Don Dodge on The Next Big Thing

Little known Outlook features

Microsoft Outlook like Microsoft Office has tons of features that most people don't know about and never use. I just discovered two cool features in Outlook that have probably been there for a long time but I never noticed them.

AOL Instant Messenger status shows up in Outlook...even if you don't use AOL IM. I have no idea how Outlook does this but I noticed it yesterday. I was reading an email from a friend and noticed the yellow AOL icon next to her name in the email, along with the blue "pawn" icon from MSN Messenger. I hovered over the yellow AIM icon and it said "This user is available". I hovered over the blue MSN icon and it said "This person is not an online contact". I don't have AOL IM loaded on my PC so I have no idea how Outlook figures out that this person has AIM and is online. When this person goes offline the AIM icon disappears.  This same behavior can be seen if you open your Contacts list. Amazing!

Maps and directions to the address of anyone in your contact list are available by clicking on a little yellow icon of a right turn street sign. This is incredible. Go to your Outlook Contacts list. Click on any contact for which you have a street address. You will see several icons above the contact information. Click on the yellow street sign and it launches MSN Maps in a new window with the exact location. From here you can request driving directions, print the map, or download the directions to your Pocket PC.

There is also an auto dialer that will dial the phone number of that contact assuming you have your phone configured to work with your PC. This has been around for a long time...and I knew about this one, but just thought I would mention it.

I am sure there are 20 more cool features I haven't discovered yet. I'm sure you have heard the refrain "the majority of users only use 20% of the features". While this is true, I can tell you from my product management experience that every feature in a product was requested by many customers, some of them really big companies. So, 100% of the features get used by at least a small percentage of users, but only 20% get used by the majority of users. This is the curse of a ubiquitous product used by companies large and small from all market sectors.

Please respond in the Comments section if you know of other little known features you would like to share.

Windows Mobile 5.0 phones are coming...slowly

Yesterday I went looking for a SmartPhone/PDA supported by Verizon Wireless and using Microsoft Windows Mobile OS. The choices were disappointing. Microsoft employees do not use Blackberrys so the choices were Audiovox XV6600, or the Samsung SCH-i730. These phones are OK for reading email but typing a reply is tedious at best.

If not for my Verizon Wireless requirement, other options would be the HP iPAQ 6515, Audiovox SMT 5600, or the Sprint PPC-6700. Sometime in early 2006 the Treo 700W and the  Motorola Q phone should also be available.

The industrial design and user interface on all of the phones was disappointing. The keypad buttons are tiny and hard to read. The Blackberry keyboard has larger buttons and a better tactile feel. The user interface was clumsy using a stylus, buttons, or a finger on a touchscreen for various actions.

The Blackberry has been around for years. Why is it so hard to design a comparable device with equivalent, or better, form factor and user interface? I know that design and usability preferences vary by individual, but for me the Blackberry is still the best.

When Verizon Wireless supports a device like the Sprint PPC-6700 I will be a buyer. It has a much larger slide out keyboard and an excellent screen. The Smartphones are coming to Verizon Wireless, but for now I am sticking with my dumb phone, a Motorola V276.

UPDATE: 1/3/2006

At the 2006 Consumer Electronics Show in Las Vegas, Verizon Wireless has announced the availability of the Treo 700W and the UT Starcom XV6700.  The press release can be found at http://news.vzw.com/news/2006/01/pr2006-01-04b.html

UT Starcom XV6700 (HTC Apache)

• Windows Mobile 5.0 for PocketPC Phone Edition

• EVDO support for high speed wireless data access (where available)

• Camera

• Bluetooth

• Wifi (disables phone when active) J)

• QWERTY keyboard

This is the HTC Apache that has been offered by Sprint and Alltel. This is a very good device with a full 320x240 screen as opposed the squared 240x240 screen on the Treo and it includes Wifi.  However, when you turn Wifi on Verizon disables the phone, so you can’t make or receive calls when using the Wifi.  If the larger screen and larger keyboard appeal to you, this may be (for you) a better choice than the Palm Treo. 

