I met Jim Lanzone over 10 years ago and I was sure he would quickly IPO his startup, eTour, which was a web discovery site similar to Stumbleupon. He raised over $50 million in funding, had top backers and generated a lot of buzz.
Then the internet went through what past Mixergy interviewees called a “nuclear winter,” and the company lost its stability. I watched others disappear from the industry, but Jim ended up selling his startup to the company that became known as Ask.com, and he made it into one of the few surviving search sites.
In this interview you’ll hear how it happened, and how he’s making Clicker into the most complete guide to Internet television.
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Interviewer: Hey, I am Andrew Warner, I am the founder of mixerg.com, home of the ambitious upstarts. You guys know what we do here everyday, every single weekday, I think I have been doing this now every week day since the last eight months at least. I bring on a different entrepreneur to talk about how he built his business or how she grew her company, we talk to entrepreneurs about their big successes, we talk their big failures and we learn from everything that they have experienced, so that we don’t have to experience it first hand to learn for ourselves and more importantly so we can go out there and build a incredible businesses ourselves. Today I’ve got Jim Lanzone with me, he is the founder of clicker, the programming guide to T.V. there he is. It makes finding online video very easy, incredibly easy. I just typed in a few people to prep for this interview and I got carried away and started looking at all their videos. Previously he was C.E.O. of Ask and before that he founded eTour. Welcome.
Interviewee: Thank you.
Interviewer: Jim, by the way, how do you do such a freaking good job… (I won’t ask all this soft ball questions. We are going to talk about eTour. I’ve read lots of interviews. I saw the Jason [Calic Candice] interview with you and I plan to ask questions that others had not talked about . We will be talking about eTour but I’ve got to ask, what seems like a soft ball question because I am fascinated.) How do you get all that content sorted and so easy to find, much better even than Google does?
Interviewee: Well, I guess truth is, so one is, we did spend a year in stealth building it and it doesn’t just happen. The thing is that there are so many videos, premium videos and that is all we index, we are not dealing in cap videos, or excerpts or clips or illegal stuff. We are only categorizing the things let’s say that are worthy of the 10 Foot experience or that we would deem to be that. But even with that, but still, hundreds of thousands of episodes across thousands of sites and so the way, you cant do that manually so from a technology standpoint we search. We are search guys and the core team here comes from search and so what we spend our time dealing with is kind of plugging all the technology into these thousands of sites and doing it so that we could suck down all the data and then normalize it into one consistent data structure, because our, if you go back to the beginning I mean our goal here was to build the T.V. guide to the next generation or what we thought was more, what would look like a lot more like yahoo or IMDB or Wikipedia would schedule grid. It’s no longer about when things are on, right? But the problem is that there is no, there was no metadata that existed yet. It wasn’t like plugging in the shopping search where you could just say, size 13 blue, Nike running shoes, suck that down and its all kind of already there. We had to go create it site by site. So the reason we were able to get all that data is because we set up technology to go suck it all down and that is why even when things change, you have a new website, we know about it automatically and the UI site, I just think , we have, we’ve always I think gone back to Ask, they have a very good UI scheme and we took a lot of pride now, we have put a lot of effort into it, we care about it, which I think is half the battle sometimes so hopefully it looks and feels vey, very easy to use.
Interviewer: Alright. I want to come back to this. We are going to go in a chronological order and I will come back to the UI because I would love to find out how people improve their UI and how they even watch users interact with their websites so they know what needs to be improved. Why don’t we start with a website that I only read about in the New York Times article recently, something called NO X. That apparently was the gateway drug for you. What was that?
Interviewee: It was the gateway drug to me.
Interviewer: That was what got you into Internet entrepreneurship?
Interviewee: oh, it was my first job really, I mean I never, so I mean the short version of this is I went to UCLA and you know as a kid growing up, my dad was a lawyer, my mom was a teacher, our family business was a fishing ship store, I mean am not coming from a big linear people who were reading the wall street journal here and growing up I had never done anything other than read the sports page and the entertainment section and that pretty much existed all the way through college where I was a river guide and I worked in a book store. I mean I never really had a career track and so I did what all people, who don’t know what they want to do, do. I went to law school. Very expensive and boring way to figure out what you don’t want to do and so I got really lucky, I switched over to business school and one of the professors there hooked me up with a bunch of internet start ups, this is ‘96 and one was hot wired here in San Francisco which created the first ad, one was jam TV, which was the first, it became emusic and then the third was a company in Atlanta called InformationAmerica, which wasn’t a real online business. It was kind of like … in fact it had been thought by westlaw, and they did public records, they sold them via, you know through online to lawyers and businesses and private investigators and my first job there interning was build us a web version not just me, I mean I was with a team of people who did it. It just kind of clicked and I spent 8 months helping build it off the ground and around the same time two of my classmates at Emery business school were starting a company which became eTour and they needed a product guy and so I got cocky and said sure I could do that and so I joined this start up in August of ’97. Their name, by the way, through the corporate entity was [Jaxtinet], awesome name.
Interviewer: For eTour, right?
Interviewee: Yeah, it became eTour after we got funding. Yeah, so I joined the two down and started helping them build that out.
Interviewer: I see, so we talk before the end of the interview. Back then you and I did business together, I think the first time I met you was in Atlanta in your office. We used to send members to you, you used to send big nice checks to us, it was a great relationship for a while.
Interviewee: Crazy days.
Interviewer: Those were the days. Here is what I haven’t seen in the bios of you and actually and of your co-founder. I see sold to Ask Jeeves, I see you raised over fifty million dollars, in fact the New York Times article said we sold the company to askjeeves.com by the skin of our teeth in 2001 but what no one says is, this is the hard part for me to say because I want to make sure that you feel comfortable here being open and that you, well I want to make sure that you feel comfortable. The company went bankrupt, right?
