Sridhar Ramaswamy, Google’s senior vice president of advertising and commerce
Krisztian Bocsi | Bloomberg | Getty Images
Sridhar Ramaswamy is the CEO of Neeva, an ad-free search engine that he found after running Google’s advertising and trading business. Ramaswamy spent seventeen years at Google and eventually became disaffected with his advertising business. Now he’s trying to fund the solution with $ 77.5 million. In this conversation, we discuss his evolving view of advertising, what enables search to be decoupled from a product perspective, and how the current antitrust environment is opening up Google to competition.
Alex Kantrowitz: Google, where you used to work – they now call it Alphabet – had revenue of $ 31.9 billion in the last quarter alone, compared to $ 24.5 billion in Q1 2020. Revenue with YouTube ads rose 49% to $ 6 billion in the first quarter. That growth will reach a ceiling, could you imagine?
Sridhar Ramaswamy: That will happen when digital advertising is almost entirely advertising and we haven’t quite reached the ceiling yet. We’ve hit caps in a number of areas, such as smartphone sales – it’s not really growing significantly year after year – but he’s moved to online advertising along the way.
But are you building a search engine with no ads?
In the company’s history, there has never been a company that had a market share of over 90 percent in a market worth more than 100 billion US dollars. If you look at previous cases, of what bothered you? It’s usually a subscription game. What did HBO do with Time Warner? What has Netflix done with ad-supported television? What did Amazon Prime do with traditional e-commerce?
The common theme is the subscription model. Going back to my earlier point about how smartphone sales decreased, Apple hasn’t increased sales much, but its subscription business and inventory is growing as it has kept investing in services and subscriptions.
So Neeva is a fully subscription based search engine trying to follow this pattern?
The ad model was always disrupted. I know from both personal experience and the enormous number of user studies we have conducted that there is resentment about it. So we wanted to create Neeva as a product that is only intended for customers and is very, very strict when it comes to not advertising.
For us, subscription search was the way to create a superior product. And with really squeaky clean business principles – not just no ads, no affiliate links, no data ever packaged and sold, with privacy first – all of these are consequences of the model in which we say, “We want this create best product for you. “
So will your product be a beautiful luxury product – privacy for the rich – or do you think it can be something that appeals to the masses? And if so, why?
Our goal is to be a product that everyone wants to have. Searching is something people do a dozen times a day. There aren’t many things that people come back to over and over again. We think we are developing a product for everyday use with no worries and no devices. We therefore believe we can evaluate this at a time when many people are really, really getting value from it and paying for it.
Scott Galloway, who wrote “The Four,” compares Google to God. You used to ask God, “When will my sick child be healed?” Now enter the symptoms in google. I suppose it doesn’t occur to us that when we’re talking to our God, we’re talking to an advertiser at the same time.
You know something The ad-supported model, even with queries like this sick kid, favors high engagement sites that have figured out how to get your attention and how to clutter a lot of ads. In fact, I joke with people that every time I do a medical search and go to a medical health page, my general conclusion is, “I have a serious problem and I am dying.”
I went to WebMD a while ago and it was for a sore throat and WebMD said, “Well, you might just have a cold or you might have Ebola.”
It’s the same as clickbait. It is the system that works the way it was designed. With these questions, we at Neeva think about the following features: “How do we show up on government websites? How do websites show up with high authority instead of web sites that look for clicks?” Part of the benefit of the subscription model is that it can focus a lot more on what matters to you and what information is of higher quality.
Okay, but isn’t it Google’s purpose to get useful results so that you keep coming back?
The answer depends on what questions you are thinking about. When it comes to commercial queries, the algorithm is now tweaked to show your results where you click ads. These take up more and more space. One of the ways you can achieve this growth is to use that extra line. Search ads have grown from 3% of the result on the page to 10%, 20% over the years. I joke with people, if you search a place like yahoo.com, even on a big screen, all you see is ads. And so now there is this very strong incentive to show you results which are ads. And ads are a conflict of interest for the search engine. Should they show you an ad or should they show you the best result?
You will be surprised to know that one of the biggest features we have is things like, “I want to control which retailers I see. I don’t want to see big retailers when I’m looking. I want smaller retailers. When.” I am looking for clothing that should only be shown to stores that are committed to ethically sourcing their material. “Listing the best retailer in the country is not an option for an ad-supported search engine. For us, it’s a feature that we need to develop because that keeps you as a customer.
Right, because this top retailer will also be a top advertiser for Google.
They also allow users to customize the news results they want. On the NFL draft weekend, I looked for the Jets Picks and Neeva let me decide if I wanted to see more ESPN or more fan blogs while searching. That felt cool to me – now I have more control over what I see when I search – is that on purpose?
