Too Cuil for School

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Sometimes we can learn more by watching other start-ups flounder, rather than fly.

Just two months ago, the scrappy new search engine, Cuil, launched with much coverage and hype (It's a tech thing. Often the launch parties are bigger than the launch itself.).

I remember blogging about Cuil somewhere between the iPhone 3G launch and taking my kids to Hershey Park over the summer. See "Cuil Leaves Me Cold - So Far". For once, maybe my gut check was right.

Cuil Down.

Without reading anything about them elsewhere, I was just struck over the weekend with a "whatever happened to that new search engine?" thought. I knew that it couldn't be good when I couldn't even remember how to spell it. I typed "cewl", "kewl", "cuel", etc. Bad sign!

Turns out their usage share of the search engine market has slipped to almost non-existent. By the way, that's where it's value sits right now, as well.

Here's some back story on Cuil:

- It was founded by former Google employees. (i.e. "Let's show them and beat them at their own game." Not!)

- As recently as September 12th, Cuil was valued by its investors at $200 million. Leading that claim; Madrone Capital Partners. Madrone Capital Partners is a private equity investment company based in Menlo Park. General Partner, Greg Penner is a former financial analyst for Goldman Sachs. Need I say more. Okay, okay; I will say more. In between Goldman Sachs and Madrone, Penner was a big wheel at Wal-Mart and is, in fact, married to Sam Walton's granddaughter. So much for rolling back the prices. Cuil was Penner's baby, by the way.

- Total digression: Penner's other search engine baby that has been quite successful is Baidu, which is used in China. You know; where Wal-Mart buys all that horrible, cheap inventor!

- Other signs of doom: the VP of Product just fled, the company blog is sparse and is admitting there's trouble in paradise and even people like me are writing negative things about them. More bad signs!

What can we learn from Cuil flaming out (I just had to get one more play on words in, forgive me!)

- Start-ups need to dream big, but act humbly. Start small. If the company takes off and grows fast; great! If not, there's time and room to flounder around a bit.

- Start-ups should be about starting something new and not running away from something old. If you're mad at your old boss and want to go toe- to- toe, think hard on that one. Spite only takes you so far.

- Beta is a private matter. Launching your start-up with loads of media coverage puts on a lot of pressure. It's much easier to grow out a fledgling company,while no one is looking. I tip my hat to web sites that launch with hand-picked users, by invitation only in the beginning. So many companies today do their full launch with the "still in beta" tag line under the new company logo. Risky business!

- What makes your start-up chocolate in a world full of vanilla? Cuil's claim to fame is that it searches through more web sites than Google? From a user's standpoint, is anyone really feeling like Google isn't crawling through enough web sites per search? I just ran a search on my own name and got 42,000 hits on Google. I assure you that I haven't written that many articles. For those of us frustrated with Google, Yahoo, MSN, etc., I don't think it's over any anxiety that they're missing crucial sites in their seach results.

- Only MySpace can get away with a black background and become huge, anyway. Kids don't try this at home.

Renee Oricchio is a technology writer and former supervising news producer for CNN Financial News. She has been covering the computer industry since 1987. @oricchio