“Got kitesurfing on the mind, mixed with some search & classification tech, and a dab of political ranting”

Could Google have eyes for Convera?

Posted by direwolff on October 24, 2006

Over the past year, Convera [Nasdaq: CNVR] has raised private equity funding to the tune of $35M in order to build up a war chest of close to $70M (now closer to $57M or so) with which to pursue its vertical search strategy. Here’s an interesting article about Convera and how the company’s patron and well known investor, Herb Allen, Jr., has stood by them throughout their history. According to the company’s last 10Q at the end of July, it had quarterly revenues of $3M on expenses of $15M for the quarter. A little over a year ago, I began hearing rumblings that one of the company’s previous acquisitions, Excalibur, was going to be the centerpiece for a new strategy they were deploying, vertical search engines. Effectively, they began a massive spidering effort and have so far gathered some 4 billion Web pages in an attempt to reach Google and Yahoo! scale, but with a focus towards providing vertical search engines to publishing sites. Their business model is basically a revenue split on advertising revenue generated by the site with the use of the vertical search engine. It would be up to the site to sell (direct) or establish the advertiser relationships (ad networks) from which they and Convera would share revenue in.

Well, Google’s announcement today would certainly make me mighty nervous if I was working at Convera. Pretty crazy, but Google is now enabling publishers or bloggers or any one really, to create their own custom search engines, similar to Rollyo. It’s pretty easy to create one of these. Here’s my Kitesurfing Search Engine page. Now Convera’s offering is currently a bit more robust but it’s not rocket science to figure out that Google will reach critical mass in this project much faster than Convera because this can be undertaken by people low in any organization who just simply just go out and create one of these. No big contracts to sign up to, and convenient full access to Google’s AdSense program. Imagine all sorts of people in organizations deciding that they could do a better job at selecting quality Web sites from which to apply ordinary Google search capabilities to, in order to provide more solid value to their members or constituents. That’s what Google has enabled here and I’d expect this offering to be well received.

If I was Convera, I’d start thinking of plan E, since plans A through C have yielded lackluster results, and plan D is looking like its headed for a freight train named Google. Heck, they’ve got $70M in cash to mess around with and a patron that’s very smart and supportive, sounds like there’s no lack of opportunities for them to explore given that combination, just not this vertical search engine approach. Actually, a company that I’m an advisor to recently beat them in a head-to-head evaluation process by a publisher in the healthcare arena. Healia, a healthcare focused search engine beat them primarily because of their depth in the healthcare field (read higher quality results) which is not casually entered into by low end search engines given the nature of the, at times, technical vocabulary required in healthcare matters. Convera may need to figure out one vertical market they can dominate as their generalist strategy looks to be doomed before it’s fully launched.

*** UPDATE 10/24/06: Thought this New York Times article would provide additional color on Google’s new offering.

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