This is 100% intentional. It is one of the things that we focus a lot on giving you freedom of choice about search results. The other features we developed for personalization allow you to put your personal information in a secure environment for you to search. Many of us have multiple email accounts [Google] I spoke to someone who had nine email accounts linked to their Neeva account because they said, “Yeah, how am I supposed to search them all?”
So things like personalization and freedom of choice are an integral part of the product. And in a way, we’re impatient with the technology we need to build because we want to be able to support such things more and more.
When it comes to news, we worry about things like filter bubbles. We have ideas on how to present different perspectives. In a few months, I’d like to be able to come back to you and say, “Hey, Alex, you are a public figure. Would you be open to making your messaging settings available to anyone nearby for them to use able to see?” World as you see it “
Oh that’s interesting.
I often have diametrically opposed angles on my screen. I like to look at CNN on one side and Fox News on the other and say, “This is the same country, this is my country. Let’s see what’s here.” It goes back to this: the choice is yours, and we should allow you to make the choice in different ways.
I wanted to ask you the question about the filter bubble, but you shut me out. The most basic level to do this is choosing your news sites. But then one level down begins to choose viewpoints – would you like the left or right view?
Or do you want a specific person’s view? We relate to people that we do not relate to abstract concepts. So you want to see the world that Alex or David Brooks have? For me it’s super cool. We are a registered product, we are a subscription product, I am not ashamed of either. I believe capitalism should make great products possible on a large scale, so I don’t think we can somehow create this premium elitist product. You pay for it, but that makes the product better so we can serve you better. Along the way, we want to be able to develop the features that make the product your own.
Could any of this be happening on Google? Because I imagine it would be a bit difficult to allow Google to customize the publishers they get or make decisions about what kind of publications to show …
Google can do it all. It’s a hugely powerful, hugely successful company. But then people ask me, “Why didn’t you want to do this in Google?” The answer is that sometimes principles need to be rethought from the ground up, and a successful business necessarily and correctly hesitates about what it sees as heretical ideas. Because of this, it was very important to me that I hit the reset button in my life. Some things are simple, but will Google ever really want to create a completely ad-free product where you can customize everything? I say they can do anything, but at this point in their antitrust story, it will also look very strange if they do that now. I think this is one of those classic cases where success depends on a number of parameters that are difficult to change, especially after you’ve achieved a $ 120 billion success. That’s a lot of money that’s talking here.
If you are talking about “heretical ideas”, would it be heretical to post this ad-free idea on google?
I’ve done a lot of these things before. Even the step we took to make desktop and mobile advertising a single concept, we call these advanced campaigns, it was like 2013, 2014 …
In google. And it’s just so hard to get your way because you have people who are connected to a way of doing things. I was responsible for converting the entire purchase item into a paid item. I’ve gone through these changes, but some changes are particularly difficult.
I want to hear a little more about your personal story. We’ve talked a little about how ads keep filling up the Google page. This happened under …
So, did it happen slowly where you started saying, “Maybe this is not the right way to search,” or did it happen all at once?
I was the CEO responsible for many of the ad load increases. Some growth was expected. There were a number of techniques you could use to increase growth. They are always very thoughtful about the trade -offs implied by growth. There came a point when, in terms of the entire ad ecosystem, I said, “I don’t want to work on it anymore.” I’m an accidental ad person. I had nothing to do with ads before I came to Google. I joke with people, my first boss found the word “database” on my resume and sent me to work on the advertising system. That’s why I worked on ads for 15 years.
This idea from Neeva came later. We love the problem, with any other model it can be a strong differentiator. I started the subscription business like this: “This is the best way to create a match between you, the customer and the provider.” But then you learn all these other qualities that they bring. 100% of your team is focused on developing the product. If you look at how Google works, a vanishing fraction of people are working on Google Search. And you’d think, “How can that be?” But that’s the reality, the size of the Google Ads team and the Google Ads product team dwarfs that of the search team.
Is the Google ad team bigger than the search team?
And when you take on the ad business team, as well as the ad product and development teams, they’re a lot bigger than the search team.
Obviously, people will see it as competitive to your old employer. Have you thought about the relationships there or how they might be welcomed? How was the feedback from your former colleagues?
I’m obviously concerned, I have a lot of close relationships with a lot of people on Google. And I would roughly say that the feedback is broken down into two sections, a group of people who say, “Yes, we understand why you are doing this and why you didn’t think you could do this on Google.” And another set: “We really wish you had done this on Google because if someone could have changed what Google was, it should have been you.”
Both are reasonable viewpoints and there are some people who don’t just want to deal with that, it’s all too much for them and I respect those views, but at some level you have to be guided by what you see is that correct, long-term result. Personally, I think ad-supported free products are not good for consumers and for our country in the long run, as it is very difficult for them, as users and customers of what you and I want, to be true to these products.
