When value is not as it seems
Web portals like Alta Vista and Netscape were great but it was the search engine that really kicked things off, and screwed things up, depending on your point of view. Sir Tim Berners Lee created Web 1.0 the World Wide Web allowing the Internet to become more efficient and opening it up to the average consumer.
Where there are consumers there are companies looking to make money selling them things which led to the development of the Internet Service Provider (ISP) and the Web Portal. The early Internet giants are footnotes in the history books as Compuserve, AOL, Alta Vista and Netscape gave way to the search engine in the early 1990’s with the likes of Yahoo taking centre stage.
Gerry Yang and David Filo were computer science students at Stanford University in the early 1990s when they realized that all these different websites being created and accessed through portals would be useless unless there was a way to find them all. They created Yahoo, the first search engine, allowing people to type in a request for some data like the weather in New York and they would send you a list of websites that hosted that data.
It didn’t matter that for the first little while Yang and Filo were fulfilling the search requests manually, each taking a 12 hour shifts at the computer terminal in a portable building in the parking lot of the Stanford Physics building while the other one slept on the floor, they were on to something.
Every search created a list of results that were dutifully indexed by Yang and Filo and eventually they were able to automate the process enough to get a decent nights’ sleep, raise a bunch of cash from VCs and become the darling of the tech world. But they missed something critical and left the door open for an 800 pound gorilla named Google who would eventually dominate the search engine space and reduce Yahoo to a footnote in the history books.
Google was also a search engine, an even simpler one than Yahoo with a blank white screen and one text field. Google’s simple, clean interface was clearly focussed on search and nothing else and they soon came to dominate Internet search as a result.
What Google realized was that the true value of a search engine was not in indexing and providing search results to users, the value was in knowing what people were searching for.
Yahoo built a database of websites while Google built a database of what people were searching for. This may sound like splitting hairs but the distinction is very important. If you own a database of websites you own a spreadsheet. If you own a database of what people are searching for you can sell that data to advertisers looking to influence the decisions of Internet users.
Google rapidly became the 800 pound Gorilla of the Internet as they dominated Internet search. As computers got faster and cheaper the Internet grew exponentially and Google required a massive investment in storage and servers to contain all that search data and the Cloud was born.
Looking back on things I bet Jerry Yang wishes he could borrow Marty McFly’s DeLorean to take him back to the past so he could change Yahoo’s business plan.