The Seed Capital for Startups Blog

Facebook & MySpace Step Aside For Lonerbook

From the website: Lonerbook  is an anti-social utility that keeps you from connecting with people around you.

If you're a quiet introverted loner by nature you have probably been feeling left out of the action by sites such as Myspace and Facebook.

Well, now there's a new site coming for the INTPs of the world and anyone else is who picky about who they let into their lives.

Lonerbook is coming.

Once the site is launched, I will sign-up, create a blank profile page, disable all means of communicating with me, and finally scramble my password.

Then I'll go read a book or take a walk with the dogs.

My New Non-Google Startup Strategy

Google as an SE is done. Someone stick a fork in it. Here's why.

Not too long ago many startups relied on Google as their primary source of customers. At least that's what the Google Myth led entrepreneurs to believe it could do. So hundreds of hours would be sunk into tweaking the SEO and fine-tuning Adwords advertising campaigns.

But if you have any experience in running online businesses, you are probably painfully aware of just how fickle and unreliable Google is as a business "partner" for a small business.

Firstly, it takes a very long time for a new site to appear in Google's SERP (Search Engine Results Page). While Google denies it, most of the savvy webmasters who talk at places like webmasterworld (WMW) suspect that Google secretly does this in order to force new sites to spend money on its Adwords program. (I believe this because all my new sites do well quickly on Yahoo and the other SEs but poorly on Google.)

Forcing sites to use Adwords makes perfect sense--from Google's point of view. But not from mine.

Secondly, it wouldn't be so bad if, at least, Adwords delivered in terms of ROI. But even it is deteriorating performance wise. (See my earlier posts on this in the Online Business category.) My suspicion is that most surfers have gradually turned a blind eye to Adwords. They have probably seen the ads a few thousand times and have lost interest in them because the pay-off from clicking is so low, in most cases.

One final point. Just a few short years ago the consensus on WMW was to avoid doing anything that might tick Google off. They all walked around on eggshells as if Google was a spouse with Borderline Personality Disorder who might fly into a rage at any moment and attack them with a steak knife.

For example, reciprocal link exchanges were considered a taboo because Google would assume that they weren't freely given but the result of scheming by the two sites involved and then penalize both sites. Then there was the obsession with the idiotic Page Rank system devised by Google. So all the webmasters at WMW installed the G-toolbar and avoided incoming links from sites with a lower pagerank.

In summary, there was rampant paranoia about doing anything that might upset Google and result in a penalty. I also read in horror daily tales from webmasters whose sites simply vanished from Google for reasons unknown. (Speaking of vanishing sites, I watched a cancelled site sit in the middle of the first G SERP for over a year. If you clicked on the link you'd get a an error message stating the site was unavailable. Why was it unvailable? Because the owners had pulled it. So for over a year G's vaunted SE shows a non-existent site in the middle of the first SERP for a key search term. Here's what happened a year later, the original owners launched a new site and placed a redirect on the old site to the new one.  So a new site with a very low SERP ranking benefits from a redirect on the first G SERP.)

Sadly, I fell for all the "don't do anything to upset Google nonsense" at WMW. But then after a year, I began to notice that there were some renegade webmasters out there who didn't care what Google thought. All they cared about was traffic--and they were getting it!

Maybe I'll write about this later but suffice it to say here that there are a lot of ways of driving traffic to your site. Blogs combined with bookmark services are one great example of getting the word out.

The bottomline is to go for the right traffic.  Go for paying customers. Who cares if they come from a site with a low page rank. A sale is a sale.

Do I sound pissed at G? You bet. One of my sites, www.antiventurecapital.com, used to appear on G's 4th SERP for searches on "venture capital". Then overnight a year ago it vanished from G and then returned a month later around the 90th SERP. Since then it's yoyo-ed between 80th and 95th SERP.

Screw you Google, instead of the tedium of constantly tweaking my meta-tags and key word density while blowing money on Adwords, I'm doing fun marketing via this blog and other methods and it's paying off.

My newest site's strategy will basically ignore Google.

Are Adwords & Adsense Dying?

Ok, I'm talking about this from the perspective of small business. I'm certain that the Big-G is still raking in the bucks.

