Case Study: Going Up Against Google

Sifry's instincts told him to stick to his plan. But could he really change nothing?

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It was almost midnight, but David Sifry was still sitting at his office computer, nervously zinging instant messages back and forth with friends and employees. Sifry knew that his fledgling business, the popular blog search engine Technorati, was about to get a gigantic new rival: Google.

It was a moment Sifry had been anticipating. When he founded Technorati in 2002, he knew that if blogging became as big as he anticipated, he'd almost certainly face competition from the giants. Indeed, he had spent the previous three years trying to take maximum advantage of Technorati's first-mover status, the better to protect his company when the big boys made their play. On September 14, 2005, that day arrived. Google Blog Search was making its debut. Similar offerings from Yahoo and Microsoft were said to be in the works.

If Technorati was to survive, Sifry reasoned, it would have to do so on the basis of its technology. From the outset, he had been pushing his programmers to refine Technorati's novel way of searching the growing number of weblogs. And despite the long and admittedly scary shadow cast by Google, Sifry's instincts told him to ignore the new competition and stick to his plan.

Google, after all, had added other new services without killing its smaller rivals. The search engine Ask Jeeves, for example, remains viable. And Shopping.com, a shopping search engine, not only survived Google's 2002 launch of Froogle, but wound up being purchased by eBay for $620 million in June 2005, which was hardly a bad outcome. Still, it was hard to imagine sitting back and doing nothing as one of the most powerful companies in the world encroached on his turf. "I take them extraordinarily seriously," Sifry says. "These are very smart people, smarter than me, and they've made tons of money."

But Sifry didn't see many options. Launching a major brand-building campaign to reinforce Technorati's image as the original blog search engine wasn't viable; after all, who can outspend Google? And he didn't particularly want to cut and run and start looking for a buyer. A computer geek at heart, Sifry had a lot of faith in the technology he'd developed. Indeed, his bet all along had been that Google's approach to searching the Web wouldn't be the right fit for the blogosphere. The company's famed PageRank algorithm indexes keywords and looks at the number of people linking to websites in order to establish the best matches for a search. In essence, Google treats the Web like an enormous library, sifting through millions of pages and displaying the most relevant ones, regardless of how old they might be.

Sifry believes the blogosphere is different. It's not so much a library as a conversation, and old blog entries get stale fast. That's why he's made sure that the first page of Technorati search often yields items posted in the past 10 or 20 minutes.

A former Wall Street analyst, Sifry developed the technology in early 2002, while working as chief technology officer at Sputnik, a wireless computer networking start-up he had co-founded. On the side, he kept a blog, mostly to expound on tech issues, and he was curious to know who was reading it. So he spent an evening writing software code that would help answer the question. At the time, most bloggers were techies like Sifry or teenagers posting their diaries. But the phenomenon took off, and Sifry's website, which he had dubbed Technorati, was seeing rapid traffic growth and even some paying customers--including The New York Times and Reuters, both of which licensed the technology to track what bloggers were saying about their articles.

When AOL called and said it wanted to collaborate with Technorati on its new blogging service AOL Journals, Sifry realized that Technorati was no fluke and could be a lot more than a hobby. He wound down his relationship with Sputnik, signed a deal with AOL, and started raising some angel capital. In September 2003 he devoted himself full-time to Technorati. Its mantra: "Be of service."

Sifry's instincts about the blogosphere proved correct, and Technorati has been scrambling from the outset to keep up with the blogging world's explosive growth.

In 2004, the company raised $6.5 million in venture capital. By the fall of 2005, more than 15 million blogs were being read by 30 million people, and Technorati was performing millions of searches a day. The company wasn't profitable. But it was building a real business, using a business model not unlike Google's--selling advertising and sponsorships, and syndicating its technology to other websites. It had much better brand recognition than its competitors, most of them start-ups such as Feedster, PubSub, and Bloglines. But going head-to-head with Google would be an entirely different matter.

Sifry wondered what Google had up its sleeve. It might, for instance, have more effective ways to deal with the growing number of blog spammers trying to game the search engines (spammers had generated lots of complaints about Technorati). Indeed, the company was vulnerable on a number of fronts. Keeping up with demand was a constant challenge. Searches on Technorati were taking longer and were increasingly generating error messages. Customer support was overwhelmed, with some queries taking as long as a week to answer, sparking more complaints among bloggers. What if Google's technology simply worked better? What if the company had developed entirely new approaches that Sifry hadn't even considered? Could he really just stand by and do nothing?

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