A story as American as apple pie on July 4th. Told in a needlessly jumpy narrative style. But, trust me, there’s some good stuff here. When I was a very little kid, I had a home-knit, pumpkin-colored sweater. I pronounced it punkin. My older cousin called me Punkin for a year. Punkin. Yeesh.
+++
In one of the many Blank Street Coffee places that seem to have sprung up throughout New York City almost overnight. This one is in the West Village. It’s about 9:00 in the morning. Automatonic people enter, order, grab, and go. Except for the names on the cups, customers are indistinguishable. Most people don’t stay. Except PUNKIN and his friend, BONNIE. She talks with the slightest hint of an improper British accent. It’s hot and sticky. Manhattan in the summer. They’re sitting outside at the only table.
BONNIE
I love media. It’s just so ineffably hard right now.
PUNKIN
Ineffably? Effably?
BONNIE
You’re not even close. Get your hearing checked. (she shakes her head) Oh, and Google is toast.
I said, “Toast,” not “Done.” There’s a difference. I can turn stale bread into toast and enjoy it. Like with marmalade and a decent cuppa. I don’t make BLTs with Wonder Thin White… bread. I make BLTs on Wonder Thin White… toast. On the other hand, if my bread is moldy, no amount of toasting is going to make it edible.
PUNKIN
Inedible? (chuckles expecting BONNIE to laugh; she doesn’t). All you smart media people are saying that right now. Google… toast.
BONNIE
Google is moldy. It needs to evolve into an even crustier version of itself. We all know why. It’s getting flanked from all sides.
PUNKIN
Did they stop innovating?
BONNIE
Yeah. Actually, no. What was their last innovation…
Six blocks south, two guys in their 50s walk out of one of the city’s biggest office buildings. They’re dressed in collared shirts, fitted blazers, and stylish pants. The ones with just a little cuff. No socks and loafers. One is JERRY the other is TIM.
JERRY
Tell me about Congress.
TIM
They can get away with anything. They can buy our stock, give us a mammoth contract, watch our stock sail, and keep all the profits. Nancy’s portfolio is up just as much as our stock this year.
JERRY
And, we’re the ones on trial (shakes head in disbelief).
TIM
So, what are you going to say?
JERRY
I’ve been prepped. They’re going to say our search business is a monopoly. Who are we kidding? It is. We can raise prices and not lose customers. Nick (Fox, our VP of Product) said, “Search is our superpower. Search is incredibly lucrative. It provides endless capital.” There’s no coming back from that.
TIM
I was here from the start. Selling ads out of my apartment. Now, you’re in this place (he points to the building they just left). People tend to forget that we built something here. It wasn’t handed to us. We didn’t take it from anyone. We created it out of nothing.
Folks lump us in with Yahoo… to them, we’re all… search (he mimics the condescension). It was TV [f***ing] Guide. At a time when there were fewer webpages than there were TV shows. In 1996, it indexed a grand total of 23,836 links on 19 topics. I see that many in a day now. There was no search bar. Because there was nothing to search.
A couple of years later they built a hierarchy. Entertainment begat TV, movies, music, magazines, and …. Yes, literally, “….” Ellipses.
JERRY
I remember those days. I would go to News, then to Newspapers, then to the Trib. That’s how I got to stories about the Cubs. I could jump the linear queue with their rudimentary search. But unless I knew what I was looking for, there was no way to find it.
TIM
When the web exploded, there was more content than you could shake a tree structure at. It was nothing like TV. The idea of a “guide” was laughable. That was my pitch to advertisers. You’re not buying pages or covers. You’re buying a message that will reach the right person at the right time.
JERRY
They think search is our secret sauce. Really it was that we gamified content (said almost in unison with TIM saying, “pitted creators against each other.”) It was our mountain and we made you climb it.
TIM
Nick was right. Endless capital. We index the content. We watch traffic. We auction the space. We show our ads. We show their ads. We arbitrate the value of an ad. (emphasizing, “We,” every time.)
JERRY
Those days are ending. We’re creating less content. (he gestures that his head is exploding).
TIM
The numbers say data traffic is big and growing. People generated 120 zettabytes of content last year. Up 20% a year four years in a row.
JERRY
But that’s “data traffic,” not “content.”
TIM
Content shmontent. Does it matter?
JERRY
Even you think we’re tech. BIG tech. We’re in the content business. Ads need content. Some tech, yeah. But mostly content.
Here, if that’s too broad for your liking, I’ll narrow it. People create less content that needs to be “found.”
The super vast majority of TikToks don’t need to be found. They’re just there to fill the space between the bevels. The same goes for virtually every Twitch stream of someone in a RECARO chair playing some video game.
