Category Archives: Google

Google as Publisher: The Grassy Knol

On December 13th Google took its first step from organizer and indexer of the world’s knowledge to supporting-creator of it with the announcement of a new free tool called “knol” (a cutesy-ism which stands for unit of knowledge).

The folks at publishing industry watcher Outsell were quick to use the announcement as validation of their predictions that Google would eventually enter the publishing market:

While it was debatable in the past whether or not Google’s actions constituted those of a publisher, there can be no doubt about it today.

Outsell takes a broader view of the announcement than most, who generally see it as a clear, direct shot at Wikipedia. (For an example of the consensus viewpoint, see this Newsfactor story entitled Death Knell Sounds for Wikipedia, I’d add that lesser known and poorly named Freebase seems squarely in the cross-hairs as well.)

Outsell points out that once a large knol-base (phrase coined by me, you heard it here first!) is created, then Google can tweak its search algorithms to favor its content over competing sites such as Wikipedia, which currently enjoys great organic search rankings;, which doesn’t; and which was a casualty of an algorithm change in August, resulting in a 28% traffic drop and a nearly 20% drop in their stock price.

There has been plenty written about knol so I won’t add a deep analysis here. For more, I’d go to the official Google blog post that launched knol and scroll down to see the list of blog postings that refer to it.

Techcrunch has a great write-up here:

Google is moving away from simply indexing the worlds content to being a content provider itself. Of course Google in response would argue that it is simply facilitating user generated content (like with Blogger), that ultimately they are the host as opposed to the creator, but it still competes with existing content providers, many of whom rely on Google search results for their living.

If you thought publishers were uncomfortable partners with Google before, things just got a lot frostier.

To me, despite billions of R&D investment and boatloads of hype, Google remains, as Kris Tuttle at Research 2.0 says, “a one-trick pony (but it’s one darn good trick.)” So no new initiative can be presumed successful simply because Google is behind it. Consider the defunct Google Answers, or the perennially weak comparison shopping service, Google Products, nee Froogle.

Is knol a gimme just because Google’s its dad? No way. The poor choice of name will hinder it as will Wikipedia’s entrenched position, positive karma, and what I sense is a growing Google fatigue in the market.

(Like a boyish 40-year-old suffering from Peter Pan Syndrome, I think Google is increasingly out of touch with its perception. They’re not cute and cuddly techies who everybody loves anymore, so they should stop trying to do cute and cuddly things.)

So, should this make publishers uncomfortable? Yes.

Is it (another) warning shot for the information industry? You betcha.

Do I have three words of advice for publishers regarding Google? Watch your back.

Postini Snatched Off IPO Track By Google

This just hit the wires this morning at 8:00 AM Eastern: Google to buy Postini for $625M in cash. Here’s the official press release.

Google will add Postini’s on-demand “security” (nee anti-spam) offering to its stable of Google Apps. Judging by the fact that Dave Girouard, VP and general manager of Google Enterprise, is the spokesperson in this Register story, and given the nature of the following quote, it seems clear that Google is attempting to build a base in small and medium business (SMB) on-demand productivity apps and then work their way up into the enterprise in the much same way that did with on-demand sales automation apps.

Girouard’s quote:

The response to Google Apps has been tremendous, with more than 1,000 small businesses signing up for the service every day. At the same time, large businesses have been reluctant to move to hosted applications due to issues of security and corporate compliance. By adding Postini products to Google’s technology, businesses no longer have to choose,” said Dave Girouard, VP and general manager of Google Enterprise.

My guess is that Postini was tracking towards an IPO within the next 6-12 months, which suggests that they were doing somewhere between $80 and $100M in revenue this year (my take on the new IPO entry bar). This suggests a valuation somewhere between 6-8x sales., the king of the on-demand sector, trades for 9x TTM revenues (see here), and the industry and sector trade for 5-6x revenues.

Some simple math (assuming 40% growth and 40%/60% 1H/2H revenue linearity — both are standard assumptions and neither of which I have any specific reason to believe true) says that current year revenue is 1.2x TTM revenue, suggesting a 7.5 to 9.5x valuation for Postini, in-line with the premium you’d expect to pay for snatching the IPO dream from a company that could see it within reach.

Here’s the Google Blog commentary on the deal. Here’s their FAQ. Finally, here’s the Google Enterprise Blog commentary as well.