GATES VS. GOOGLE - 3
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Search and Destroy
Bill Gates is on a mission to build a Google killer. What got him so riled? The darling of search is moving into software—and that's Microsoft's turf.By Fred Vogelstein
(Photo: Newscast)
Payne, 37, was nervous but pumped. Although Ballmer was present, everyone knew no big technology project got a green light without Gates' say-so—and the chairman never said yes until he had subjected the idea to a withering barrage of questions. Zapping through PowerPoint slides, Payne spoke for two hours, showing in painstaking detail how MSN was making a monumental mistake outsourcing its search function to third parties. In those days Inktomi, a small firm that had agreed to sell itself to Yahoo in December 2002, provided MSN's search results. Overture, a brainchild of Idealab's Bill Gross, supplied the ads to go alongside them. In hindsight, outsourcing search looks dumb, but back then, search was widely viewed as a money loser. Payne explained how Google was developing a great search engine, and how its minimalist design and consistently relevant results—better than those delivered by MSN's cluttered site—were attracting legions of Internet users. Worse, Google had unlocked the secret of online advertising; its automated system noted a user's search request and then delivered discrete matching ads alongside the results. That enabled the Internet upstart to generate gobs of cash. The impact on MSN was obvious. "I'm seeing revenue in the category go up, and I'm seeing our market share go down," Payne said later.
Payne told Gates & Co. that he would need more than $100 million and 18 months to build his search engine; that he wanted the authority to pull the cream of Microsoft's brainiacs into the effort. And Gates? He asked almost no questions, interrupting mostly to suggest people in Microsoft who might help. "It was reasonably obvious to me that we were going to have to depend on ourselves, not our partners, for search," says Gates now. So when Payne finished, Gates signed off on one of the largest commitments for a new business in Microsoft history: Project Underdog was born. Payne could hardly contain himself. "I was very, like, God!" he says, pumping his fist. "I had done all this work, and then I'm like, 'He said yes!' Honestly, it was awesome."
It was the last easy win for Payne. Last November he released Microsoft's search engine, followed in December by a desktop-search tool (two months behind Google) and in March by a search-related advertising business. Microsoft supported the launches with a $150 million ad campaign and scores of other promotions. But the effort has generated little buzz so far, and Microsoft's global market share, at about 13% of search requests, remains puny.
Yet Payne seems impervious. A gregarious Kentuckian with a devilish Jim Carrey smile, he talks in wide-eyed bursts. He seems to be in motion even when he's at rest. Since taking charge of the search effort, he has become well known within the company not just for energy and charisma but also for toughness. Gates may have given him a pass during that initial presentation, but Payne has been at the receiving end of plenty of vicious tongue-lashings since then, during his monthly meetings with Gates and in the weekly e-mails he receives from his boss.
Payne joined Microsoft right out of Dartmouth in 1990, eventually ending up as a marketer and strategic planner for the company's database-software business. His first break came in 1995 when he was transferred to the then-fledgling MSN division. He was one of the original three employees on MSN Investor, playing a critical part in making it one of the best financial websites. But he didn't stick around to reap the rewards. He jumped to Amazon in 1999, only to discover that working there was more about retailing and merchandising than he had thought it would be—he missed building and selling software. By early 2002 he was back at MSN, running its home page and search, among other things. Over the course of that year, he saw Google's threat and began formulating the plan for Underdog.
Search and Destroy
Bill Gates is on a mission to build a Google killer. What got him so riled? The darling of search is moving into software—and that's Microsoft's turf.By Fred Vogelstein
(Photo: Newscast)
Payne, 37, was nervous but pumped. Although Ballmer was present, everyone knew no big technology project got a green light without Gates' say-so—and the chairman never said yes until he had subjected the idea to a withering barrage of questions. Zapping through PowerPoint slides, Payne spoke for two hours, showing in painstaking detail how MSN was making a monumental mistake outsourcing its search function to third parties. In those days Inktomi, a small firm that had agreed to sell itself to Yahoo in December 2002, provided MSN's search results. Overture, a brainchild of Idealab's Bill Gross, supplied the ads to go alongside them. In hindsight, outsourcing search looks dumb, but back then, search was widely viewed as a money loser. Payne explained how Google was developing a great search engine, and how its minimalist design and consistently relevant results—better than those delivered by MSN's cluttered site—were attracting legions of Internet users. Worse, Google had unlocked the secret of online advertising; its automated system noted a user's search request and then delivered discrete matching ads alongside the results. That enabled the Internet upstart to generate gobs of cash. The impact on MSN was obvious. "I'm seeing revenue in the category go up, and I'm seeing our market share go down," Payne said later.
Payne told Gates & Co. that he would need more than $100 million and 18 months to build his search engine; that he wanted the authority to pull the cream of Microsoft's brainiacs into the effort. And Gates? He asked almost no questions, interrupting mostly to suggest people in Microsoft who might help. "It was reasonably obvious to me that we were going to have to depend on ourselves, not our partners, for search," says Gates now. So when Payne finished, Gates signed off on one of the largest commitments for a new business in Microsoft history: Project Underdog was born. Payne could hardly contain himself. "I was very, like, God!" he says, pumping his fist. "I had done all this work, and then I'm like, 'He said yes!' Honestly, it was awesome."
It was the last easy win for Payne. Last November he released Microsoft's search engine, followed in December by a desktop-search tool (two months behind Google) and in March by a search-related advertising business. Microsoft supported the launches with a $150 million ad campaign and scores of other promotions. But the effort has generated little buzz so far, and Microsoft's global market share, at about 13% of search requests, remains puny.
Yet Payne seems impervious. A gregarious Kentuckian with a devilish Jim Carrey smile, he talks in wide-eyed bursts. He seems to be in motion even when he's at rest. Since taking charge of the search effort, he has become well known within the company not just for energy and charisma but also for toughness. Gates may have given him a pass during that initial presentation, but Payne has been at the receiving end of plenty of vicious tongue-lashings since then, during his monthly meetings with Gates and in the weekly e-mails he receives from his boss.
Payne joined Microsoft right out of Dartmouth in 1990, eventually ending up as a marketer and strategic planner for the company's database-software business. His first break came in 1995 when he was transferred to the then-fledgling MSN division. He was one of the original three employees on MSN Investor, playing a critical part in making it one of the best financial websites. But he didn't stick around to reap the rewards. He jumped to Amazon in 1999, only to discover that working there was more about retailing and merchandising than he had thought it would be—he missed building and selling software. By early 2002 he was back at MSN, running its home page and search, among other things. Over the course of that year, he saw Google's threat and began formulating the plan for Underdog.
Labels: Experiences
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