Fear is temporary, greed is permanent

The investment market is driven by two things; fear and greed. Fear is temporary, greed is permanent. Markets over time always move up but there are periods of fear and doubt that cause investors to retreat. Greed takes over when investors see others making money and want to get back in the game before the opportunities get away. This happens in the stock market and in VC investing.

When fear takes over it consumes everyone. Everything looks black. Investments that looked great 6 months ago look like risky charades with no business fundamentals. We saw this happen in 1987, 1994, and 2001. There are usually a few high profile examples of "irrational exuberance" that were indeed big mistakes. Then the rest of the market gets slammed irrationally.

But fear is temporary, greed is permanent. Greed is a much stronger emotion than fear. Greed in this sense is a good thing, more like motivation and risk taking.

Every year at this time investment gurus review the performance of the stock market for the year and make predictions about next year. Everyone has an opinion, but from all of this a consensus emerges, and it is usually pretty accurate. I am reminded of the book "The Wisdom Of Crowds" by James Surowiecki. The premise of the book is that the consensus opinion of the masses will be more accurate than the opinion of one expert. The book cites many examples where the wisdom of the "crowds" was superior to the expert. The consensus this year seems to be moderately positive.

Regardless of the environment, entrepreneurs are always going against conventional wisdom. We think big, we think about what could be, and ignore the naysayers. Yes, entrepreneurs do take big risks, but they don't look so big to us. It just looks like a big opportunity. If it were easy or obvious everyone would be doing it. Entrepreneurs ignore the fear and focus on the opportunity.

We had some dark years from 2001 to 2003, but the pendulum has swung back to where good deals are being funded at reasonable valuations. Angel investors have been very active over the past four years but are starting to see deal quality fall as the VC's grab the good deals.

Some might argue the pendulum has swung too far. Social networking and user generated content companies are attracting a lot of attention and investment.  Proven revenue models are still a question mark. But, greed is alive and well. There is lots of money sitting in VC funds that must be invested. 2006 is shaping up to be a great year.

Happy New Year!!

Three kinds of companies

VC and Angel investors put prospective companies in three buckets, and they only invest in one of them. Entrepreneurs looking for money should think about where they fit. The three types of companies are; Lifestyle, Cash Flow, and High Growth. When companies are just starting out it is sometimes not clear which category they will fall into. This is why investors spend a lot of time studying market size data and asking questions about customer scenarios.

Lifestyle companies provide a nice job and great compensation for the owner and top people. They might have a solid history of profitability, and a solid product or service. But, without significant changes these companies will never grow 5X or 10X from where they are now. VCs and Angels will not invest in this type of company. These companies should look for Friends and Family money, asset based loans from banks, or vendor financing.

Cash Flow companies are very profitable and throw off consistent cash flow. They grow at a reasonable (10% to 20%) rate and the cash flow covers all growth needs. After years of steady growth these companies might decide they need capital to staff up new sales offices in an attempt to double their revenues over a couple years.

VCs and Angels are not likely to be interested in this situation even though there is little risk. Little risk equals little reward. They are looking for 3X to 5X returns over a few years with an occasional 10X winner. From an investor point of view, a minority percentage ownership in a privately held company, where insiders control the BOD, is not attractive. The company can decide to keep all the cash flow or pay it out to executives. The investors are unlikely to see any of it, or enough to make the investment interesting.

Cash Flow companies should look for bank financing, asset based lending, or convertible secured loans from angel investors. Some angels will do secured loans with an optional conversion to equity feature.

High Growth companies have the opportunity to grow 50% to 100% per year for several years. They have products in fast growing markets where innovation and/or disruption is happening. It is a high risk, high reward, environment. Innovation often leads to entirely new markets or usage scenarios where value is added to an existing process. Disruption usually means that a new technology is applied to an existing problem or process where incumbent products will be replaced. Either way it is a high growth opportunity.

Investors need to understand the total addressable market and guess at what percentage of that your company can win.  They will spend a lot of time understanding the competitors and possible acquirers of the company. From the beginning investors are looking for multiple exit strategies.

