In Search of the Next Google

Rob Enderle

I took a meeting with a company called Apture the other day and while I was listening to what the company was doing and what it planned to do, I wondered if I would be able to tell if it could grow to become the next Google. Others here at IT Business Edge argue it can't and they probably are right, because the odds against picking the next Google during the early stages of a company are likely in line with winning a state lottery. Unlike the lottery, though, there are concepts that could be applied that increase the odds of picking a winner. And clearly, some VCs have impressive hit rates.

 

History of Big Hits

 

Now we have to be careful because the last truly big company in tech was Microsoft. Before that, it was IBM, and if you were to apply a test focused tightly on what made IBM what it is, you'd miss Microsoft. And if you applied the test that focused too tightly on Microsoft, you'd miss Google. You have to make sure you aren't too restrictive.

 

Google Leadership Assumption

 

I'm going to make an assumption in this piece and that is that Google has displaced Microsoft as the current major power in technology. This isn't based on the size of the company but on who is chasing whom. The leader leads, everyone else follows. Microsoft became more powerful than IBM, in my view, when IBM started chasing it with OS/2. In my view, power is control, and you have control when the others in the market are following your lead. I think it is interesting to note that in almost every case, the leadership has passed not because of something that was done by the new guy, but because of a change made by the old leader. Might be an interesting topic for a future post.


 

On a side note: Mainframes, which IBM agreed were basically dead in the 80s, are still a multi-billion dollar business for the company and might have been the best platform for cloud computing if everyone didn't think they were "dead."

 

Global Potential

 

Skipping IBM, which basically was built to displace NCR, Microsoft was something different; its OS and productivity suite were designed to touch and be used by the masses. This gave it global potential. So too did search and the need to find things on the Web. This rule would have also applied to Netscape, but just because something has potential doesn't mean success is assured. I doubt there is any tool we can use in the early phases to assure execution won't fail once the small startup becomes a large company.

 

Easy and Inexpensive

 

This is a relative rule, I think, because while initial PCs were vastly easier and less expensive than the systems they replaced, they would be too expensive and difficult to use for the market the way it currently exists. Google at free was clearly inexpensive and made search vastly easier than it had been, given the nature of the tools that preceded it. But we shouldn't lose track of the fact that this is relative, not absolute. It simply has to be more simple and less expensive than whatever tool it eplaces.

 

A Piece, Not a Whole

 

One of the consistencies that struck me between Google and Microsoft was that both took a piece of something in terms of revenue source but not the whole thing. Even in IBM's case, back when it was the power in tech, it was largely based on a leasing, not a purchasing, model. It was kind of getting a piece of the annual income from client companies. This is what gives the effort scale and still defines why Microsoft, not Apple, became the power that succeeded IBM.

 

Transitional Talent

 

This just occurred to me as I was finishing this piece: Companies go through phases often defined as: start-up, transitional and sustaining. The skills needed to run a company in these three phases are quite different and firms often fail because they lack the maturity and experience to make the needed transition in management style. IBM started with an experienced team, Microsoft and Google hired in people with this kind of experience relatively rapidly. In fact, in terms of general company success or failure, regardless of dominance, I think you can probably accurately forecast a company's likelihood of survival based on the depth of its executive bench. This is what I used to accurately estimate Netscape's failure nearly a year before it actually failed.

 

However, as I think about this, in the very early phases, this isn't that critical. It only becomes critical once the company starts to rapidly grow. Early on, I think you want to assess whether the startup has anticipated that change and will be willing to pass leadership on to someone more capable when the time comes, or whether running the company and actually being the initial CEO is the goal of the founder. If the latter, it may reduce substantially the probability even for initial success.

 

Apture

 

So how does Apture stack up? This is a site that demonstrates what its links do. It was were close enough to have me think through elements of what could make a company big in the current environment. It is another very small Stanford-based startup looking at creating better hyperlinks and monetizing them. I actually thought the result was rather cool but you should come to your own conclusions.



Add Comment      Leave a comment on this blog post
May 23, 2008 12:16 PM Kurien Kurien  says:
When we talk about ideas - this idea is also based on information ... which Google has plenty of. It just takes a small script from Google to replicate what Apture is doing. Also, Google is different in the basic experience. I need information ... I need it fast. Right from the first time google was launched - speed has been an important criteria. even in the first days of google it was FAST! .. Apture is slow ... even when I am trying to access it now. Apture the next google - IMHO - No Way! Reply

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