Is this a hunch based on an anecdote? I like to think not. Our company owns ten high traffic sites which use or have used both Adwords and Adsense since 2003.  In addition, rest assured that we talk regularly with other online partners about this subject.

The growing consensus is that Adwords is losing its efectiveness. All other things being equal, the click-through rate is down dramatically.  On the plus side, we've also noticed a corresponding decline in bidding price. Maybe everyone is starting to back off?

As for Adsense, the drop in performance has been greater than that of its sister program Adwords.  Earnings-per-click are literally at about 5-10% of what they were at the end of 2004. I hear this time and time again on various forums and in personal conversations. The click-through rate has also declined to below 1%. This fall we began dropping Adsense in favor of other publishing programs as it's no longer worth running its ads.

Moreover, of late many of our long time competitors have simply stopped using Adwords. After a year or more of going head-to-head with us in bidding for keywords, they have simply pulled the plug on their ppc advertising. From this fact it's even easier to assume that both Big-G programs are losing their effectiveness.

What's the take away here for the entrepreneur?

Don't rely on the Big-G to bring you sales. Up until recently many online entrepreneurs would rely on Adwords to bring in sales initially. But that no longer works. What's worse is the fact that the rumor mill on the various webmaster forums has it that the Big-G won't even index a new site for its first year of operations in order to force it to use Adwords to attract traffic.

I believe this rumor to be true, although the Big-G denies it, because new websites show up on Yahoo and the other search engines within 30 days of being submitted. With Google, it takes a very long time. Usually about a year.

I'd like to hear about your experiences if you run sites using these programs.

Real Competition, Finally!

Up until now there's basically been only one game in town for small sites looking to earn money from publishing content-based ads. The virtual monopoly in this space has been the truly abysmal Adsense program from Google. (see earlier posts in this category)

Now Yahoo is finally entering the space as well.

Application link at http://publisher.yahoo.com/   Note that the program is still in the beta phase.

The more competition there is the better it will be for the rest of us.

So support Yahoo and the various small-fry out there such as adbrite, fastclick, tribalfusion, etc.

At Least Yahoo Listens

Looks like Yahoo listened to my advice about its need to go with a clean search page.

http://search.yahoo.com/

The Online Sales Lag

Okay, so there really is a lag between the first time someone visits your site and when they actually buy.

http://www.useit.com/alertbox/sales_cycle.html

I took a survey once of my manual customers and discovered that upwards of half had to think about the investment at least two weeks before returning to obtain a copy.

Well, it's kind of a relief to discover that I'm not the only merchant who has to wait.

Gosh, more people pissed at Google

http://www.darth-google.com

Alright, here's another site which dares to tell it like it is. Google places too much weight on the number of incoming links.

As explained before this gives old dinosaur sites launched back during the Korean War a really unfair advantage over newer, fresher, and better sites.

Click at the bottom of this post on "Online Business" for more.

Read this too http://www.darth-google.com/anti-google-sucks-basics.html

Blog Hammers Google Stock

It seems as if some people believe that this blog is responsible for every dip in Google share price of late.

If that's the case, it wasn't my intention.

My bad.

Here's where I'm coming from. One of my companies runs a number of fairly popular sites and continues to add one or two new ones per year. So my perspective is that of an entrepreneur trying to deal with a situation where one big player basically controls access to 80% of the online market.

I simply want more competition from Yahoo, Dogpile, Excite, etc. in terms of not only gaining more of the search pie but also of providing competition to Adwords and Adsense.

If my rants have pounded G's stock down, then investors have my sincerest apologies.

Google and the Startup

Here's another excerpt from the same NY Times article mentioned below:

"In the day, you'd hear that Microsoft was the evil empire, especially in Silicon Valley," said Brian Lent, the president of Medio Systems, a start-up in Seattle working on mobile-phone-based search. "Google is the new evil empire, because they're in such a powerful position in terms of control. They have potential monopolistic control over access to information."

Mr. Lent, who worked closely with Google's founders, Sergey Brin and Larry Page, when all three were Ph.D. students at Stanford University, helped introduce Mr. Brin and Mr. Page to one of the company's earliest investors.

