My Thoughts

Does Google Care About their Customers?

Lew Moorman from Rackspace wrote a great article today about Google. He asks an interesting question: can Google continue to snub their customers? I think it's a great question and one I've been thinking about for a long time.

As a disclaimer, I try really hard not to be one of those people that hates on companies because they're big and successful. I might envy them, but I rarely have a true dislike. For example, I like Microsoft. I use their products every day and I don't see that ending, probably ever.

Google might be an exception to that rule, but I’m not sure yet. I admire (and envy) them in so many ways. I use Google search all the time and as a company, we spend a ton of advertising money with them every month. I love the culture they've built and I try to learn as much about how they do things as I can (and I'm not ashamed to try to emulate a lot of their successful initiatives). But there is one thing I just can't get over: they don't seem to care about their customers (some, like Lew, don't even think they consider advertisers customers).

Many people still don't realize how Google makes so much money. But shockingly, it's pretty simple. It goes like this: people use Google to search for stuff every day. It's become second nature to "google" for something you want to find on the web. And while more people search for more stuff, Google sells advertisements to companies that want to capture that search traffic. For example, we advertise when people are searching for anything having to do with email hosting. Rackspace wants to capture anyone searching for managed hosting. And eBay wants to capture as much traffic as they can since they sell just about everything under the sun.

With this brilliant model, Google has truly changed the business world. Literally millions of companies now leverage Google's advertising platform to attract new customers and grow their businesses. Millions of users search Google to find stuff everyday. This means that Google is growing like a weed. I'm not sure where they rank, but I know they're still one of the fastest growing companies in the world and their stock price is incredibly high.

But now that Google is so big and has so much money, they are going far beyond search. It seems like they are getting into just about everything. And they have every right to do whatever they want... right? But what happens when they start competing with their advertisers? Because its exactly what they're doing. Will their customers ultimately revolt?

Take eBay, for example. eBay spends hundreds of millions of dollars every year on Google ads. And what does Google do? They build competing products such as Google Base and Google Checkout (Checkout is really a competitor to PayPal which is owned by eBay).

But here is what I really have a tough time swallowing—Google has the ability to use its own advertising and distribution system to market the competing products and services (sounds like the same thing that used to get Microsoft in trouble with the government and probably still does). This creates more competition for companies that advertise with Google which does two really important things:

1. Additional competition means lower conversion rates for the advertisers (as long as some people buy from Google, they're taking conversions away from their advertisers).

2. Additional competition drives up the price of the ads (the Google ad system is based partly on how much companies are willing to pay for ads. The more you pay, the higher your ad comes up. It's a little more complicated than that, but the amount you pay definitely matters).

Google wins no matter what! Even if their products and services don't sell, they at least make everyone else pay them more to win customers. Unbelievable!

How long will they be able to pull this off and how many markets will they be able to do this to? I have no idea, but it's pretty scary to think about. It keeps me up at night, that's for sure. And I like seeing that a company as big as eBay got pissed off and did something about it—for now at least, they have stopped advertising with Google. Will Google get the message and do anything about it? Time will tell.

What do you think?

IT | Redux: Email Roundup

IT | Redux included us in their Email Roundup article the other day. While I was happy to see us on the list, I wasn't too excited about the summary:

Webmail.us is yet another generic online email provider, but delivers a fairly comprehensive set of features, including company directory and shared calendars. It’s also the only application that provides data migration services.

I'm not really sure what "yet another generic online email provider" really means, but it doesn't sound too exciting to me. I think what they meant to say was, "one of the only two email hosting specialists on our list of 10 email companies, most of which aren't really email companies." But close enough. ;-)

Creating a Successful Email Archiving Service with the Amazon S3 Storage Grid

Bill will be speaking at ISPCON about our relationship with Amazon and the data backup service we built on top of their S3 platform. Here is the description of that session:

With the advent of utility-based services such as the Amazon Web Services S3 Storage Grid, new applications and economics are emerging that enable point solutions and services when coupled with an API such as S3. In this session, we'll review some of the examples and uses of this technology and delve into the experiences of deploying a large-scale commercial service.

ISPCON takes place May 23-25 in Orlando, Florida. Here is the website for more information and here is a blog authored by the Jon Price, the guy who runs ISPCON.