Interviewee: No, I mean not technically. I think what a lot of companies in that period, what happened was we didn’t sell for as much as the company had raised essentially. The thing with eTour was that you know, the company did raise all these money. It was the top website and the funny thing is we were one of those companies. Again I was the product guy I wasn’t on the board or in a position to be making these decisions, but we, you know have these incredible offers, for four hundred million dollars and three hundred million dollars and it’s just a great example of what was happening at that time. Where our board was, you know, the script of people who had already made a ton of money by going public, or whatever is the founder of … the founder of IXL, which was like a big agency at the time, the founder of Relevantknowledge which became Media Metrix so these guys kind of all hit it and you know the company decided not to pursue these options at the time in order to go public, which is a very you know, common thing in 2000 and …
Interviewer: ……back then and a list of all the people that were going to get friends and family shares when we went public and here I was, an unfunded company, I got from no where and I was thinking in that direction so I completely get that.
Interviewee: Yeah and so, if you, I mean the long story short is, the market crushed, we didn’t go public, we went on fumes and sold what we had wanted and so we sold to Ask and you know what we made on that deal, you know was not going to cover everything that the company had spent on, so in order to build up to go public. Its one really funny and interesting thing is that, one of the models for kind of priming the punk to go public was Ask Jeeves. I think I remember being in these meetings and people saying you know that we need to like buy wall street journal ads, these things were expensive and you know we were doing good revenue but it was you know, eight, ten million a year, it wasn’t enough to really, these days talk of, going public and buying these expensive ads we did television ads, you probably remember this and that was supposed to kind of like increase awareness before we went public and then they were like if we go public I think five hundred million is the original price that we were supposed to go out at and so you know it’s interesting from our beginnings which was as you said we were not funded, we were just three guys at a business school in Atlanta, and we actually had to prove ourselves, and we had to think about, I mean for people who don’t know what eTour was, it was such a stumble upon. The only real difference was that there was no such thing as social at the time on the web and we had a team of editors essentially putting all the websites in the cue, but it was the same model whenever we x number of sites would be paid to be there. The sites would match our interests, thumbs up, thumbs down, hit the next site button, you know, so.
Interviewer: It was a great company. You would say what your interests were, you would see a big button on the bottom of the page and you could just keep flipping through pages that match your interest just like you said. Just like stumble upon, the revenue came from those, the pages that were sponsored and you were sending traffic directly to the sponsors websites so that they can make, so that they can use the full page to sell users on their servers and to get them to understand what the product was, which is so much better than just a little banner ad.
Interviewee: Yeah, but it was definitely ahead of its time and I would say, I mean what happened with eTour after we sold it was interesting because ask was on its own precarious position at the time and we actually had to make a lot of choices. Etour was one of the things that we got rid of along with our dance points, such and yahoo answers three years before that and we just killed it too. We didn’t even raise our first dime for eTour until we were already the number one ring site in the web and user loyalty and then all of a sudden the, you know the frothy market had taken off and people were thrown off the idea, but you know it was a very cool site and good idea and just early you know.
Interviewer: I thought that, actually, you’re right, it wasn’t bankruptcy there was something like bankruptcy and we had to deal with lawyers in order to get our final payments and we were told that if we pushed it then we would be pushing the company into bankruptcy and then the lawyers would get more of whatever cash was left in the bank than we would end up getting and so.
Interviewee: It just that it didn’t cover you know, all the expenses that the company had made out during that period it included things like advertising and we did CPA deals your company Mailbits , you know all kinds of things like we were getting a hundred thousand users from the Island of [banatude] through [melben] so in an island that only had three thousand in abidance so we were wondering you know what was that and there were all kinds of things that we could have gone into, I think the thing is that the company had also done things like, it bought a ten year lease on a building in down town Atlanta. You know, things that you just don’t, this is beyond lean start up and you know, this is the same thing that you would have seen at two hundred companies in San Francisco as well, so anyway, I mean the, at the end of the day we are able to, you know, ask it or eTour has a very good reputation product wise at the time and so ask was one of the multiple companies who wanted it and so we wound up there. The interesting thing about that is that Ask was, I think the day that we were part of that month was worth 30 million dollars, it was probably capital, it was worth 30 million dollars and you would have hundred million in cash at the bank. So it was actually negatively valued from a market perspective. Most of the money at the same time, this is also getting kind of tug of war in the market, was being put into the software division of the company which was a, be – to – be kind of prefabricated question – answer product. Like if you were good in Nike site, you would type into their search box, you know, how can I return my shoes online, and it would already kind of have an answer for you and that was like all the investment most of the market had and the reasons because ask didn’t have a business model yet and so you know the whole story of how Google happened has a lot to do with, I think what are the search, quote and quote such kind of things we were doing the time which is that they were bastardizing their websites with seventeen different forms of banner ads and all these things trying to get profitable, not become delisted and so this was still those days and so that’s why ask showed off at the eight different lines of business including eTour as one of them and our international businesses, things like that, so crazy crush occurred.
Interviewer: Alright, I don’t want to make you feel uncomfortable so I am not going to ask many more questions about eTour, if there is something that you feel you want to say about Mailbit, yeah, if there is something that you want to say about our relationship with it, I am completely comfortable with it, you can say even the negative stuff, I just want, I want to be open as you feel comfortable and if there is anything you remember about our experience, feel free to say it too.