VCs and Angels are really only interested in investing in high growth companies. They both want growth and big payoffs. The only difference between Angels and VCs is the size of their investment. They both evaluate investments in the same way and want the same types of exits. However, Angels are willing to make seed stage investments of $250K to $1M, sometimes even up to $2M, while most VCs will not consider anything less than $3M to $5M.

Both Angels and VCs want significant ownership and  BOD representation. Angels tend to get more involved in day to day activities during the seed stage and get you ready for future VC investment. VCs tend to get involved later in filling out the rest of the management team, helping you arrange partnerships, and paving the way for acquisitions.

All this stuff should be pretty obvious to people who have been in the technology business for a while. But, you would be surprised how many Lifestyle and Cash Flow companies try to pitch their companies to Angels for investment. Angels have a soft spot in their heart for entrepreneurs so they will often listen, but almost never invest. Save yourself the time. Unless you are in a high growth potential market space, don't bother pursuing Angel or VC money.

Good luck!!

The VC funding process - 12 steps to success

I get lots of questions about the VC funding process, how to be successful, why it takes so long, what to expect, etc. Rick Segal of JL Albright Ventures writes The Post Money Value blog and had an excellent post Inside the Process describing how it works at JLA. I was going to write a post on this but Rick did such a good job that I have little to add.

The first meeting is critical. I wrote "How to handle the first VC meeting" with tips from some of the top VCs on what they expect at the first meeting. Getting the first meeting is a process unto itself. Rick Segal is more open to taking first meetings than most VCs. My post above has a few tips on how to get the VC to take the first meeting.

The process is different at each VC firm but generally follows this pattern. I will just outline the steps. Read Rick's post for the details.

1. No harm - no foul 30 minute introduction. This can be done by phone, email, or in person. The goal is to get a full length first meeting.
2. Pre-meeting information package. Send an email with a 10 slide PowerPoint presentation and maybe a link to market sizing data.
3. The first meeting. Explain succinctly what problem you solve, who your customers are, how you will collect revenue, who your competitors are, and why your management team will be successful. Don't spend a lot of time on "how" the technology works. Save the demo for the end, if there is time. Again, read my post above, and Rick's post for more detail on how to handle the first meeting.
4. The Monday morning partners meeting. Most VC firms have a partners meeting on Monday morning to review their portfolio companies and new companies under consideration. Rick calls this "The Huddle". It is the first chance for the rest of the partners to veto the deal.
5. Send more information. Assuming you made it past the first partner test they will ask for more detailed information. Give them everything they ask for, and more. Make it organized and clearly address each point they raise. Don't send a generic package of materials. The VC will start to do some due diligence based on this information.
6. Face to Face meeting with more partners. You already have one partner championing the deal, but this is a partnership and everyone needs to feel comfortable with the investment. The other partners want to get a general understanding of the product, but more importantly get comfortable with you as a management team.
7. The second Monday morning partner meeting. Now that several partners have seen the company they will decide if they want to proceed with a term sheet, and the general parameters of a deal. Lots of deals die at this point.
8. The Term Sheet. Term sheets are pretty standard for VCs...they do them all the time. But for entrepreneurs these are scary, sometimes intimidating documents. There will be lots of legal terms and words you have never heard before. This is not a time to think you know it all. Get a good lawyer who has lots of experience with VC financing. Brad Feld has a series of great posts on term sheets. I highly recommend reading them. Some of these standard terms could come back to bite you later. You need to understand exactly what you are agreeing to. I recommend thinking up three scenarios and applying the terms to each of them to see what would happen. It may surprise you. Take the time to do it.
9. Due Diligence - Validation time. This is where the VC firm gets serious about investigating the company, the technology, the team, and the competition. This can can take a lot of time so be patient. You might think you have a deal "in the bag" when you get a term sheet, but this is just an outline of a deal. Negotiations start, the background checks start. Things can still fall apart.
10. Third Partner Meeting, they agree to move forward. Here the partners agree to do the deal, commit the money for lawyers, raise any concerns, etc.
11. The Lawyers. Lawyers can kill deals, or they can find creative ways to make deals happen. This can be a painful emotional process. Try to stay focused on the long term, bigger picture. Your lawyers job is to advise you of risks. You can decide to take the risk, but at least be aware of what they are.
12. Signing the deal. It has been a long process but you have made it. It can be somewhat anticlimactic after all the hard work, but it is time for celebration. Celebrate now. The real hard work is just beginning.

