of Google's revenues come from 26% of its advertisers (AdAge, Sept 2009), and anecdotally I'd bet close to two-thirds of that 83% is spent via the AdWords API. [It's also worth noting that Google's attitude towards AdWords API developers of late is ambivalent.]

Nowhere in the video does Google so much as mention the partners that gave them distribution, the agencies that build & manage campaigns, or the trading platforms through which much of their revenues come. Were FedEx, HomeDepot, Ford or WalMart to put to video similar histories of their services, I rather suspect partners would be included and/or figure prominently. Not so for Larry, who, I've been told several times recently, would prefer that not a single company exist in between Google and its users. Larry, keep the following in mind: 1) Max never scaled; 2) your top advertisers shouldn't, don't & won't use your tools for strategic reasons; and 3) the essence of your business model is not search, but rather direct navigation via search for people who already know where they want to go but are too technically inert to use bookmarks and the address bar to get there.

In Google's history of search, you the publisher, you the agency, you the spend enabler... are nowhere to be found.

Monday, November 21, 2011

SEO Platform Wars: Bloomreach & BrightEdge

I just read about Yahoo's decision to end-of-life its Site Explorer product. With this move, there now no longer exists any free tool to find out all of the links pointing to any particular website (as SEL's Barry Schwartz says, Google has for many years suppressed this data). While there continue to be a number of paid tools that help websites figure out the ever-changing link structures of competitors' sites, it is nevertheless important to note Yahoo's decision, as it appears to be part of a larger trend of the major internet players laying claim to their data as a strategic asset.

As I wrote last week, Google has now stopped providing referral keyword information for organic Google search traffic from logged-in users of Gmail, G+ & other Google apps. As with the Site Explorer end-of-lifeing, SEO's are raging mad that Google's done this, as it seriously undermines their white hat efforts to use keyword search data as the basis for a better user experience.

In my 2011 SMX Advanced exhibitor analysis I noted that there were as many SEO technology vendors as SEM vendors paying for booth space this year (go Danny), and with these moves by Google & Yahoo/Bing to make SEO harder, one can only expect that enterprise SEO vendors will benefit.

Pivoting over to my favorite sales tool, BuiltWith Trends, a website technology tracking service, their data for two of the top SEO platforms, Bloomreach & BrightEdge shows Bloomreach with 160 customers, all of which are among the top 10,000 websites, and BrightEdge with 148 customers, 37 of which are top 10,000 sites. Interestingly, Bloomreach's customer base is 3/4 retail, whereas BrightEdge has the type of customer diversity one would expect of CEO & alum Jim Yu.

These numbers were in the 25-50 range when I queried BuiltWith for the data 9-10 months ago , ergo enterprise SEO is getting more investment. This should continue, as it increasingly appears those who have lots of search data want to keep those who don't in the dark.

Tuesday, November 15, 2011

Google Brings Increased Privacy To Searching (or, 'Privacy Theatre')

People, Oct. 18, 2011 was a beautiful day in the history of the Internet; on that day, Google brought true searching privacy to all consumers who are logged in to any Google app (G+, Gmail, Google Reader, G Analytics, hosted apps, etc). As of that day, Google has routed signed-in users to the SSL version of Google (

Google did this *for us*, because they love us and want to protect us. Love, protection, caring and privacy are things we all value, and so isn't it just wonderful that Google has given us this early holiday gift? That reminds me, I need to hug Matt Cutts & Avinash the next time I see them, just hug them.

It turns out that the evil-doing data-users have been watching you in Google's house, watching your every move. The ISP's, they have been monitoring your queries and selling the data; the public WiFi snoopers abound, while the owners of routers & trunk Internet lines have their ears to the wires listening to your silent queries.

These stealthy hunters will no longer stalk you and watch your Google searching activity, thanks to Google. Merchants, while you would otherwise henceforth know nothing about the signed-in flock Google sends to thee organically, in its magnificence Google will still provide, via Google Webmaster Tools (GWT), an aggregated list of the top 1,000 search queries that drove traffic to your site for each of the past 30 days.

For the rest of us who make a living from online marketing:

So far the three relevant datapoints I’ve seen are:

1. SearchEngineLand survey: 12.02%
2. Hubspot view across 3644 Hubspot analytics customers: 11.36%
3. Conductor (1.5M visits across 5 websites): 6.5%
4. All 39 individual anecdotes from commenters to SEL, SEOMoz & Hubspot articles on this topic from the past two weeks: 13.27%

I expect the impact will end up being just as large as Google's combined marketshare for Gmail, G+ and all other products from Google requiring log-in. That is to say, potentially upwards of 50% over the next year or two.

Key quotes from Webmasterworld thread on this topic, which as usual is *the* place to be illuminated:

1. "Boom. A dagger through the heart of web analytics." - johnnie (WMW)
2. "To protest everyone could simply bounce all SSL referrals from Google, I dare you... :) (incrediBILL, WMW)
3. "From the look of it for the past couple months Google have officialy declared war on all webmasters." (Donna, WMW)
4. Protects privacy from snooping 3rd parties = ISPs (who all currently monitor queries & sell the data); public WiFi snoopers; owners of routers & trunk Internet lines; any middleman
5. "Privacy theatre" distract the gullible & helpful only to Google (Leosghost, WMW)
6. "The point here is that Google will be able to analyze this data--You won't. It's all about separating you from information that has historically been, and would continue to be yours to evaluate." (loner, WMW)
8. "goog is just an enormous personal data sucking black hole that wants nothing more then the complete and total control of the net....and that means getting rid of ANYTHING they do not control, IE webmasters that run websites. Every single move they do is to erase something and replace it with "goog this" (J_RaD, WMW)
9. "Google's turning off one of ten lights in your room. Enough, maybe, to be noticeable, but not enough to throw you into complete darkness." (rlange, WMW)
10. "you better start diversifying your online revenue channels beyond SEO" (wwconnect, WMW, his post #4376750 on thread is really good)
11. "G has always been pretty "siloed"..the only ones who seem to have access to all areas and know what is going on overall appear to be the lawyers , the accountants and the ruling triumvirate.." (Leosghost, WMW) -like medieval church!!! USE THAT ANALOGY
12. "Make organic an unworkable solution and force people to pay the extortionate prices for adwords. We've seen this again and again and will continue to see this. Push the organic results down, populate the page with goo, and now take away tracking." (shazam, WMW)

Wednesday, November 09, 2011

Startup Equity Survey Synopsis: You Are The 99%

The startup equity survey I started several months ago is up to 78 responses (as of March 20, 2012), and with my upgraded SurveyMonkey membership I can now share the results here. If you work in startups you had better read this, as there's a ton to learn about the huge disconnect between the startup equity dream and startup equity reality.


Only 38.5% of respondents know within 2% accuracy the total number of shares outstanding in the startup they work at.

72% don't know what the preference structure is at their startup. You might want to, for two reasons:
1. Whether your startup is Standard or Participating Preferred can have a 30-40% effect on the value of your common shares in a liquidity event;
2. I can virtually guarantee you that if the preference structure at the startup you work at or are interviewing with is gonna f#&k you in the keister upon liquidity, you never asked the right question and your employer consciously avoided disclosing what you'd have wanted to know.

Only 9% legally have any control over what role & responsibilities they'll have post-acquisition. Now do you understand why so few startup employees are truly happy with their role within the acquirer? Reality is management oftentimes doesn't think it through - either in terms of the employees' best interests or, frankly, the best long-term interests of the acquirer - because a) they have no incentive to; and b) you the Common shareholders haven't used your leverage to gain basic control over what happens post-acquisition.

A strong majority (66.7%) of startup workers don't know what the industry average is for equity given to people in similar positions. This wouldn't be an issue for you, the Common, if 50% of you weren't expecting that your startup options will be worth $100K-$1M and 20.6% $1M+. It's a dog-eat-dog startup world, and you 66.7% are wearing Milkbone underwear.

Only 29.5% of you are certain you have any type of trigger clause in your employment agreement with the startup you're at, and even fewer (10.7%) negotiated that language. A trigger clause gives you partial or full vesting acceleration should you be a) fired without cause; b) put into a role inferior to that for which you were hired; or c) upon acquisition. Given its importance, employees' profound lack of knowledge in this area is why a much higher percentage of VCs drive luxury cars while you drive Pinto's.

Dreamers Dream, But Lawyers Wake Them Up
42.3% of respondents expect their startup equity to be worth $100K-$1M after 4 years' vesting, and 25.6% expect $1M+. [Generously] assuming $100-$150K annual salary, people are clearly dreaming that their startup equity will have a big & positive (quite possibly life-changing) impact on income. Yet, only 23.1% have had two or more liquidity events. I realize in retrospect that I should've asked people what, if any, money they made from their equity in those exits, but anecdotally I've heard from several people that by no means did liquidity events always correlate to income events for them.

So what does this all mean? Two things really:

1) A strong majority of non-founding startup employees don't know what they need to about startup equity, and as a result are putting themselves at the mercy of founders and investors for receipt of a chunk of change that they largely expect to change their lives;

2) The glaring lack of knowledge on the part of Common shareholders at startups is a major contributing factor to the huge gap between startup equity income expectations and reality for non-founding startup employees.

I've had 4 startup strikeouts, 2 singles, a double, and an RBI triple on an at-bat that took 8.5 years. That's a .500 batting average; not bad but definitely better than those surveyed. The pain of walking back to the familial dugout after those strikeouts, coupled with the pride of digging out an infield single has taught me a ton about startup equity. If you need help, reach out [chris dot zaharias at gmail dot com] and maybe I can help.

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