"I like and respect the Google guys," Mr. Lent said, "but let's just say that their ultimate aim seems to me to be, 'One Google under Google, for which it stands.' "

The italics are mine.

Let's pretend that we are having a conversation about my startup plans. As I'm proudly describing my newest venture, you ask about my marketing strategy. "Oh", I reply, "I'll rely exclusively on the services of a stranger I met at the pub last week. He's a pretty busy guy but promised to do everything he can--when his schedule allows--to get the word out about my startup.  So I'll just sit at my desk and wait for the orders to come in."

You'd rightfully think that I was insane. At least I hope you would.

So what am I getting at? Well, any startup that thinks it can achieve lift off with a strictly online marketing campaign these days is in for a world of pain. 

Like the stranger in the pub, the Big G is not very helpful at all in this respect. Neither has any genuine motivation in seeing you succeed.

As mentioned in earlier posts, Google sandboxes new websites for a year. Although Goog denies it, this is the word at the various webmaster sites. It's also been my experience. By not displaying new sites on its SERPs (Search Engine Results Pages) for the first 12 months, Google forces startups to spend on Adwords advertising.  The problem now is that the performance of Adwords for small advertisers has deteriorated badly.  Two years ago, surfers clicked on ads because they were seeing them for the first time. Now hardly anyone clicks because they have seen the ads a thousand times. When they do click, they don't buy. For all intensive purposes, most Adwords expenditures are akin to setting your advertising dollars on fire. (Sorry, I collect malapropisms.)

The reason I bring this up is because many small startups think "just Google" for initial marketing. They tell me that they'll join Adwords and put some time into SEO efforts and the money volcano will explode over their heads. Well, the reality is that this thinking is as insane as relying on a disinterested stranger you met at the pub to generate your sales.  Adwords can quickly burn up a lot of money while not providing much of a return. Likewise, Google's algorithms drive webmaster's batty. Forget about mastering SEO during the first year. (Someday I'll write about the Google Whiplash which results in wild ranking fluctuations on its SERPs.)

So, the lesson here is not to rely on strictly online efforts for creating sales. It won't happen--with rare exceptions.

These days you need to use a hybrid business model for startups. In other words, don't design your business as strictly online. Add an offline dimension to it, at least in terms of marketing. When things are slow--and they will be--don't think for a moment that raising your Adwords bids will bring more business in. It won't. When things are slow the only way to bring sales in is the old-fashioned way: talking directly to real customers or "dialing for dollars".

Right now Google wields too much power in cyber-space. It's practically a monopoly considering that it has 80% of mindshare. Do you really want your business fortunes totally reliant upon some behemoth with Google's reputation amongst small businesses?

Google controlling 80% of the search business is really bad news for the rest of us.

Google: The New Evil Empire?

Interesting little article came out today in the NY Times on Google. They must be reading this blog.

Here are a few random excerpts from Relax Bill Gates: It's Google's Turn as Villian:

Nowadays, when venture capitalists, entrepreneurs and technologists gather in Silicon Valley, they often find themselves grousing about Google, complaining about everything from a hoarding of top engineers to its treatment of partners and potential partners. The word arrogant is frequently used.

Google is also making it more difficult for some start-ups to raise funds. In the second half of the 1990's, entrepreneurs frequently complained that the specter of Microsoft hung over their every conversation with venture capitalists. Today, they say the same about Google.

"When I meet with venture capitalists, or if I'm engaged in a conversation about going into partnership with someone, inevitably the question is, 'Why couldn't Google do what you're doing?' " said Craig Donato, the founder and chief executive of Oodle, a site for searching online classified listings more quickly.

"The answer is, 'They could, and they're probably thinking about it, but they can't do everything and do it well,' " Mr. Donato said. "Or at least I'm hoping they can't."

Aggressiveness is another signal trait among successful companies like Google - something those in parts of the media world are starting to learn.

Google recently announced that it would not talk to any reporter from CNETNews.com, a technology news Web site, until July 2006, after a reporter for the site wrote an article raising privacy questions about the information Google collects about individuals.

See my posts belows at to why Google is not popular with its advertising customers.

I'll write more on this shortly.