Sorry for the long post. It may only be interesting to first time entrepreneurs. But, let me tell you if you are going through this for the first time it is nerve wracking. Send a link to this post to any friends who are trying to navigate their way through the maze.

As I said earlier, every VC handles this slightly differently. There is a lot of detail and nuance behind every step. The deal can die at any step in the process. Try to have back up plans in place.

Good luck!

What "problem" does Riya solve?

The hype and rumors around Riya are perplexing to me. In fact, count me as skeptical. Some of the uber-bloggers, Robert Scoble, Om Malik, and Michael Arrington have been praising Riya, yet saying little about what Riya actually does. These guys are very influential in the tech community and can create a lot of buzz...and they have. So, there must be something there... Riya is in a controlled beta right now, but their web site indicates that they do picture categorization, tagging, search, and face detection. I am not in the beta so I have no idea what they really do, but the stated features are certainly not new.

Image search has been around for 8 years. Nick Whyte and our team at AltaVista were the inventors of multi-media search and it is still in use today at Yahoo. Nick now works for Microsoft in the search group. All the major players have reasonably good image search. It is much more difficult and sophisticated than text search, but takes advantage of many of the same techniques. We had some crude face detection technology and some pretty sophisticated skin detection technology to screen out pornography.

Face detection has been around for more than 30 years. The Defense Department, CIA, NSA, and all the defense/intelligence guys have been buying this stuff for years. There are also lots of PhD's from MIT, CMU, Stanford and other places that have done work on face detection and image identification. There is lots of technology already in the marketplace. Tagging and categorization has been around for a long time too.

Bradley Horowitz was one of the founders of Virage, a leader in search within video, is now at Yahoo doing multi-media search. Virage had very sophisticated speech recognition and video pattern recognition technology for searching for specific clips within a long video.

The real question is not how sophisticated Riya's technology is, but what problem do they solve? There are lots of photo sites that allow you to store, categorize, tag, and search photos.  So, for anyone who actually uses Riya, I have a few questions. Actually, these are the same questions I ask any new start-up;

1. What problem does it solve?
2. How are people dealing with this problem today?
3. Who will pay money for the solution to this problem?
4. How much will they pay? What is your revenue model?
5. What do you have that the search or photo service companies don't have?
6. What unique technology do you  have that can't be easily implemented by the big guys?
7. Is this a "vitamin" (nice to have) or a "pain killer" (got to have it)?
8. Why would one of the big players be interested in acquiring the company?

Maybe there is good reason for all the hype around Riya. But, until I see the service and understand the problem it solves I remain skeptical.

In my job I see hundreds of new software / service companies every year. Most of them are all about technical innovation. I love technology and always want to know how it works, but technical innovation only matters when it is applied to a real problem that satisfies a pain point. Asking the eight questions above can help focus the discussion on the real pain point and value proposition.

Can anyone answer these questions with regard to Riya?

UPDATE:  Several of you have responded in the Comments section with descriptions of what Riya does. It appears that face detection and automatic tagging of the faces it recognizes is the main feature. Riya strikes me as a "nice to have" feature of a larger service, but not something, on its own, that you could build a profitable company around.

I know of lots of other face detection technologies on the market and completed projects in research labs that do the same thing. The task is made much simpler since it only has to recognize a very small set of faces...the dozen or so faces that are in 90% of your pictures.

I know Microsoft has similar technology sitting on the shelf in the research labs. I am pretty sure Yahoo does too. I don't see a big barrier to entry for any of the big guys to enter this business if and when they want to.

Still not much information on the business or revenue model. I don't see how ads can be effectively targetted to pictures with keywords like "Robin, Caelan, and Devan".  I have learned painful lessons about cool technologies, even those that attract millions of users,  not translating into a sustainable business. AltaVista and Napster are two examples from my personal experience.

Riya probably does have some new twists on the technology, and may eventually figure out how to attract lots of users, and monetize the service.  But at this point, the hype is way ahead of the reality.

Selling your start-up to GYMA

Dare Obasanjo has an interesting post titled Flipping Your Startup 101. Dare references my earlier post Microsoft Will Acquire My Company which explains the logic the big players use when considering the acquisition of a startup. The "Flipping" post talks about the recent VC investment in Meebo and how that effects their chances of being acquired by GYMA (Google, Yahoo, Microsoft, AOL). While the subject is Meebo, the lessons and logic apply to all startups.

It is interesting to note that VCs invest in startups for the same reasons that the major companies acquire startups; 1)Great team of extraordinary people, 2)innovative technology, 3)growing user base, 4)a hot new market with huge growth potential. These are pretty much in rank order of importance.

Truly great engineering talent is hard to find. They are worth their weight in gold. Using a basketball analogy, Michael Jordan was only 1/5th of the Chicago Bulls starting lineup, but he was 100% of the reason they won so many games.

One superstar engineer/visionary like Ray Ozzie is worth 100 really great engineers. And, one really great engineer is worth another 100 good engineers. This is the normal order of things, yet few CEOs understand this. The truth is you need all levels of talent to build out a team, but without the superstar it will be tough to win.

I agree with Dare and Om Malik that Meebo is probably not now a good candidate for acquisition by the big guys, but perhaps for different reasons. The fact that they took venture capital raises the price expectations, perhaps beyond what they are worth as pure engineering talent, and their product competes with the other major players.

However, an acquisition by one of the majors is still a small possibility. It is not uncommon for big companies to acquire small companies with talented engineers and then redeploy them onto other strategic projects in the company. In other words, they are acquiring the people and their potential. The  product is of secondary importance.

It comes down to this; if the company in question has a product that is squarely in the domain of an existing Microsoft product than the valuation is a small premium over the internal development cost. If the company has market leadership in a new product space or market segment than the valuation goes up significantly.

VCs make investment decisions, and determine valuations, in the same way. Of course they want their initial investment to be successful, but if it isn't they could move the team into a different opportunity, or combine them into another investment,  and hit the jackpot. It is all about the people.

Real estate investment is all about location, location, location. Technology startup investment is all about people, people, people.

Google music search 8 years late

Eight years ago Nick Whyte and our team at AltaVista invented multi-media search. We were the first with Image (picture) Search, Video Search, and Music Search. Seven years ago I joined the team at Napster where we invented P2P music search and file sharing. Pioneers sometimes win fame, but rarely earn fortunes. In this case, the not so fast "fast follower" Google will probably make the fortune.

C/Net broke the story Google whistles a new tune. Funny, I went to Google this morning and couldn't find it. It only shows up as a secondary option after returning results of a search. For example, if you enter "Vanessa Williams" in the regular search box Google will return a results page as usual. One of the first results will have a link that says "More music results for Vanessa Williams". This link spawns a new page with music related results and a new "Search Music" button.

All that multi-media search technology we developed at AltaVista is now the property of Yahoo. Yahoo acquired AltaVista several years ago and many of the brilliant AV engineers are still there. In fact, the Image, Video, and Music search technology is still working on the Yahoo site today.

Incidentally, Nick Whyte now works with the MSN Search group at Microsoft. MSN Search already has Image Search and could add Music Search at anytime. Gee, could Video Search be next?

Both AltaVista and Napster were ahead of their time. The technology was great but the business model hadn't developed and the market wasn't quite ready. In both cases there were several strategic decision blunders as well. I wrote blog articles on my time at AltaVista and Napster that detail the story and lessons learned.

Maybe Google isn't 8 years late...maybe AltaVista was 8 years early. We had the technology at AltaVista and we tried to make ecommerce deals with Amazon and CDNow for music, and Corbis and Getty Images for Images, but we were just too early for the market. Eight years later, maybe the time is right.

Hot start-ups with cool technology

As part of my job with Microsoft's Emerging Business Team I get to work with lots of innovative start-ups with cool technology. Dan'l Lewin wrote an Always On editorial Checked My List Twice highlighting some of those companies. I encourage you to read the entire article but here is a list of the companies mentioned;

Adesso Systems—Mobile apps for an occasionally connected world. A Red Herring  100. Think "WinFS today."