Interviewee: I mean, I think the problem at the time was, you know I guess this is just wildwest, for everybody who was in existence then. And frankly it’s not even just the people who didn’t make it also the people who did make it, some of the missteps they made at the time that they are still paying for it. Yahoo is a great example, then you are shifting to becoming a portal or losing their brands as a search engine, kind of giving their businesses to Google, which have a lot of implications down the road, you know I think one of the things that happen a lot of times, people value in companies based on the number of user it’s not based on revenue but again if you look back and think of the thousands of the companies founded that go public versus the three in our space that do so every year now, it was I think it was a very hard time to even gauge. If I look back the biggest thing for me is just experience and knowing, hey I know how to build really good stuff and my team, some of them are still here, you know. You know how to build really good things, you know how to draw an audience and so those lessons were important. But say even some of the business lessons maybe don’t even apply so much just because of how crazy ‘99 to 2000 was, the sheer period when, I mean it was just insanity. I remember being in conferences where they would run a ticker on the wall of all the IPOs and all the public companies, I mean everybody would go on stage goes public and I don’t know it’s funny; I keep waiting for someone to have catalogued that era in a really appropriate way. Maybe the best, what was the start up, the government start up in New York? I think I heard a documentary about it.
Interviewer: Oh, easystrartup.com or something was the name of the movie?
Interviewee: That may have been the best overview of what was really happening maybe at the time and what people were doing and thinking or their instinct.
Interviewer: I tell you I can never see that movie because it was too painful. Here is what happened to us. First of all for a long time companies were using us to go public in this way. We were able to generate registrations. All they cared about was the number of registrations because the market then would value them at a multiple of their registrations, so they might pay us about lets say for registration but the market said every internet company is worth twenty dollars times the number registered users, so they pay us a buck, they’d end up making the nineteen dollar difference by going public and then they would go public and the world would change for them. What happened to us, here is one of the mistakes that we made. I remember you guys coming into our office and we had this stinky little office in Queens, New York, not even Manhattan, the first time that Roger, your co-founder wanted to come see us I was so embarrassed, I said, “Why don’t we just meet at the airport, I’ll make it easier for you.” And so we met at the airport and then the next time he insisted on seeing the office. And so he came in, we showed you guys the office, I don’t know if you were there with him or not but I’m so embarrassed. We quickly moved across the street to a Chinese place which at the time I thought was more impressive, and now I look back, I look, what was I thinking, a Chinese restaurant in the middle of Queens, that’s where I’m taking these guys?
Interviewee: Well, you were, it was probably your first job, or one of them, right? I mean…
Interviewer: It was my first… essentially it was my first internet company. Soon after it my first company in general. Actually no, before that my kid brother and I tried a bunch of different things. Soon after we bought and did a ten year lease on office space in Manhattan; just like you’re talking about. Ten years of full floor of space because there were no offices with internet access on them. We had to gut the whole office, rewire it so that we could have the internet that we needed and then we were stuck with this office space, and to this day, I still have the lease on. I’m now subletting it.
Interviewee: That’s cool.
Interviewer: It’s cool, except when it hurts. Okay so…
Interviewee: Probably always… well, why don’t you live in there now?
Interviewer: In New York? I then, I got burned out. We were just working non-stop and then when the bubble burst was when I was ready to just take a break and go explore a life, but the bubble burst and I had to stay on top of my business. And then when things finally leveled off I said I’m going to go and take some space. That’s when I went to Los Angeles; I hang out for a little bit, I put work behind me. I think that there are a lot of us who went through that period and were changed by it. For me, I was more open to non-work activities. For others, I noticed that they were treated from the internet and never able to go. One of the things I admired about you and a few others who were at that time, and kept at it, is that you kept at it. You didn’t disappear the way that I did, you didn’t take time off the way that I did, you stayed with ASK, you stayed on top of the industry, and you grew and you grew and you grew until you became the CEO of ASK which was a part of IAC, a publicly traded company. Did you at any point feel like, ‘I got to get out of here; I got to get a freaking break. I was running this one company, the bubble burst, I’m now here, and now then, do you ever feel that?
Interviewee: No, to tell you, I wish I had first of all. Not then. One interesting thing for me is I had taken a year off between college and law school and I went and lived in Barcelona and just — I had a year off where I kind of did all that. But then, and then the first day at law school I met my wife; my eventual wife. And so when eTour went to Ask and I was from the area. So I grew up on the peninsula, five minutes from Stanford, half my friends’ parents worked in the valley, so I was kind of swimming the wrong way there starting an internet company in Atlanta having been from here anyway. And so ASK… I spent three months integrating e-tour into ASK from Atlanta, and then I got the luckiest thing that ever happened to me. And this is why eTour was becoming kind of a blur, because ASK then became my real start-up in a way. In fact, I would say that I made a mistake ultimately in feeling that it was mine, when really it wasn’t. That’s how attached I got to it. But the week that that acquisition happened, ASK hired a new president, for their web division named Steve Birkwoods who became my mentor. And so, we hit it off and by the end of that summer he was offering me to… he was going to pay me to move home. We had just had our first kid, my parents were still here, and so I looked at it as like, “Great! Pay me to move me out and if it doesn’t work” because, I really was not a big fan of Ask Jeeves at the time. I thought like everybody else did, I was not a fan boy. I kind of ran into trouble when I first started because I shit talked too much about it, but he liked me and he moved me out as head of product and actually it wasn’t even overall product, it was the head of advertising products. And so, he wound up bringing me along and the two of us wound up kind of turning it around together was a really incredible way of teaching about business. So I wound up being there for what, seven years? And the first three in product, then two is general manager of the ASK business because we bought a couple other companies and so ASK chief’s Inc, — one of them which was ASK, so when I became CEO, technically it wasn’t even a new job, it was almost more of a different title for the same job. But that kept me going. That whole time it was just like, I was doing, ASK was my IPO ultimately, because it was 79 degrees cents a share the day I joined, we got up to 45 dollars a share by 2004, and so, sold for over 2 billion dollars. It was an incredible rise.
Interviewer: Let’s talk about how you did that. And it kept doing well and it survived even after the sale. Talk about the toughest area to be in. Its online search, huge competition, lots of money at stake, nobody’s taking their eye off the ball even for a second and you’re in there competing with them. When you came in there, you were shit talking them. Why? What did you see that was wrong with the product at the time?
