Search Engine and Content Processing Vendors, Check Out the Failure Rate

August 12, 2014

I find the number of search and content processing start ups surprising. Both fields are difficult to make work in terms of technology and money. The squabble between Hewlett Packard and Autonomy make it clear that established vendors and big companies can be a potent concoction too.

I read a write up from the stats cats at FiveThirtyEight. The article is “Corporate America Hasn’t Been Disrupted.” No kidding. After “real” number crunching FiveThirtyEight wrote:

the advantages of incumbency in corporate America have never been greater. “The business sector of the United States,” economists Ian Hathaway and Robert Litan [an expert, of course] wrote in a recent Brookings Institution paper, “appears to be getting ‘old and fat.’

According to FiveThirtyEight:

recent research suggests that established businesses have less and less to fear from would-be disruptors.

The most interesting item in the article is this statement:

the advantage enjoyed by incumbents, always substantial, has been growing in recent years.

FiveThirtyEight crunched US Census data and generated this diagram:


As a non mathematician, I interpreted the chart to say, “Failure up. Start ups down.”

What about search? My observations are:

  • Venture firms pumping millions into search and content processing are likely to lose their money unless a sell out or sell off is possible
  • Buying a successful search or content processing business may provide an expensive management challenge; for example, the criminal investigation of Fast Search & Transfer
  • Getting objective information about a search and content processing company may be tough due to the saucisson issue or the difficulty of explaining certain technical concepts.

My hunch is that making lots of money from search and content processing as a venture backed start up is similar to buying a Yugo and expecting to win a dirt track race. That type of race can be quite exciting and risky.

Stephen E Arnold, August 12, 2014


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