Monday, October 29, 2007

How to Build an Igloo

“The Price of Insanity,” Part II

In Part I of “The Price of Insanity,” we pointed out the futility of the persistent, if anemic, attempts by the editors of Barron’s to call the peak in Google’s share price over the last 18 months.

There is nothing wrong with Barron’s trying to do its job—which would seem to be pricking Wall Street’s bubbles while helping its readers make better investment decisions. The trick, however, is doing so without relying on the likes of Fred Hickey, whose grumpy, King Leer-ish wailings against Google appear to rely less on observation and more on phrase-making.

Specifically, the phrase that Google’s stock market valuation is, in his words, “insane.”

While we here at NotMakingThisUp leave such market valuation judgment calls to others and offered no commentary on the valuation of Google, we did point out that the “price of insanity” has nearly doubled since Barron’s first made its call that Google’s valuation was “insane.”

Now, if Barron’s readers truly want to understand why Google is taking it to Yahoo! and Microsoft in the realm of internet leadership like Ray “Boom-Boom” Mancini at his peak, they should put down their newsprint copies of the paper and turn on the nearest computer.

More accurately, they should search the internet—not rely on the prognostications of Barron’s or the “First 100 Days” speech of Yahoo! CEO Jerry Yang or the futuristic white papers Bill Gates reads at his lakeside hideaway.

If they did do a search or two, I think, they might understand exactly why Google continues to pull ahead, while the other two pull up tired, gasping for breath, hands on knees, exhausted.

In fact, let's do it here, right now.

We’ll do a search I did recently. It was this:

How to Tie a Bow Tie

Now, the reason for doing that search was precisely what it appears to be. I’d bought the wrong kind of bow tie—the kind you tie rather than the kind you just clip on.

But I’d never tied one before.

So in a hotel room with the minutes to leave ticking down, I did a Google search. The results were immediate and in fact more helpful than I'd hoped: right at the very top of the page, above the normal “how to tie a bow-tie” instructional web sites you’d expect would come up, were three results from Google Images.

Two of the Google Images showed simple, step-by-step diagrams and one showed photographs. They were exactly what I needed, which was how to tie the stupid bow tie, which looked like a long, weird piece of ribbon on the desk beside me, well enough so that I did not look any worse than I already do in a tux.

I never bothered with the “how to tie a bow-tie” web sites. The diagrams were easy to follow, and after a few fumbles I managed the task literally at hand.

Now, I did notice that, oddly enough, there were no paid ads on either the top of the Google results page, nor were there any along the right side of the page. This struck me as unusual, having never typed in a search that failed to bring up a paid search result on Google.

I was faintly alarmed—no paid ads on a Google search?

So I tried the same phrase on Yahoo! and then on Microsoft. And the results were highly instructive.

Both Yahoo! and Microsoft searches turned up plenty of “how to tie a bow-tie” web sites. And both carried plenty of paid search ads.

But neither generated a simple image at the top of the search, as Google did, which is, after all, pretty much all you care about when you type “how to tie a bow tie” into a search engine.

In fact, the more I thought about it, the more I realized the subtle genius somehow embedded in Google’s algorithms: after all, a guy typing in “how to tie a bow tie” is probably not in the mood for buying one at that moment. Why bother putting up a paid ad at all?

So I did a Google search for “bow ties,” and sure enough this one brought forth a healthy selection of paid ads—with not a single Google Image of “how to tie a bow tie.”

But if the editors of Barron’s really want to understand the gap between Google and the rest, they need look no further than the results of the Microsoft search.

Microsoft, which has vowed to “win back the search market” by putting its “best engineers” on the case yet still manages to lose money in its internet business—no easy task—cluttered up its search results with the type of superfluous and irritating extraneous flourishes that makes Vista the operating system of choice among…well, people who can’t switch to Macs.

My personal favorite came in the “Related Searches” box, where Microsoft graciously provided many extraneous results that its "best engineers" had somehow decided would useful to me after I'd figured out “How to Tie a Bow Tie.”

What Microsoft offered, and I am not making this up, was as follows:

Related searches: “How to Build An Igloo”

Hey, you never know when you’re gonna need to build an igloo after a night on the town.

Jeff Matthews
I Am Not Making This Up

© 2007 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.


Mark said...

I agree that Google is by far the best search engine out there (as evidenced by the "bowtie tying pictures"), but commending the company for not placing paid adds next to those pictures makes no sense. What, for Google, would be the downside of that? (For instance, how about an ad for *clip-on* bowties???) My guess is that this lack of ads wasn't deliberate but, rather, some sort of a programming screw-up.

benkoch said...

Ironically Microsoft's related search results appear to be a keen reference to Tux, the mascot penguin of Linux.

Kyle S said...

Jeff - have you used recently? I use google almost exclusively myself, but decided to try ask with your example because I know they're pushing hard for market share (cf. all the tv ads I've seen).

Anyway, here are the results. No images, but two fairly helpful videos on the right side, plenty of helpful links, and natural suggestions for narrowing searches on the left.

Chrispy said...

Jeff, I write as a fan of your blog, but I feel I have to defend Mr Hickey. The guy's work has value for me for one simple reason and that reason is the same one why I read your excellent blog. Even though I may sometimes disagree with either of your opinions I value highly the manner in which you reach your conclusions - which in turns helps me make my own.
In an ideal world I'd be able to find two types of analyst...those that are always right and those that are always wrong. The second type isn't actually that rare....there were plenty sitting not too far from me in an investment bank in Japan in the early 90s. However, in the meantime, I'll focus of those guys that actually think before they write even if I entirely disagree with their final analysis.

Many thanks for your efforts with the's hoping for some snow in the UK this winter so I can have a go at that igloo.

rvb1977 said...

Actually, I believe the approximate # of searches that Google will show paid ads is somewhere in the 45% range of all searches Google runs. They've been bringing the percentage down the past few years, focusing more on relevance and user experience.

jimmy105 said...

Another Microsoft product which sucks when compared to the competition is the explorer. I have been using the Mozilla Firefox product, which if you haven't tried it, has many subtleties that make you wonder why you ever bother with Explorer anymore. It was interesting that microsoft revised the explorer to mirror some of the features that Firefox was introduced with. I urge you to give it a try.

pondering said...

Hat's off to Google on this. When I'm searching for information that's what I want. When buying product product results is what I'm after.

I had a similar experience with my dog Henry who was skunked at 9pm on a Sunday evening. By 9:40 I had him cleaned up and in the house thanks to a Google search (and that includes a run to Stop and Shop for the ingredients).

Anonymous said...

Jeff: One of the more interesting notes I read about GOOG today was their preliminary talks with VZ and S on developing handsets powered with GOOG applications. I find this quite surprising in light of MSFT trying the same ploy but with little success. I wonder whether a partnership between GOOG and VZ would mean higher revenue streams for both, despite GOOG recently sparring with VZ on buying available wireless spectrum? Just wondering...

Joshua said...


"How to" questions typically lack ads. Check it out. Clever.


Adam said...

Google took the image and related search ideas from ASK. Google's dominance in the search market gives it the privilege of cherry picking good ideas and then taking the full credit for reinventing the wheel.

rvb1977 said...

Thought I'd add one last link on the topic: