Google vs. Yahoo: Which is Worth More?

Today Yahoo is worth $36 billion. In its quarter ending 12/31/03 Yahoo made $75 million in after-tax income on revenue of about $664 million. Very impressive.

Today Google filed for its IPO. In its quarter ending 3/31/04, Google made $64 million in after-tax income on revenue of about $390 million. More impressive.

And remember, Yahoo’s last reported quarter was Q4, so all the holiday advertising revenue shows up there. Google’s is Q1. Google’s cost structure and operation is so incredibly efficient. It appears to me that with its incredible growth rate that Google will likely surpass Yahoo in value within six months to a year.

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Letter from Google’s Founders.

I love Google. I’ve been reading the S-1. I love that the entire IPO will be done through an open auction. I love the founders’ philosophy: the “don’t be evil” by letting commercial interests skew natural search results, the idea of bridging the “digital divide” by offering free services (including gmail), the Google foundation which will get about 1% of Google equity, the long-term view they will take in managing a public company.

I want everyone to see this: Larry Page wrote a letter to future shareholders of Google. It’s the coolest thing I’ve ever read in an SEC filing. Enjoy!


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Time Conflicts: Productivity vs. Retooling

As a start-up company, the technology bets you make can sometimes make or break your company.

Back in 1990 when I co-founded Infobases, we bet that the Folio VIEWs search engine would help us create better CD-ROM products for our customers than other search engines like AskSam, WordCruncher, or Dataware. Our bet was a good one. Folio VIEWs was perfect for us. Our develop costs were low; our royalties were reasonable; and our customers loved our products. Within a few years we were generating nearly $4 million in revenue.

For six years I used WordPerfect Editor’s macro functions, Quick Basic, Turbo Pascal, and FSR (a Folio utility) to turn raw or marked up text files into searchable infobase libraries. These tools were simple, clean and powerful. But when Windows replaced DOS and the internet replaced CD-ROM as the primary platform for content, my skills with these tools became obsolete.

Rather than retooling personally, I managed people who had to learn new skills for the internet era.

At, our lead developer wrote an internet based search engine because Folio’s SiteDirector just didn’t cut it for serving up hundreds of millions of genealogy records. Later, we paid a lot of money to license Altavista’s search engine. Later still, the company rewrote its search engine yet again.

Maturing companies generating as much revenue as can afford to switch platforms and rethink technologies. But sometimes start-up companies have to make the right bet early on, or else they lose.

What if Infobases had bet on WordCruncher, and a later start-up had chosen Folio? We would have lost. We may have gone out of business.

So how much time should entrepreneurs spend looking at new technologies?

From my experience, most full-time employees at start-up companies spend most of their time focusing on execution, and not flirting with new tools, business models, or half-baked ideas. So they miss out on revolutionary new tools and ideas that could cut their costs dramatically or give them a long term competitive advantage.

At Infobase Ventures, I serve on the board of directors of several portfolio companies. I consider it one of my roles to continually explore and investigate new tools and technologies, business models, internet marketing tactics, and potential strategic partners that continually emerge out of nowhere. (Just read one day’s worth of press releases on or to see what I’m talking about.)

And one of the most revolutionary changes in todays tech environment is the platform shift from Windows to Linux and other open source architectures.

Today, I’m happy to finally announce that I bought my first Linux machine, to add to my collection of 9-10 Windows machines in my home. I ordered a $278 2+ gigaherz machine from Wal-Mart Online. It runs the Lindows (now called Linspire) Operating System and comes with StarOffice installed. (That is Sun’s open source version of MS Office).

I know many people will think I’m years later to the open source party. I’m a big believer in open source, especially after attending OSBC 2004 in San Francisco and hearing Clayon Christensen (of Innovator’s Dilemma fame) address the subject of commoditization of hardware and software platforms. I knew then that I needed to gain first hand knowledge of the so-called LAMP architecture (Linux, Apache, MySQL, PhP).

One of my goals is to install Apache and MySQL and start hosting a web site from my home. I also want to implement an OSCommerce enabled e-commerce web site personally.

