March 13, 2001

1:40 PM

Google's Larry Pagesees Horatio Alger surviving on the web: "The way I judge these things is, if you have a product that's really gaining a lot of usage, then it's probably a good idea, and it's probably going to be significant. And that tends to be a metric that investors use as well. Because if it's growing naturally, it'll often continue to grow for a long time. [...] And once you have the product and people are using it, it's very easy to raise investment. " His examples are Google and eGroups. Pyra presumably spent too much money on staple-removers and post-it notes.
posted by bumppo (9 comments total)

Google's Larry Page

All I could think of when I saw this thread title was, "Larry page? What in hell is a Larry page, and why does Google have one? A whole page devoted to searches on Larry?" Then, after a short time spent in confusion, I finally felt stupid.
posted by Skot at 2:00 PM on March 13, 2001

That's what I thought, too.
It's easy to say good ideas get funded when you're divin' in cash a la Scrooge McDuck. It sounds like they just were fortunate enough to be in a position to get their good idea out there.
posted by sonofsamiam at 2:04 PM on March 13, 2001

...once you have the product and people are using it, it's very easy to raise investment

How often does this guy get off the Stanford campus? Perhaps he meant once you have a product like Google which gets 70 million queries a day, it's very easy to raise investment. For anything less, the funding well ran dry months ago.
posted by Chairman_MaoXian at 2:19 PM on March 13, 2001

Also, there's nothing like a bit of campus nepotism. I'd like to know precisely what percentage of the VCs who funded Google (and Yahoo for that matter) came out of Stanford themselves.
posted by holgate at 2:26 PM on March 13, 2001

Not to bash Pyra - but I've seen many popular companies with excellent ideas fall on their face for less. People aren't willing to pay (perhaps they're willing to donate) and I suspect this will continue for a long time.

The one thing I'm surprised I haven't seen is more major corporate sponsorship - Pepsi Metafilter, for example - it's so cheap compared to any marketing campaign. Imagine if they had the foresight to give ten thousand dollars to a fledgling slashdot. Not to bash Matt but I think many site authors would change the name of their site for 5k (no obvious jokes, please).

Investors are rightfully timid and will be for a year or two. Unless you're getting a physical product most people still have the internet mindset that you don't have to pay for it - and sure, you don't. Because someone will always undermine your effort.

I think there will come a point when website operators have more common knowledge about costs involved in scaling to a million users a day - and they won't dare provide a public web service for free. Eventually there will come a common knowledge that you can't do that and survive - and when there are fewer options I think people will begin to pay.
posted by holloway at 3:30 PM on March 13, 2001

I so disagree with Mr Page. Good ideas used to get funding. If you had a good idea and executed on it, that would mean usage, which in yesterday's economy translated into some sort of liquidating event (IPO, acquisition, etc).

Today, it's not good ideas that get funded, but instead, good businesses that can make a profit regardless of liquidation. (I know there are exceptions. This is by and large, what most VCs are looking for now)

When the IPO market is cold and all of the possible acquirers are stock-poor, you better be able to sustain your business for at least the next 5 years. If you can't, it's like swimming in water underneath an oil fire.
posted by fooljay at 4:33 PM on March 13, 2001

Bringing Pyra into this is silly. For one thing, Pyra did get funding, just not as much as they needed apparently. For another, there are levels of popularity, and while Pyra does have lots of users, 100,000 users of a free service is not that remarkable. I am not taking anything away from Pyra there, I just mean that I think Page is talking about much more popular things, sites that are much larger.

Now as far as saying that Larry Page is out of touch with the current business climate or whatever, guys, he is the CEO OF GOOGLE for god's sake, he had a unique view into the complete life cycle of Egroups, he knows something (yes, believe it or not, maybe even more than many metafilter users) about the current climate. This is not your dad's barber giving you advice on tech stocks. I can see people disagreeing with him, but to make him sound like some foggy-headed old Stanford guy who isn't out in the real world is just silly.
posted by beefula at 7:14 PM on March 13, 2001

Just in case someone misreads my previous post... I was serious, not sarcastic.
posted by holloway at 7:45 PM on March 13, 2001

I hate to break it to this guy, but it wouldn't matter if he got 70 billion hits a day. It only matters how many other companies are willing to pay to use your search software and/or how many ads they can sell. The latter is a completely dead business model these days, so they're stuck with selling the engine. And who's buying the engine? Other dotcoms.

Now, the reason the banner ad market collapsed (other than the fact that they don't work in the first place) is that it was all a big circle jerk: Every dotcom was buying ads on every other dotcom's site. And, obviously (to everyone who wasn't working for a dotcom), this was only able to last as long as the VC money was flowing freely. Now Google is relying on circle jerk #2. It may well work, for a while. Yahoo isn't going to go out of business tomorrow. Neither is Cisco, or Netscape. (All Google clients.) But all of those companies are in times of financial difficulty. And if things start to get really tight with them, well, anything could happen.

I don't want Google to die; it's the best search engine out there. But this guy's a touch too cocky, considering the general state of the economy and the fact that his company is nowhere near IPO. No matter how brilliant your idea is, or how well it is executed, the VCs will eventually stop funding after a certain point. And if you can't fly on your own by then, you die. Spending frugally is good, but even that won't help you when there's no money left to spend at all.
posted by aaron at 1:25 AM on March 14, 2001