Interviewee: Set-up. I mean, right, remember?
Interviewer: You made the promise of answers… if you asked the question, it would give you the answer.
Interviewee: It was the exact opposite of Google. I mean, ASK overpromised and under-delivered. It said it would answer questions and it didn’t. And the reason it didn’t is because it’s extremely hard. It’s the hardest problem solve and search. That’s why nobody does it, even today at a high degree of… high percentage of accuracy. And I mean, let alone in 1997, 1998, give me a break. So, then you had the crash, which decimated the company, and the morale, of everybody there, you had rolling blackouts in California at the time and so to like save money, the lights went off early. Literally the lights in the whole building would go off and like tabloid; everybody would go home. So people in the blackouts ending the lights would come back on, everybody would go home. You’d almost reestablish this start of culture… they start charging for cokes. So meanwhile we’re doing all this, we’re not profitable, we have 17 ads on the page, and Google came along with a real search that works, no ads on the page, they only did search, which was still the number one user need online, every one of its competition had taken its eye off the ball to become a portal, and you know, the day I joined I think Google already had twenty times as many searches as ASK. Now, with ASK we did have, was a brand and it may have been one that people didn’t like, it may have been the butt of a lot of jokes, but it was well known. And so it still had millions of users. And so we didn’t have the money to invest in a lot of technology, and a lot of people and search advertising had not taken off yet so we weren’t going to get that revenue anytime soon. So we resolved simply to take the people who were already coming, give them a better service, so that today if 17 out of 100 people liked what they got, tomorrow it would be 18, and then they would come back more often, and we would grow traffic that way. And so the day I left, that was always the strategy. I mean even through times that we did television ads and things like that under [Berry Dealer], it was still that we never expected to beat Google or to be larger, but it was “how much can we grow as a percentage for ourselves?” and so everything we did at that period of time was dedicated at that. The first thing we bought was that we bought a search engine, or I should say Stephen did, because it was really an ASK thing and I was just part of his team. A search engine called Teoma, in New Jersey which was founded by a couple of reckless professors, and it was legit, I mean it was a theory, it was only 7-10 people but it was a legit search technology and so ASK I think traded 10% of its market cap to this little startup, who they all wound up doing very well, and started building its own search engine. We decided that the one thing that we could do very well, is that people are already coming to us to do search, so let’s do search, get rid of everything else and let’s do it well. So from that day, we got Teoma, we started building out what ultimately became 200 people and scattered away New Jersey and we began building search.
Interviewer: Where were your search results coming from before?
Interviewee: Well, technically I don’t thing ASK had search at that point. So ironically even though, if you would look at the user data, even though it was known for questions, what people were using, well people were using it for research, and if you surveyed any user, they would actually tell you that links were answers. So in a way, what Google was already doing was already answering question. So it wasn’t in our strategy to do anything that they were doing, and even later on some people said that we tried to become more like them. That wasn’t true at all. We were trying to answer questions or more accurate searches because people were being trained to type queries however they wanted to, not be forced to do it as a question. And so what we realized is that you have to play defense not offense. You can’t tell people how to use a search engine; you have to let them use it the way they’re going to use it and then be on the other side of that search box waiting for them, with the best answer or tools that can help find the answer possible. And that could only be done after the query. If you try and force the user before the query through advanced search, toggling of any kind, you’re hopeless, because….
Interveiwer: How did you try to do that- did you try to do it at any point by asking the beginning of the question by trying to encourage them to form their search query as a question, did you say over and over in different ways that users need to ask questions, how’d you do it?
Interviewee: ASK had spent a lot of money and a lot of time and they ultimately would have gone bankrupt if they hadn’t figured out a way to do this right; explaining to users that they needed to ask it in the form of a question. It was like jeopardy.
Interviewer: So you would just keep buying ads to say, “This is the way you interact with our site?”
Interviewee: By the time I got there, there was no money for ads. They weren’t advertising anymore; but that was… the brand was very well established. Jeeves was part of culture. I mean it was an easy day parade. People knew Ask Jeeves. And that turned out to be a great asset again, no matter how negative that brand was. So what we said was, “what can we do to answer these questions better?” and so the first was try to let them answer…. Ask it anyway they want, don’t force them into framing their question a certain way because what it did was it added a step of work. It made them think; horrible. So don’t make them think, let them ask it anyway they want, and then answer it as best you can. The only way to add scale across billions of searches, answer questions is with plain old search technology. Because it’s the only thing that’s going to broadly bring back enough results that are accurate enough. Because if… You know what I always say about search – a lot of people think they know how to go on a search engine because they use search, because its so… it’s the number one thing that you use online. And that’s like to me, that’s like people thinking they can write a screen play because they watch movies or sitcoms. It’s actually… if you sit in the other side of the search box and you watch what comes through, first of all, it’s disturbing. Second of all, it’s extremely educational. Just like how crazy broad it is. How the same topic can be asked a hundred different ways every single day; and how it changes based on… Some things never change. Like, how can I tell if I’m pregnant? Or dictionary, things like that. Other things, like the oil spill and whatever’s happening today, are going to change a lot. And so there’s no way you can manually deal with it and there’s no way you can ever be prefabricated.
Interviewer: That’s right. Two months ago, oil spill would have been, maybe “I spilled oil on my carpet,” “how do I clean it” – is the result I would look for. Today oil spill is a query that oil spill’s looking for information on the recent oil spill.
Interviewee: Right. And so we have to actually make a very tough decision; because we actually do make the decision to be less differentiated. Which kind of goes against every fiber in my body in terms of branding that it’s exactly what people tell you not to do. But the truth is it’s the only reason we grew as much as we did after that because we started answering what people were asking. And if we… it would have been cutting off our noses from our face to try to simply differentiate from other search engines, just to be different. And so the decision was we’d rather have a slice of a water-melon than a whole grape and we’d rather… and so even today, when ASK is kind of off the map and considered being all so rand and… its still…. They just released the Google top 1000 sites it was still 18th… I mean, I mean its crazy. And its because there’s not that many brand destination people know for search and if you do a better job than you did yesterday, more people will come back tomorrow.
