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.
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.
Posted by Jeff Matthews at 8:45 AM