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Wednesday, April 16, 2008

Can the Next Google be Manufactured?

Can anyone successfully engineer another Google? What I mean is, is it possible to grow startup in a systematic manner that guarantees repeatable success?

No, it's not possible.

Yes, you can apply all kinds of procedures, techniques and control, have the best mentors, and best programmers, have the coolest ideas ( by your definition, of course) and just enough funding (too much money will spoil the founders) but still fail.

Not being a MBA professor, I would like to offer a suggestion on why this is so.

The very fact that we see only one Google, one Microsoft and one Facebook may have to do with the fact that losers tend to shut up, aka survivor bias.

Why there aren't more Googles? Not because Google is exceptionally unique, but because it just happened that Google just took off whereas other startup just died. If XXX company took off we would be asking the question "why there aren't more XXXs?"

I know, I know, Google folks are smart, a few magnitude orders smarter than me; their technologies are unique and substantial , unlike so many copycats websites out there that have nothing unique to offer; their management is good ( maybe). But let's pause a while and think a bit, how many promising ideas or startups that are Google-like but eventually ended up forgotten?

Do you remember Simpli WordNet? I bet you don't. Me don't, either. In fact I came across this term only after I researched this post. Simple WordNet is the pioneer to what we know today as Targeted Ads. In fact Google bought over Simpli WordNet in 2002 and rebranded the services under the name-- you guess it-- Google Adsense.

Google took off, but WordNet didn't.

What about RankDex? It employed the same technologies as Google search, but it didn't took off.

Speaking of search technologies, except PageRank, we have natural language query, pioneered by; we have semantic web; Yahoo's web directories(1997) and other less well known endeavors. Out of so many competing technologies, PageRank stood out as it was and is obviously better.

But Page and Brin didn't know that their search technologies would one day revolutionize the world when they started their project in the garage. No one knew. No one knew PageRank was better until everyone used it and liked it. No one can foresee Google could come this far and be a juggernaut that can challenge Microsoft when it was first born.

There were many promising technologies at the startup stage, and they didn't make it. But without the benefits of hindsight, no one knew that they would die.

Who would have, in 90s, thought that the search would be such a lucrative business in 10 years time? By similar token, in early 2000s no one anticipated the rise of Facebook, YouTube and other scores of prominent web 2.0 startups. Funding startups are rewarding precisely because they are risky. If there was a sure-fire way to spot the Next Google, or to grow the Next Facebook, then the whole funding business would not be as lucrative as it is today. There won't be as many people as there are now in jumping into the startup bandwagon.

Sure, Google's resistance to being acquired was one of the keys to grow in size ( or else we won't see Google as it is today). But avoid being acquired is just one of the necessary, but not a sufficient condition, much like having a cluster of server farms is a necessary but not a sufficient condition to run database-intensive web applications. Granted, there are a lot more companies that refused to get acquired but nevertheless retreated into oblivion after some time. One of the examples is Friendster (You do remember Friendster, don't you?). Friendster was the top of all social networking sites in 2002-2004 and had the opportunity to get acquired by Google. But the people in charge turned down the offer and saw its market share being gradually eaten by MySpace and Facebook.

In stock market there is no way to tell which money managers will perform best in the next ten years or so, I suspect that similarly there is no way to tell which startup will prosper and which will perish. The successful ones may not be the most technologically sophisticated (although a certain degree of technological sophistication is a necessity), they may not be the most well-funded ones, but they must be the most popular ones.

The catch here is that without the benefits of hindsight there is no way to tell which ones are the most popular ones.

No, no one can replicate another Google reliably. And that's what makes startup so exciting. You know that you are not the best, you know that you can't compete with the big guns in terms of resources. But with luck and diligence and all your naive optimism, still you have the hopes to upset them.

That's how the whole entreprenuership business recruit bright and adventurous people despite high rates of dropouts and failures. As a result of that, the world is a much better place.

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