Interveiwer: So, how did you change, it would be, You were asking people questions and if they typed in a question where would the results come from and what were those results?
Interviewee: I mean, the day I got there, the thing at the top, well… so first of all one of the best things Steve Birkwood taught me was about being obsessive with data. And we; luckily, one of the things that ASK had done, by the way, there were so many talented smart good people who had been through ASK or were still at ASK and it was great it was the people who cared the most. I think it had gone from 800 people down to 250 people when I got there, but Peter Norbick, one of the coming… the head of relevance at Google had been through ASK and all kinds of very good people had touched this. But the first thing you would get was called the knowledge base. And that was the prefabricated hand matching answers to your question. So that if you would say, “Is it raining in Seattle”, there would be an answer there. It turned out that would match 85% of the time, first thing of the page and it would only be picked out 25% of the time. So you’re just shooting yourself in the mess. I mean when you do that to your site, it’s just, you’re just done.
Interviewer: Why? You’ve just… I’ve just asked you what the temperature is in Seattle, you’ve told me the answer, I’m not clicking, why?
Interviewee: We’ve only told you the answer, basically 1 out of 5 times.
Interviewer: But it’s… Oh I thought it was an 85% result rate, 85% of the time we had the answer.
Actually, it would come up 85% of the time, but it would only be picked up 25% of the time.
Interviewer: Yeah, why wasn’t it picked on more?
Interviewee: Why wasn’t it? – because it was inaccurate. Because if you’re trying to hand match these things to billions of queries, you’re going to start stretching the system and it would come up when it shouldn’t. Now, partly, it would come up when it shouldn’t’ because of failures in technology, partly it came up when is shouldn’t because the company was married to its original concept. And so, the question was how can we get the 85% matching to the 27 where honestly, what we wound up seeing was that if you just replace that with regular search results, even Teoma, day one, which was not a very good search engine when we got it, that pivot went up to like, it matched 90% of the time and it was picked on 80% of the time.. Right, so that first year, we increased traffic like 40, 50% I think, from where it was. And that was just based on the people coming, coming back more often.
Interviewer: Okay, that’s a tough… that’s more than a pivot. That’s a big change and it’s a tough one to make. How did you guys come to that decision that you were going to change the business that dramatically? Was there a champion inside who said you have to do this; were there conversations that you can tell us a little bit about?
Interviewee: Yeah. Well I’d say the person most responsible was Steve Birkwoods, because, myself, Paul Gardy who’s the head of Teoma, several other people, we saw this and were pushing to kind of dump that knowledge base and go with more search oriented products that were proprietary, that we could own, that we saw the data on as opposed to outsourcing it. One of the ideas was outsourcers talking to me or Google, or somebody. But we said, look, we’re going to …. We went to the board, which included the founder of Ask Jeeves and we said we want to take this in a completely different direction, and it was a lot of arm wrestling. It was very painful. I always would say I had a lot of arrows in my back from pushing so hard against historical product of ours.
Interviewer: So how did you convince them? I’m going to have a situation in my life and everyone listening too is going to have a situation in their life, lives; where they’re convinced that they have to make a drastic change but they have to convince others in order to make that change. How did you do it?
Interviewee: It was the only way. So we owned Teoma already at that point. We’d already put them in there… AB testing, but in 2001, AB testing wasn’t that common. We just did a crap look of it. And every click, every breath a user took on our site, we measured; everything. We had a data warehouse that we call “What’s up,” which dates us because that was from the Budweiser commercial. Where every morning Steve and I would get in, and our offices were next to each other and we would go online and we would start shouting to each other like, “Why was the clicks on this product down 0.1% during… between 3.00 pm and 4.00 pm yesterday?” And you just start analyzing it and seeing and then you would test other configurations and, by the way, this wound up also changing us from a revenue point of view because what we also proved to ourselves was that there’s only one click that you can get on any page. So make it the most valuable click it could be. And that you would rather… and ironically, you could by having fewer ads in the page you could make more money because you would drive the clicks into the things that were most valuable. We had Overtures on at the time and it was amazing to see higher RPNs by having fewer ads and things like if you got rid of this banner, the results get moved up the page. That increases the clickthrough rates both on your regular results and on the search ads. That increases loyalty. Measure that over six months, you see that after six months loyalty is now… you’ve now broken even on getting on the money you would have made through those ads and you are now getting more users back and that’s the gift that keeps on giving. All those kinds of decisions are made with data and at the end of the day whether it was the Ask [Ford] in 2001 trusting us to go in a new direction with the product or it was [Barry Dayler] when he acquired us letting us go from ten ads above our search results which we had to do as a public company and we can talk about how we got into that because that was a misreading of data and someone led us to think that that was good for the business. But once you went to ten ads above the results you could never go back because now you had to keep making quarterly numbers. Barry trusted us that we did the eight months of research that said if we went from ten ads to three that it would take us X amount of time to break even and then 2006 we grew 50% after we got rid of those ten ads. And Barry trusted, so I guess, I don’t know, we have a good way of telling people to trust us but we always had data that would tell you, you would be okay if you did it.
Interviewer: What was the misreading of data that ended up that caused you to have ten ads on top of surf results?
