by Ryan Caldwell, founder/CEO of MX.
This article was originally published in the Summer 2017 edition of Silicon Slopes Magazine.
If you were to ask people today about a company named Overture and what they did, most people likely couldn’t tell you. And yet nearly twenty years ago Overture was by far the largest player in online search, with more than 60 percent of market share. They were consolidating the market by buying up potential competition and it seemed like a smaller player or new entrant wouldn’t have a chance against them.
And yet within a few years of direct competition against Google, Overture lost their lead and was swiftly forgotten.
What happened?
There were several dynamics at play, but one of the biggest is that Overture wasn’t advocating enough for end users. Instead, they were primarily concerned about advertisers. They allowed the highest bidder to be the most prominently displayed link for their users, even if a link below it was being clicked on a hundred times more often. Overture believed what mattered most was the highest bidder, not the end user’s needs.
This abusive and predatory practice seemed like the right move to Overture, and it was — over the very short term.
Then along came a tiny competitor named Google. Google had less than 5 percent market share prior to 2000 and was eclipsed by Overture’s shadow. They were much smaller, but they understood that advocacy was the only viable long-term strategy. They decided that if an ad or a link was clicked on or referenced by more users, they needed to take that into account, knowing that it was what the user actually wanted to see. Google therefore moved relevant ads and links to a more prominent position even if those advertisers were paying less for those spots. In short, Google focused relentlessly on giving users the experience they wanted.
Users noticed, and word of mouth spread quickly. Soon enough, Google became the dominate search engine and, with a continued commitment to advocacy, has remained so for more than a decade. Overture, on the other hand, is almost totally forgotten.
There’s a lesson here for tech companies across the nation and here in Utah. It’s not enough to have a slick UI or a strong revenue model or a dominant market position. To succeed, we must fixate above all on what end users actually want. If we don’t get that right, we don’t have a viable long-term strategy.
The best way to do this is to, once again, learn from Google’s early days. We must focus on user data, being willing to learn from it wherever it takes us. If we find that users are invested in a certain aspect of our products, we too must invest in that aspect — even if we didn’t previously think it was the smartest move. We must be willing to collect, refine, and present data to the end user, in addition to giving them the opportunity to act on their own data.
It’s not about setting a strategy that rakes in short-term revenue. It’s about using data to build trust over the long term and then leveraging that trust to provide an even better experience for the end user. As we do this, Utah will continue to be the best place for business in the nation. I look forward to what our state continues to achieve going forward as we advocate through technology.