Meanwhile, in addition to trying to get first hand experience with open source, I’ve been trying out new web site hosting services like, which is a major European concern that is targeting the U.S. in a big way (with multiple page spreads in Business 2.0 for the last several months). Every startup company that I know wrestles with choosing a hosting service, an ecommerce platform, content management tools, email tools, search engines, and more.

Clearly, I’ve decided that it’s time for me to retool.

I recently downloaded X1, which I absolutely love. It is a powerful desktop search engine that indexes all the files on your hard drive and all the email you send and receive. It comes from Bill Gross and other Idealab people who once wrote Magellan for Lotus. I use it daily and love it.

I also just purchased Form Artist, a web survey and form design tool from So far, so good. Every business needs a way to survey customers and other stakeholders continually. At we had amazing survey tools and I used them almost every day. I think I’ll like Form Artist because of its ease of use and flexibility. All the responses to my surveys are stored in a database on my PC, no matter where my web site is hosted.

Hopefully my first-hand experience in making technology bets can help each of our start-up companies make quicker and better decisions. I think this is one reason that the Incubator model is so powerful. When start-ups can focus on their customers and not agonize day after day about every large and small technology issue that affects internal operations and productivity, then it has a much greater chance to succeed.

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SEC web site being hammered has never been slower. I’m sure tens of thousands of people are trying to download Google’s S-1, which apparently they filed about 40 minutes ago. I’m anxious to read the document and highlight important items, which I will blog about later today.

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TiVo Advances


TiVo, whose DVRs are already a fixture in about 1.3 million homes. TiVo is developing a technology infrastructure that would enable content owners to pay for exposure in search results for video, TiVo President Martin Yudkovitz said in a recent interview. The system will enable TiVo subscribers to type in a search for Julia Roberts on their DVR, for example, to find a list of video clips or films featuring the actress. Marketers would be able to pay for greater visibility in those search results.

Since becoming addicted to the Folio VIEWS desktop search engine many years ago for managing all my personal information, I have hoped for the day when text, audio, and video would be as easily manageable and searchable. TiVo’s plans are extremely interesting to me. I love the shift of power away from broadcasters and news editors to individual consumers of information who can search for and find whatever they want whenever they want it.

Two of Infobase Ventures companies also plan to get in on the act. hopes to develop audio search technologies and to synchronize text and audio content for personal research and for use in presentations. plans to work with historical television and film broadcasters and archives to catalog clips and programs with metadata. Using a typical search engine, consumers will be able to find historical video clips or documentaries on topics of interest to them.

It’s a shame that today most people watch whatever is on TV at any given moment. Knowing when valuable programs are airing, and then setting your PVR to record them, and then watching the programs at your convenience is far better. When people can choose what and when they want to learn, human intelligence will dramatically increase and our enjoyment in life grows as well. No wonder FCC Chairman Michael Powell called the TiVo “God’s machine.”

I wonder what Powell will call the device we all use in 5-10 years that has multiple terabytes of storage, broadband wireless access to the internet and search engines, personal preferences that download, index, and store all the text, audio, and video content you could ever want, and is small and portable.

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Interesting Facts from Google’s S-1

A few more interesting facts from Google’s S-1:

We provide advertising, web search and other services to members of our Google Network. The net revenues generated from the fees advertisers pay us when users click on ads that we have delivered to our Google Network members

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Advice to College Graduates

BYU just held its graduation ceremonies last week with more than 6,000 students finishing their undergraduate college experience. I’m glad the traffic is gone. I have some advice for graduating college students everywhere.

Explaining the success of His Greatness, famous hockey player Wayne Gretzky reportedly said, “I skate to where the puck is going to be, not to where it has been.” FastCompany claims that Wayne’s father Walter should get credit for this famous saying. Nevertheless I love this quote. And I think that more college graduates should take it to heart.

And maybe the advice is even better for high school graduates: if you want an exciting career, choose a field of study that will lead you someplace special. I chose to major in Russian in the 80s, thinking that work in that field would be exciting. But then came perestroika, glasnost, and the fall of Soviet-era communism. So Russian skills are not as central to U.S. intelligence as they once were. Today, if I were in college, I’d want to learn Chinese or Arabic, for different reasons. A friend of mine is fluent in Chinese: today he is building Seastone, one of the fastest growing companies in Utah, in large part because he has manufacturing relationships in China.