Interviewee: Well, it was both misreading and it was going back to drug analogy, it was heroine where I can’t remember what it was but long story short, we went down to just search ads Overture made that market, she gave it all the credit in the world for it, people now, you know, victors rewrite history, but it wasn’t Google, it was Overture, Google copied Overture, they did it in a unique way, but for the most part it was Overture. And then 2002 we switched to Google. There were two reasons. One was Google was making this product for themselves so they gave it to us as long as they were making $1 and it was just an X amount fee that their ads. They could do it, so they could give us such a high revenue share that Overture which had no proprietary traffic, they had to pass those costs on to their partners. So, it just wasn’t even close! Besides that, Google broad matched their search terms and it took Overture a while to catch up to this. They were, they had better relevance but Google had made you more money because their ads were just… match even times when they shouldn’t. Those two things meant that Google’s revenue per thousand searches were so lucrative that within one quarter of switching to them in 2002, Ask had its first profitable quarter ever in Q4, 2002. And that started our stock settlement. While I would like to take credit for all of it and I’m sure the team back then would… and you know, I think we all had a big impact on the product side, really the search market was so hot and made us all so much money that say that was at least half of what made us perceive it to be such a great turn around, right? Luckily for us we had the grand view of the traffic. Now, a year later, when your –- over your costs starts slowing down, well, you are not going to have a double impact of traffic growth in the incredible revenue or PM growth. So, now you are now you start twisting dials to make your numbers within the EPP couple. Google right now will never really see when they are doing this but they have every knob that they ever want to turn change the font sizes, change the shading of the ads from blue to yellow back to light blue. So many things that you can do especially when they have a network the way that they have it. For Ask which did not have that footprint, we had our own website mostly that we could deal with. And so, we started having more ads on the page. It wasn’t on every query; it was maybe sometimes. And then as you go you start thinking, maybe we could stomach this on 5% of all queries having ten ads. Well, it turned out it was more than 5%, it winded up being 15%. Then a year later as Google grew its business and they got more and more companies advertising that 15% grew to 30%. It was every commercial querry and it is a fact that every click into an ad is at the detriment, not every click, four to five clicks, my opinion.
Interviewer: Four to five clicks on an ad?
Interviewee: Results negatively on user loyalty because it textually matches but when you get to the page, it rarely is what you were actually looking for; because its targeting running shoes, it doesn’t mean that you want to buy them on the spot at that moment. Anyway, that’s why later, we knew this and that’s why we AB test ourselves to death trying to figure out how we could get out of the death sparrow having so many ads and to [Barry Dayler] credit, he trusted us and we had the best year ever in 2006.
Interviewer: A couple of years ago I read on Blogs those ads were coming back. You guys went from two ads to three ads and that there is more and more, why?
Interviewee: I think it’s a lot of the same reason. It’s just something that there’s a lot of private conversations that I’ll probably… I’ll leave that to be corporate business. But a long story short, what I would just say that every lesson that we had to — was not wrong. And so, if you want to turn that dial, well there’s consequences of user experience that there’s consequences for the user experience going back to the history of the web, you can see that there’s a penalty to pay with users.
Interviewer: How do you get more users and search? I saw the ads that you guys were doing on TV, it’s the algorithm ad and I think I saw some ads online, what do you do to grow search?
Interviewee: Well, the most important thing over that time was the thing the thing we — about, least understood. It was just that we innovated our asses off! We were very well respected even when we were Ask Jeeves. During that period among the… the people at the core research, starting to their credit with Danny Sullivan, Chris [Sherman], Garry Price, Barry [Shorts], the people at the heart of the search industry, they didn’t have banisters against us, at least until we started to prove ourselves, John [Datel] is another one , where they took our innovation at face value. We were in many of the things that then became standard search, whether it was saving search results, this thing called ‘My Jeeves’ at the time, which is very forward looking, related search – we were the first ones to actually put it on the page,
Interviewer: Search types?
Interviewee: Yeah, things that we could… yeah exactly, type ahead, things that we called “smart answers”, which were hacking back to the knowledge base that didn’t work, but now it did work and we restricted the matching to only when it was appropriate and then the clickthrough rate was insanely high, which Google, we gave Google one box. Even today, we were the first ones to change the home page, the way Bing and Google now have; having images, pretty background images, it’s cheesy, but people liked it. We were scrappy, and we were the 4th placed search engine, it was our place to innovate it our way from where we were. The most gratifying thing was the — twice within one year, wrote full column ad our articles that were basically ads for Ask saying that we were awesome! Mistakenly I thought that would make us but then big things started happening online in 2005-2006. This was the Blogger-sphere , social… people’s attention just started getting very dispatched and so one article couldn’t make you the way it could five years earlier. In fact no articles would have the impact they had five years earlier. And it still exists today, it takes massive word-of-mouth volume and consistency over time to build any brand online. But luckily at the time we couldn’t afford new TV ads or anything like that. So, user loyalty was how we improved originally, then we could afford to do advertising but we couldn’t afford to do very much. And so we actually experimented ourselves with TV ads but they were very descriptive, they were just re-introduction of the brand to people, asking each other how I would call the ‘long’ orbit, which is, we touched almost everybody online it’s just that instead of once a day or once a week it was once every three months or when you had a question. So even loyalty would take us a lot of time to get to everybody because they didn’t come to Ask so often but what we found was you stocked people’s awareness of us and then they would come back once a month, and then we had the opportunity to show them the new sites. So, TV ads were actually affordable for us when we did them affordably, cheaply and scriptedly. We saw this even in 2006, we did ads that honestly just showed our page and what was different about it. So, those were all works and I would argue that we were in a unique position with our brand to do those ads once people are not it’s not a good brand introduction. [Doodle] maybe, was a good example of one that was. Now, interestingly, [Doodle] wrote the same ad agency we did for the algorithm. Big expenses over-the-top and it just didn’t work. It was a company-wide IC Ask decision, I was definitely part of it to experiment with, some much more dramatic and creative ads. Barry, to his credit, believed so much in our products that he wanted the world to know about it and it was just a shitty campaign – there’s no other way to put it. It just wasn’t very good in a way it made us seem grabby. I think we may have gone from the kid from the back of the class everybody roots for to the one people thought was snorty and I think that’s a fine line. I think people were starting to root for us in the search industry and then all of a sudden they were like, “What are they doing?” But they never did that when we ran other TV ads, just these ads. So, anyway, by the end of the year we were back to running these ones that literally just showed people using our website and little… you know, we had our highest track report ever in Q4, 2007.
Interviewer: Is there a way to add viral marketing to search?
Interviewee: No, I would say that viral marketing its searches word of mouth. It’s… and to that extent I think… so many things get tried over and over again. And I always say, just because something is new to you doesn’t mean it’s new. And so many people kind of wet through these search companies that you get new blood in and then they go back to trying the same old things, like Microsoft just tried CashBack thing and that didn’t work.
Interviewer: Didn’t you guys do that too before?
Interviewer: Someone did.
Interviewee: Ask didn’t do it. But there were businesses that were coming up… [Greengo] that did it, that they sold to Columbia House maybe… or whatever that … yeah, Columbia House.
Interviewer: I don’t remember.
Interviewee: It’s interesting, I’ve thought a lot about this and I think again, the misconception of Ask and the misjudgment of Ask would have been the failure if it didn’t get more traffic than Google and Yahoo. When it was starting from a base of ten million users to twenty or thirty as opposed to four hundred million users or where Google was even when I got there which was the biggest brand in the world. At the time you would have never, now Facebook and Twitter have taken some of these but you would have never seen anything like what had happened to their brand where every television show was talking about them, news channels talking about it. So it was incredible kind of headway to walk into, so, what I was trying to get the team on was, measure us versus ourselves, measure us versus last week, last month, last year, not only against these other guys, especially then we are going to start trying to copy them and that’s not going to take you anywhere good. Focus on our users, focus on innovating and focus on the data. What I want to say about viral, to wrap up, research, Google has such a large talented team on search and they have a killer app for search, which is traffic. They seal the queries, they can apply technology that improves the queries through the just as their own users usage of their site, which also is what we were doing but they could do it at a massive scale beyond us that….aAnd users never became sophisticated, they wanted a different way of searching. It was kind of default, that no matter what you tried to do majority of the time when they search they are under duress, they want to get something done, they want to get it done right now, they are not going to think about, you know, some feature that you may have that’s different, they are not going to think about… you know, it’s going to be, ‘What do they think works?’. And actually, even worse, it maybe what is good enough that they will trust it will work versus the risk that the upside of Ask, for example, is worth the downside of not getting what they want before they have to get back to check on their baby, to deal with this recipe that they were looking up. So, it’s a very hard place to… I’m not going to say that Google had to check mail on people but even from a design point of view, white space with nothing else in the way, if you just do that, you are just copying them. Right?
Interviewee: But it’s what users want! What do you do? Do you do something different just to do that or do you give your users what they want even if it’s more similar to what other people are doing?
Interviewer: But, let me ask one of these questions about Ask and then I’ve got to come back to Clicker. One of my viewers is Gabriel [Wineberg] guys creating duckduckgo.com, do you know that search engine?
Interviewer: Do you have any advice for him?
Interviewee: Look, I think, two things. One is, whatever he’s doing from a brand point of view is appealing to a certain group of people and I love that. One thing I love that he did is privacy, so right before I left Ask, we decided that we kind of saw that the market was going on Privacy. Everybody’s going to regulate the shit out of us if we don’t regulate ourselves. So, we are going to draw a line in the sand here and we are going to say we are only going to keep user data, I can’t remember now, whatever it was, it was like a third as long as the other search engines, it was whatever the European Union because 40% of our revenue is UK based, whatever the European Union said was mandatory. And then we went deep on broadcast on the fact that we were doing this. Now, DuckDuckGo has done that and I think that they are making headway on being a place that doesn’t record what you are doing. Now, again, I don’t know if that’s enough to overcome the good enough problem under duress, but I think if it’s a way to become default for a certain number of people then that’s great. The great thing about search is you don’t have to be a big search engine to make a lot of money. The revenue is so powerful in search that you know, again, you can be very misleading be called a ‘Google-killer’. I mean Taoma, when we first bought it in 2001, I learned that this Google-killer thing is not that fruitful, I mean, we were on CNN as a Google-killer with Taoma! You couldn’t even pronounce it, or spell it! And the press loved that story but people wouldn’t buy it. I think it has got to be feature based, quality based then I would be sticking to it.
Interviewer: Okay. Alright, I have a note here to come back to UI and Clicker. What do you do for UI, do you do listening labs? Are you watching people? Are you… How are you tracking clicks online? What are you doing?
Interviewee: It’s a really good for us to be very creative — process. So, first of all, we know that at the core we have a plan, so I like to think of my strategy for team building, as kind of like the A-team so that makes me handball. Not the new A team which looks like it will suck, but the real A team. You have these guys who are just really good at certain things and have proven themselves over time, and that’s your team. And that core team for me has been together now a long time and they are here on Clicker, and so we knew that through the user they needed this presented in a more directory or taxonomy format. We knew that with video things would be very visual, and we knew that we were going to have information overload even on our pages to do this right. So, I will never be the cleanest from the standpoint that our there’s a tone of data around every one of these shows and episodes that’s important to the user and we’re going to be very data-rich. And so then it just went to 15 different ways of designing. The good news for us is we had a year to do it, you know, because it took it took someone to do the research technology to get all the data in the first place that we had time to get it right. I don’t like usability lab because the problem is people are being paid to be there. It’s one person being interviewed by another one person. And what I discovered in 09 was a website called usertesting.com which I love. If I was an investor I would have invested in and put as much juice behind it as possible because for now twenty five dollars a person I can have them use my website under password protection. I can target it by country, by age, by browser type you know. And I can then watch them screen themselves using my site and you will find when people are alone in their homes they are brutally honest. They will tell you what they really think. And so whether features are confusing or you look so much like somebody else, or they think this is better than somebody else, you hear it. And so I don’t know we may have made four hundred tweaks to the website between the first data and when we launched. There’s some feedback we got through user testing.