This conflict of interest is really inevitable. And the fact is, Alex, while the products are free on one level, all the benefits of scaling for products like this one go to the creator of the product, not you and me. For example, when it comes to Neeva, I’m talking about charging a subscription of no more than $ 5 to $ 10 per month.
Okay we got the award …
And as we grow in size, I expect the product to actually get cheaper over time. When you start with a free product, the product doesn’t get freer for you. All the benefits of scaling go to the manufacturer of the product. In many ways, I see these as not even working with the same principles of capitalism that have worked so well for us as a country and, frankly, as a globe over the past 100, 200 years. And so we think back to the basics: “You are the customer you pay for the product. In the long term, we will get better products than free products that basically all bill the advertiser.” And do you know who will turn around and give you and me a higher price?
You are the retailer, you are the dealer. By the way, in e-commerce it is known that a marketplace can account for between 15 and 20% of the GMV.
The value of the growth goods. If you run a marketplace and … sell $ 1 billion worth of goods, you can extract between 15-20% of that as advertising tax by running ads on that marketplace, but that comes from the marketplace’s users, customers, She and I. This whole fallacy that ad-supported products are good because they give us everything else for free is exactly what it is, it’s a fallacy. You and I only pay indirectly and not knowingly.
One of the things that was not said throughout this conversation is that all you have to do to search is enter your intent, not really be followed, and the advertiser goes in and tries to match their ads with the keywords you entered. You don’t really have to know who you are. In fact, many people would say that Google search ads are the least invasive of all online ads …
First, there is no limit to the number of ads that you can be shown. Incidentally, according to the current interpretations of antitrust law, it is completely legal for only advertisements to be displayed on the entire search results page. It is perfectly legitimate. And the fact that these ads draw so much attention and you have to make a conscious effort to get past them is a subtle and indirect tax. We are all more susceptible to our decisions being influenced than honestly any of us would like to admit. How are decisions presented to you?
We are very suggestible.
How decisions are presented to you has a huge impact. And so the fact that you have to go through tons of these affects you even if you think it doesn’t affect you. I tell people, “I eat what I have on the surface in my kitchen.” I think I’m full of self-control, but honestly, in the long run, all I see is what’s out there. So I think there is this effect.
The other thing to keep in mind is that tracking conversions wherever they happen on the internet, that all data goes back to Google and Facebook, is the core part of ad technology. And then it is very difficult to say that this information will not be used to serve ads in other places.
To give you a specific example: Your search queries can be used to serve you ads on YouTube. They can be used to serve you ads in Gmail. So there really are no limits to what information you can use, and this is one of the reasons we are so adamant about having these core principles for Neeva. Your data is yours. We will not benefit from the data except in creating the service that is right for you.
Yes, there used to be a firewall between what you were looking for on Google and the search ads you were shown and the rest of the business that eventually collapsed. How did this happen?
It’s a very long and very complicated subject, but …
Give us the cliff notes.
The cliff notes roughly goes that it was always okay to move this information around to show you ads when you were signed into different Google properties. This has always been part of the equation. There were boundaries between what was kept outside of Google and what happened inside Google, but information always flowed into Google through the various existing conversion tracking pixels.
The last thing we should talk about is the fact that Google is currently under antitrust scrutiny as it freezes companies like yours. The Justice Department is suing Google for paying Apple billions of dollars a year to be the default for iPhone and iOS. Is it intimidating for you to try and go up against Google when you know the tactics?
Choice is important. Search is the gateway to information for tons and tons of people. So when it comes to Google and search, I worry about just standing in front of the users. We understand we have a lot more to build – be it in terms of personalization or the 1,000 features people have – but I can honestly tell you that there is also a lot of joy people get, when using Neeva. The feeling of relaxation, “Oh wow, I don’t get stressed by a lot of things” is very real too.
So I’m worried about the chance to stand in front of you, stand in front of 100 other people like you and say, “Hey, give us a chance. If you think it’s worth paying when, though.” not, that’s okay too. ” . “For me, that’s the important part, and the DOJ case, at least, gets to the point: How doesn’t a monopoly prevent others from competing at all? It’s a fair chance I want for you.
The DOJ is taking over Google in relation to its search distribution agreements. Where is it all going? Since these hearings could go on forever, the cases could go on forever, but as a business owner who could really use a bit of help, do you expect them to ever show up?
The exam helps, I think it increases awareness that these are real problems. Do I expect an actual result? No, not soon. But the exam helps, it gives us a small chance.
Alex Kantrowitz is the founder of Big Technology, a weekly newspaper Newsletter and Podcast which cover the inner workings of Amazon, Apple, Facebook, Google and Microsoft. He is also a CNBC contributor.