Consider a library. The kind of library that existed before we showed up. The place was filled with books and a few magazines and yesterday’s newspaper on one of those long wooden spindles. Everything in there was indexed. There was no point writing a book and putting it on a shelf if no one needed to find it.
The guys arrive at Starbucks at 19th Street and notice the long line.
TIM
Did you pre-order?
JERRY
I don’t use apps (snickers). Don’t trust what they do with my data. How do you like that irony?
TIM
You know, I don’t even think I like this coffee. I guess that’s why I fill mine with syrup and top it with whipped cream. The place is just a habit.
JERRY
We’re a habit. If you and I can leave this place, people can leave ours. Play this out. If there’s less content that needs to be found, why do people need our search?
Jack made content. Jill did too. We made everyone want to schlep their pail of water up the hill. Jack and Jill are gone. The mountain has been drilled and flattened. Rankings don’t matter. AI will summarize the top few ranked pages. The ad business will change. Display ads atop search rankings – gone. Auctions for ads on the open web – gone. All of it – gone.
And I mean all of it. Endless capital gone. The perpetual motion machine comes to screeching halt. Ad dollars subsidize those apps and devices.
TIM
Then just create new stuff.
JERRY
New stuff? New stuff! (a la Jim Mora). Stop reading our press clippings. What did we create? Our search added backlinks to a ten-year-old technology. Things didn’t take off until we bought that company that connected search intent to ads. That was in 2003. What have we done since then?
TIM
You’re dour enough to nail that DOJ thing in D.C. tomorrow. You convinced me. You don’t dominate. You’re toast.
JERRY
You know what surprises me most? That nobody noticed we don’t buy companies. That they believe we think up all this stuff. All on our own. We’re the world’s fourth biggest company and we did it all by ourselves. That’s the question I hope they don’t ask. “As the product manager for the world’s biggest ad platform, how do you search for new ideas?”
JERRY and TIM walk into Blank Street at 21st and Ninth. Right by PUNKIN and BONNIE. TIM is far away in though wondering where new ideas come from.
JERRY
I’m getting a small hot brew. What’ll you have?
TIM
Large strawberries and cream. Thanks.
BONNIE
AI summaries are replacing search. Younger generations are searching TikTok and YouTube. Search traffic is slowing down. But, that’s not their only problem. The suckiness of display ads is catching up with the ad industry. People never wanted them. Now ad people lament the open web, made for advertising sites, and the loss of marketing dollars to ad tech. Ranking issues are destroying content creators. Government investigations. Fines. How to get rid of cookies and collect data. Privacy. I could go on but, why?
PUNKIN
Go on. I’m going to get another hot brew. What can I get you?
BONNIE
Large strawberries and cream, thanks.
How did they get so dang dominant in the ad world? Did they literally come up with every idea for ads all on their own? I get that they’re super smart. Are they that smart? (She emphasizes “that”).
Every large tech and biotech company buys stuff.
Intel — you know, the folks who made the chips we used before Nvidia showed up. From 1999 to 2003, Intel paid $11B to buy 30 telecommunications and networking companies. They saw mobile as their future and scooped up everything they’d need to be successful.
Merck has bought 250 companies. That includes the world’s biggest drug, Keytruda. Scientists at Organon invented it. Schering-Plough bought Organon. Merck bought Schering-Plough.
It’s rare to invent ALL your own tech. Emphasis on rare. Except them. From its inception in 1995 through 2003, they bought a total of eight companies. Eight. A word you write with letters, not a big number that needs to be expressed in digits. Of those, two related to ads. One aligned ads and content. They paid $102M for that. Nothing. The other was a deal so small that the cost was not material enough to disclose.
So, we have to believe that everything they do to optimize auctions, determine ad efficacy, calibrate pricing, figure out placement, and literally every other part of the world’s biggest ad ecosystem was thought up and built in-house. While the digital ad marketplace was at its most formative stages. It’s the ultimate version of building the plane as you’re going down the runway.
Two guys from the world’s biggest search company could walk in here, take our coffees, and leave. We wouldn’t even know. The guy behind the counter would make us new ones.
TIM
(Talking to JERRY). I streamed Pulp Fiction last night on Prime. Still Tarantino’s best. Loved that scene in the coffee shop.
Okay people, I'm going to go 'round and
collect your wallets. Don't talk, just
toss 'em in the bag. We clear?
JERRY and TIM walk out with a small hot brew and a large strawberries and cream.
JERRY
Thanks for the coffee.
TIM
I didn’t buy these. I thought you did.