Akimbi—Automates and accelerates the setup and teardown of even the most complex multi-machine software configurations using virtualization technology. Winner at Under the Radar.

Akimbo—The first functional marriage of TV and the Internet. "Your wish is on demand."

AtHoc—Alerting specialists for warning systems, emergency operations centers, and critical communications.

AviCode—Can pinpoint the exact source of any bug in a .NET application in real-time—during production or development. Identifies the exact line of problem source code.

BeVocal—Provides hosted self-service voice application solutions for carriers and call centers.

Cicero Networks—Voice over Wireless IP that harnesses the power of wi-fi and Bluetooth networks to deliver wireless voice services.

Colligo—Instant collaboration for teams in the field: Lets any wireless capable laptop, Pocket PC, or Tablet PC instantly and securely network to one or more computers no matter where you are.

Coveo—Specialized enterprise search with superior relevance ranking, document summaries, and integrated security.

CXO Systems—Web services-based dashboards that enable a one-touch, comprehensive view of multiple business functions in real time.

Digipede—Its "many legs make light work" and turn any combination of servers and desktops into a grid for .NET apps.

EchoPass—Offers complete solutions for on-demand call and contact center needs.

eSecurity—Security event management and continuous compliance monitoring for IT controls; makes sense out of the deluge of security log data that all the different systems on the network spit out.

Exact Target—A SaaS e-mail marketing company with a very slick AJAX interface that has achieved massive scale.

Fortify—Kind of like a mega-powerful cereal for your code; it figures out security problems during code development so you don't become the next statistic.

Forum Systems—Hardware appliances provide secure transmission and acceleration of XML data.

Fractal Edge—Cool visualization technology that lets you maintain and know your place anywhere within the hierarchy as you drill down on data. A Red Herring  Top 100 Private Company in Europe, 2005.

Grouper—Provides a way for friends and family to share videos and photos online via .NET smart client applications. Friends-only file sharing.

IdeaBlade—.NET on Rails. A framework for building service-based applications and distributed clients.

IP Commerce—Transaction payment platform and toolsets that enable the IP Payments Framework, a partnership Software as a Service system for incumbent and emerging players involved in electronic payments. Chase Merchant Services, a division of Chase Manhattan Bank, is an initial partner.

IDV Solutions—A visualization and geographical mapping solution. Integrates with MapPoint, Visio, and SQL.

K2.net—Enterprise scale workflow solution that automates any business process spanning people, divisions, technology, and distance. It has a powerful drag-and-drop design environment.

LoyaltyLab—Software service that lets merchants easily manage an online rewards/points system and create custom marketing messages to customers.

Newsgator—RSS aggregation from consumer to enterprise, from phone to desktop.

Onfolio—Built into the browser, it's a convenient and familiar tool that will help make web research more efficient, thorough, and organized.

OutlookSoft—Web-based solution delivers real-time planning, budgeting, forecasting, consolidation, analysis, reporting, score carding, and process management.

OSIsoft—Delivers performance management software to the world's leading process manufacturing, life sciences, and utility companies—anywhere real-time operational metrics fuel performance.

Oxlo Systems—Lets automotive dealers integrate their systems with auto manufacturers, service providers, and other partners.

Rackwise—Focused on automating the manual processes associated with designing, documenting, and tracking changing networks in a datacenter through an on-line subscription service.

Skelta—Superior yet affordable workflow technology has let software vendors and enterprises implement workflows rapidly and at significantly reduced costs. 100% web based, multicultural architecture for anywhere, anytime access. Red Herring  Top 100 Private Companies in Asia.

Tableau—The Visual Spreadsheet, it provides visual reporting and analysis solutions.

Workshare—Lets you exchange high-value business documents and be certain the right information—and only the right information—is in your document. Works in-line with Microsoft Office.

We work with hundreds of new start-ups developing products on the Microsoft platform. These are a representative sample of the kinds of companies and products we like. If you have a new start-up building innovative products and services on Microsoft platforms we want to help you. Drop me an email (ddodge at microsoft dot com) and I will direct you to the right person.