Doing the Zimbra Math

Zimbra announced via TechCrunch this morning that they now have 6 million paid mailboxes.

My first reaction to this was pretty much the same reaction that I had when they announced that they had 4 million paid mailboxes just three short months ago. That reaction goes a little something like this:

"BULL-sh*t!"

After doing some further thinking, my reaction hasn't really changed that much. I just don't see how the math adds up. For example, they claim to have 1,300 customers, which sounds very reasonable to me. But, if you divide 6,000,000 mailboxes by 1,300 customers, you get an average deployment of 4,615 seats per customer. I just don't see how that's possible. Not to mention I know of at least a dozen of those customers and none of them have deployments that would justify these types of numbers. And even the customers that they tout really aren't that big. I have to assume that they're probably selling software licenses that allow up to a certain number of users, most of which simply aren't being used (i.e. a license that allows you to create 100,000 email accounts even though you might only create 5,000).

I don't want to come across like I'm bashing Zimbra though.

First of all, I think that their success is a good sign for the entire industry. It shows that businesses are willing to move their email away from some of the traditional software and service providers. And if businesses are indeed willing to move their email systems, then it shows that the best providers, not the oldest or the biggest, will win out in the long term.

Secondly, I don't view them as a competitor. Customers come to us because they don't want to deal with the headaches associated with managing an in-house email system. Zimbra is an in-house email system.

And finally, I think Zimbra is doing an incredible job. They're filling a market void as an in-house software alternative to Microsoft Exchange and they are doing a hell of a job with their public relations and marketing efforts. And even if their numbers are 1/5 of what they claim them to be, that is phenomenal performance and for that, they need to be commended.

More on Amazon

We've been able to generate a lot of buzz around our deal with Amazon over the last few weeks. Just last night Read/Write/Web wrote an article titled Amazon Web Services Success Stories, calling us the "most compelling success story for Amazon Web Services", which is definitely cool. But beyond all the coolness are the bottom line results we've gotten from our relationship with Amazon. Bill wrote an article today that does a great job of explaining why we made this move and answers a lot of questions he's been getting from around the industry. Check it out if you're interested.

Downsizing at AOL

I just read that AOL is cutting about 5,000 jobs as they restructure the company and shift their business model to try to capture more online advertising dollars.

I think this is a smart move by AOL and I’m sure in the long run it will be good for AOL and their shareholders.

In the meantime, if you’re a soon-to-be ex-AOL’r, you should check us out. We’re always looking for good people and industry experience could be a huge plus. I’m not sure if Northern Virginia is where they’re slashing jobs, but if so, there is a lot less traffic in Blacksburg. ;-)

Supernova 2006

I'll be flying to San Francisco tonight to attend Supernova 2006 tomorrow and Friday. If you're in the area and would like to meet up, email me and we can set something up.

Google to Play in our Space, Too

We spend thousands of dollars per month advertising with Google. Now, we’re not just an advertiser, but a competitor as well. How weird is that? How many markets will Google move into before they step on the toes of all their advertisers?

We knew it was coming. Now we’ll have to see how many businesses really want Google hosting their mission critical business email. My prediction is that lots will, but I don’t think they’ll be able to dominate this market. So far, they haven’t proven to do much of anything as well as they have with search.

I wrote two weeks ago about how we’re going to win in the face of increased competition. I was influenced to write that piece by Microsoft’s entrance into the email hosting space and I knew Google wouldn’t be too far off.

Gmail definitely made a big splash when Google launched it back in 2004—only time will tell how big an impact this will have.

USA Today: Say goodbye to software residing on your computer

The USA Today published an online article this morning called, "Say goodbye to software residing on your computer." Andrew Kantor, the author of the weekly column and writer for The Roanoke Times, gave us a quick mention alongside some pretty big industry names.

Google Gets Scarier

Is that even possible? Of course! And I don't think it's going to stop anytime soon.

Rumor has it that Google just acquired a company who hasn't even launched yet for $40m. Riya, the company they acquired, "uses face recognition technology to identify people in photos."

This is still a rumor, as others are saying it isn't the case... who knows. Either way, it sounds like they're at least talking and the deal is probably close to done.

Something about Google having that technology just seems scary. Am I wrong?