But besides learning a language that could be useful, pick subjects that will lead you into the very depths of cutting edge research or application of world-changing technologies. Alan Kay said the best way to predict the future is by inventing it. There are so many important things yet to be invented, refined, developed, marketed and adopted by consumers and businesses world wide. It’s a super exciting time to live.

But not necessarily if you major in accounting or plan on going to law school. (I only pick on these two professions because most people that I know who chose accounting or law did so for the money, not for the love of it. And we have way too many smart people practicing law who could be and should be creating value in our economy.)

Think about physics and engineering. A university in Texas is one of few institutions to offer a Ph.D. in Nanotechnology. I love what Nanosolar is trying to do: make solar power competitive with conventional energy.

Consider genetics. A friend of mine has a Ph.D. and is working for Merck’s research lab on personalized drugs and potential cures for diabetes. There are a number of interesting Utah companies in this space, such as Sorenson Genomics and Myriad Genetics.

If you’re in business, don’t just start a franchise: consider teaming up with medical researchers, biologists, digital media or communications experts and doing something innovative and important.

Why settle for a boring 9-to-5 job working for a company you don’t love in a field that is not exciting and engaging and forward-looking?

Read Wired Magazine and Popular Science. Stay current with technology news. Find something that looks promising and exciting and then find a way to work in that industry. How will you explain to your grandchildren 50 years from now that you lived through the era of personal computers, the internet bubble, the biotech revolution, the era of nanotechnology, robotics and space travel, and that for a living you managed accounts receivable for a small ski shop? I guess someone has to do it. But why does it need to be you?

Gretzky was right. Skate where the puck is going to be.

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Best Book for Successful Selling

Dr. Rick Farr, with whom I teach a business course at Utah Valley State College, gave a great lecture two weeks ago on sales. He has been a highly successful salesman in his career. I just ordered the book that he said is the best book written on successful selling: SPIN Selling by Neil Rackham. This approach claims that asking the right questions is more important in the selling process than anything else. The SPIN Model is this:

The seller uses Situation Questions to establish a context, leading to Problem Questions, so that the buyer reveals Implied Needs, which are developed by Implication Questions . . . which make the buyer feel the problem more clearly and acutely leading to Need-Payoff Questions, so that the buyer states Explicit Needs, allowing the seller to state benefits, which are strongly related to sales success.

According to the research in the book, the close rate is far higher for sales peple that use the question approach and then try to close a sale once, than those aggressive sales pepole that using multiple closing tactics during their presentation and focus primarily on the close. Rick enjoys sales and enjoys meeting people. I’m sure that part of the enjoyment comes from the interesting and satisfying results that come from asking questions and really seeking to understand someone’s needs and solve their problems. Hopefully, after reading the book, I’ll be more conscious of asking questions rather than just saying what I want to say — not only in sales situations, but also in teaching and lecturing.

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Lindows, Inc. IPO

Lindows, Inc. has filed with the SEC for a public offering on 2003 revenues of $2 million and losses of $4 million. The filing states that the company will be pursuing a non-traditional IPO.

OpenIPO�: The method of distribution being used by the underwriters in this offering differs somewhat from that traditionally employed in firm commitment underwritten public offerings. In particular, the public offering price and allocation of shares will be determined primarily by an auction process conducted by the underwriters and other securities dealers participating in this offering. A more detailed description of this process, known as an OpenIPO, is included in �Plan of Distribution� beginning on page 84.

The CEO is Michael Robertson of fame. Lindows has agreed after two years of legal fighting with Microsoft to change the name of its Linux-based operating system to Linspire.

The number of Linspire users is increasing steadily, and the international penetration looks promising. Some new computers are being sold with the Linspire OS for as little as $200, for example, in Mexico.

It will be fun to watch this IPO to see if it actually makes it out.

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Alibris IPO

I missed this filing from March:

Alibris, which operates an online marketplace for buyers and sellers of used and hard-to-find books, filed to go public on Wednesday. The Emeryville, CA based company recorded $45 million in revenue during fiscal 2003 and generated an operating loss of -$5 million. The IPO price will be determined via WR Hambrecht’s Dutch auction process, which is also known as OpenIPO. Terms and timing for this deal have yet to be announced.

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