Search is a commodity - Ad serving is the business

The headlines are screaming about the Alexa (Amazon) announcement that they will offer the Alexa index and computing platform as a web service for a fee.  Monster Mash, Re-scramble of the search game, Alexa Offers Fee Based Vertical Search Service, and a host of others are falling over themselves touting this as a historic moment, a turning point. Sorry to rain on the parade, but I don't think so. The search business is not about the technology, it is about the advertising network. The disruption is in the business model, not the technology.

Search has been a commodity for years. There are probably 50 search engines and indexes in existence today. Search is available on virtually any web site, in any browser, and in many applications. Search is ubiquitous and free to users. Search is syndicated to many sites, even some of the biggest sites in the world. AOL doesn't have its own search engine, it outsources search to Google, and perhaps others.

There is very little difference in the size, scope, accuracy, timeliness, or technology involved in any of the search engines. They are all good, and there are hundreds of them beyond the well known Google, Yahoo, MSN, Ask Jeeves, etc. Adding Alexa to the mix will not change things significantly.

Meta search engines have been around for nearly 10 years. Dogpile is one of many meta search engines that basically take your search query and submit it to all the search engines. Then they assemble the results, eliminate the duplicates, and rank them for presentation to you. This all happens in the background in less than a second.

The search business is not about technology, they are all about the same. It is about attracting a huge audience for serving advertisements.  Google and MSN are trying hard to make a deal with AOL to offer their search service to the AOL audience. The prize is a huge audience to serve ads to. Advertisers will flock to the network that has the biggest audience and reach.

Google disrupted the search business by offering a clean (no banner ads) service that was fast and accurate. They attracted a huge audience of people who just wanted to search, when all the other guys (Yahoo, Excite, Lycos, AltaVista) were building big consumer portals with lots of "sticky" content. Google disrupted the business side of search by delivering "text only ads" and auctioning them off to the highest bidder in a self service auction.

Alexa is not disruptive. Yes, there will probably be some new niche search services built on top of it, but I don't expect they will gain much traction.

To present the other side of the story here is an excerpt from John Battelle who authored "The Search" and writes Searchblog.

Every so often an idea comes along that has the potential to change the game. When it does, you find yourself saying - “Sheesh, of course that was going to happen. Why didn’t I predict it?” Well, I didn’t predict this happening, but here it is, happening anyway.

In short, Alexa, an Amazon-owned search company started by Bruce Gilliat and Brewster Kahle (and the spider that fuels the Internet Archive), is going to offer its index up to anyone who wants it. Alexa has about 5 billion documents in its index - about 100 terabytes of data. It’s best known for its toolbar-based traffic and site stats, which are much debated and, regardless, much used across the web.

OK, step back, and think about that. Anyone can use Alexa’s index, to build anything. But wait, there’s more. Much more.

Anyone can also use Alexa’s servers and processing power to mine its index to discover things - perhaps, to outsource the crawl needed to create a vertical search engine, for example. Or maybe to build new kinds of search engines entirely, or …well, whatever creative folks can dream up. And then, anyone can run that new service on Alexa’s (er…Amazon’s) platform, should they wish.

It’s all done via web services. It’s all integrated with Amazon’s fabled web services platform. And there’s no licensing fees. Just “consumption fees” which, at my first glance, seem pretty reasonable. (”Consumption” meaning consuming processor cycles, or storage, or bandwidth).

The fees? One dollar per CPU hour consumed. $1 per gig of storage used. $1 per 50 gigs of data processed. $1 per gig of data uploaded (if you are putting your new service up on their platform).

In other words, Alexa and Amazon are turning the index inside out, and offering it as a web service that anyone can mashup to their hearts content. Entrepreneurs can use Alexa’s crawl, Alexa’s processors, Alexa’s server farm….the whole nine yards.

OK, so the cost of building a search service just went down because you can rent the Alexa index. Is this a whole lot different than the meta search engines using the existing search engines in the background, or sites like AOL outsourcing search to Google?

In the end, the search business is all about building an audience and selling advertisements. The underlying technology to deliver the search results can be custom built, outsourced, or rented. It really doesn't matter. Alexa is just another option among hundreds of existing choices.