Saturday, March 31, 2012

Why Google Might Be Going to $0 (and the stock that just went public that will benefit)

By James Altucher

Ken Lang could perform miracles. In 1990 we would head off to a bar near where we were going to graduate school for computer science, and we would bring a Go board. Then we would drink and play Go for five hours. At the end of the five hours, after a grueling battle over the board, I remember this one time when magically Ken would show up with two girls who were actually willing to sit down and hang out with two guys who had a GO BOARD in front of them. How did Ken do that?

Fast forward: 1991, CMU asks me to leave graduate school, citing lack of maturity. The professor who threw me out still occasionally calls me up asking me when I’m going to be mature enough.

Fast forward: 1994, one of our classmates, Michael Mauldin is working on a database that automatically sorts by category pages his spider retrieves on the Internet. The name of his computer: lycos.cs.cmu.edu. Lycos eventually spins out of CMU, becomes the biggest seach engine,  and goes public with a multi-billlion dollar valuation.

Fast forward: Ken Lang starts a company called WiseWire. I was incredibly skeptical. I read through what the company is about. “No way,” I think to myself, “that this is going to make any money”.

1998: Ken files a patent that classified how search results and ad results are sorted based on the number of click-thrus an ad gets. He sells the company to Lycos for $40 million. Ken Lang becomes CTO of Lycos and they take over his patents.

$40 million! What? And then Lycos stock skyrockets up. I can’t believe it. I’m happy for my friend but also incredibly jealous although later in 1998 I sell my first company as well. Still, I wanted to be the only one I knew who made money. I didn’t think it was fun when other people I knew made money. And, anyway, weren’t search engines dead? I mean,what was even the business model?

Fast forward: the  2000s. Almost every search engine dies. Excite, Lycos, Altavista. Before that “the world wide web worm”. Lycos got bought by a Spanish company, then a Korean company, then an Indian company. To be honest, I don’t even know who owns it now. It has a breathing tube and a feeding tube. Somehow, in a complete coma, it is being kept alive.

One search engine, a little company called Google, figured out how to make money.

Read the rest here.

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