I'm Feeling Lucky_ The Confessions of Google Employee Number 59 - Douglas Edwards [144]
It took both Eric and Salar to convince Larry and Sergey, who still hadn't signed off on offering CPC pricing, let alone on a method for implementing it. Salar explained the advantages for syndication. Eric showed how the auction model fixed GoTo's bid-lowering problem and suggested the changes might protect Google from GoTo's patent claims. Salar argued that different keywords had different values, so a fixed-price model made no sense.
Larry remained unswayed. It was only after Eric pointed out that ad quality and search quality were related—that with the changes we could control the relevance of the ads we displayed and improve the user experience—that he finally consented. As Eric put it, "Larry had always been the biggest champion of getting the best results for users. He was fine with making things tough for advertisers when we needed to."
In the end, Larry and Sergey weren't totally convinced, but they agreed to move ahead. That was not unusual for them. If you brought enough passion and logic to the fight, they'd take a chance that you might be right. Eric assumed they would rake him over the coals if it didn't turn out well, but he was glad to get the chance to move ahead and wasted no time putting together his team. He knew GoTo had a head start and was gaining momentum.
A Friend Accepts an Enemy Overture
Google's first great challenge had been gaining primacy in search. Its second would be winning the war for advertising revenue. Eric and Salar were preparing the company for that battle, but those of us not in the ads group at the time were left in the dark. All we could see was GoTo scoring deals and racking up sales. Not only was GoTo generating revenue, it was running the table, locking up portal sites with multi-year contracts. When our salespeople pitched Google ads to GoTo customers, they came away empty-handed, shaking their heads.
To make it worse, GoTo's sales team kept sending us things, as if we were a potential client. Every week, a new "gift" would arrive. A notepad. A golden egg. A plastic goose that lit up. A hand-delivered pie. Omid would display the latest item at TGIF each week and then send it flying with a kick. Except the pie. I'm pretty sure he ate that.
GoTo's management continued to crow about their successes. In August 2001, one month after Eric's team was given the green light to build a CPC system, a GoTo executive appeared at a Jupiter Research conference and claimed that all search would be paid for in the future. "He said that if users don't like the results, they can keep clicking," a Googler who attended the conference reported back. "It's no problem, since they'll eventually find what they want."
In October 2001, GoTo signed a deal expanding their relationship with Ask Jeeves. They announced proudly that they had attained profitability and that they were changing their name to Overture.
Overture continued the boasting at the Direct Marketing Association conference in Chicago later that month. I was in our small booth off to one side of the large hall, which overflowed with direct-mail houses, list brokers, specialty printers, and foreign governments offering low taxes and cheap labor for call centers. We were handing out magnets and t-shirts and riding our Googlized scooter around the floor promoting a contest for free ads. We stood out from the conservative coat-and-tie crowd, members of which came by to tell us again and again, "I love Google!" The only booth generating more interest was staffed by Hooters waitresses handing out free chicken wings as the Bears game played on a big-screen TV.
Overture's chief operating officer, Jaynie Studenmund, gave a speech. She claimed Overture was having a "Barry Bonds year" and acknowledged that Google was "a fine company" and "absolutely in the business