Interviewer: I see. So that’s how…I’m sorry, you go ahead.
Interviewee: No ,no just to say that we had a two month official data period where we had close to fifty thousand people on tech cranch on site using it and even the site that we launched to everyone in November was not the same site exactly that we had in September.
Interviewer: So now I think I understand how with the long period of time where the average person couldn’t come on your website you were still collecting user data because you were using services like usertesting.com to watch people and to see how they were interacting and get their feedback.
Interviewee: Oh you know we had one other thing there, we weren’t funded. We actually Bill [Gully], my main investor had found a little company in LA that maybe seem more to you wasn’t the best situation that we could subsume as part of my funding and take them in house. So that’s why I was commuting to LA for these eighteen months. So what I decided for acceleration/for momentum I would just keep them down there and my team and I would just fly down every week for three days a week. I have three kids so there would be kind of some wide space to be created and I think three days a week without obligations of home. And so we actually we had a little bit of data. They weren’t used to very much but we had a little bit of data from their website which they kind of fault started couple of times but was out there so you kind of learn at least some initial live user things. So that’s how –
Interviewer: What was that company?
Interviewee: Modern Feed.
Interviewer: I’m sorry we seemed to have lost the connection. Can you say that again please?
Interviewee: Modern Feed.
Interviewer: Modern Feed…
Interviewee: Founder of [IB] and the name was inspired by that. So yeah so once we officially launched we redirected the site to quicker.com. But you know I would say by the end of the day it was less than five percent of our final product but the spirit of it was similar and saying that was just more data than we could have.
Interviewer: Why are you sending users away from your site instead of having all the videos play within your website?
Interviewee: Well I feel like first of you had to make a choice which is that, in my opinion, you either need to be TV or TV guide. And you can’t be both. If you’re to do TV guide, and am using them figuratively not literally, but to be that programming guide for the next generation TV we felt that you needed to be …three things: comprehensive, unbiased, and structured, you know organized. You had to be able to surf in a taxonomy not just through your research cause most of the time you don’t know exactly what you are looking for. And so to be comprehensive you need to include things that you couldn’t host on your own site. To be unbiased you need to do the same, and then to be a search engine you have to be unbiased. You can’t be sending people to the shows you prefer and then you can’t be in competition with the people whom you’re trying to send traffic to. If I was hosting all the stuff, then you know I would be biased against your show. My job is to let people know everything about mixergy that they need to know that exists, an episode guide and then I need to…If you want to give us an embed, we’ll have it because especially down the midtail, sites want that cause it’s good for brand awareness. They want to go where the user is. For a majority of network sites they don’t want that. They want to protect their traffic. And that’s great so we kind of do both but our…we don’t have a point of view that this is…we need to host it on our site.
Interviewer: I think you said to be that TV or to be that TV that revenue is going to come from advertising and did you say lead gen also?
Interviewee: Yeah so our…I mean this can evolve right because we are so pre-revenue mostly. I mean we get paid for some lead gen right now like to Netflix [IB] and I think it’s
a good example where we are not biased we don’t promote them in the UI but it’s that if we send people through we can get paid. And if you look at all the subscription services that are now going to be launching it’s happening. I mean you’re going to see more and more and more of these subscription services as a way to make money when they’re not going to make as much of it through advertising. Apps is another good example of this and we think it’s almost the same thing .You know we can make money by sending people to apps. And so its very much like search, eventually we can also have ads targeted against shows. So it’s a mom’s show we can have another mom’s show targeted or if it’s a western in Philadelphia, you know, modern family when they first started modern family we’re going to be targeting against that or you…If for some reason you’re getting fifty dollars — or something and your people are paying to subscribe you want to target against that. This we can start apps or something else you know. So we want to enable that
and I’m from search my CTO is from Overture and we have this in our blood and it’s just a very, very good model.
Interviewer: One of the question that a few people kept on saying in the audience, they kept on saying, “Ask him about boxy. Ask him about boxy.”So how do you fit in to this space with boxy?
Interviewee: Well I mean we started as partners. We are very compatible in a number of ways and then like everything in the space nobody does exactly what we do but we all overlap with each other a little bit and I think its because it’s like search in the early days, its Wild West still and so everyone is trying to figure out where they fit. We launched Boxy apps. I was actually on stage in Brooklyn at the Boxy — user event and so we were one of the first app. on boxy beta and so we still are. We are still featured on the home page. The way I would think about it is that we operating system, they are a downloadable application browser. They cover things that we would never cover like things in your hard drives, but things that we don’t cover and probably won’t cover. Things on your hard drive they link to apps like music and because it’s an operating system for you, your TV on your pc whereas we are a pencil, we do one thing we are TV guide for internet TV. And so we in that, you know whatever five hundred percent more content than they have with the –and things in their site. Now quicker.tv which launched was not launched to be a competitor to boxy but as a pure web destination it has a lot of the same characteristics in terms of being navigable with a remote version of clicker. It was inspired by our boxy app. and then it’s going to inspire our iPad app. So I’d say that’s it and we are good friends with them and we have the same PR agency for a long time and we are you know …I think we’ll keep partnering. — says he wants clicker.tv on boxy and so we’ll figure how to make that happen.
Interviewer: Alright…cool. I see that we’ve already gone over our time and I didn’t even get to ask you about the advisory work you did with Seanet, with Aardvark where you were an early investor, congratulations on that, you stream…Got a whole bunch of other stuff but maybe we’ll do another interview. Thank you for doing this interview.
Interviewee: Alright Andrew.