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PowerHype At Powerset

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The more I dig into the new search engine startup Powerset the more I am wondering if it is nothing more than a house of cards. They’re an odd company with a bit of a split personality. For example, in some ways they are very secretive – everyone who gets to see “The Demo” (as it’s now being called) have to sign a nondisclosure agreement. It’s rare for startups to request this. On the other hand, though, CEO Barney Pell is hyping the hell out of the product (which is still just The Demo – Powerset may or may not ship in 2007 from what we’re hearing), the fact that they’ve raised $12.5 million in venture capital and that they’ve hired a dozen or so search experts out of Yahoo (where options are vesting and the search experts are itching for the next big thing).

All this hype is generating a lot of press. Normally even handed Matt Marshall continues to gush about them every time he writes (he got the chance to see The Demo). And the New York Times has written about them twice already this year (here and here).

This does make a good story. People are frustrated with the current state of search and want something better. Google was also criticized when it first launched as trying to tackle a problem too difficult to solve. People draw an analogy to Powerset, perhaps thinking that once a decade a new company will launch and kill off the old, entrenched competition.

Still, Powerset is given little chance by the search engine elite who judge such things.

People who’ve seen The Demo say it is a completely controlled environment. The index is limited to just a very small sample of high quality sites like the New York Times website, and the search queries are driven by Powerset employees as well. With that kind of setup, almost anyone could show a stunning demo. The real experts I’ve talked to who’ve seen the demo said it shows little or nothing real. Others leave impressed.

The company had a party in San Francisco this last weekend to celebrate their venture funding. Sarah Meyers, who regularly crashes parties with a cameraman to videotape what’s going on (including ours), was there to talk to Pell and other employees. The video is embedded below. Pell talks at a high level about the product, not really saying much more than we’ve already heard. At around the 2:47 mark, though, some poor soul gets caught on camera and answers Meyer’s question about what exactly Powerset is. His answer: “We have a demo where you can, like, search web pages and get results, like, like, books by children versus books for children…and that’s what we claim we can do…we’ll see in a year.” Not exactly confidence-inducing stuff.

http://www.veoh.com/videodetails.swf?permalinkId=v242166nQJaRAqy&id=1&player=videodetails&videoAutoPlay=0

The Yahoo Angle
All of this doesn’t add up. The company is too far away from launch to be hyping its product and throwing parties. But Pell, by all accounts, is a brilliant entrepreneur. So what exactly is he up to?

I think Don Dodge nailed it. Powerset is promising what Yahoo needs, and they’re building it with former Yahoo employees. Powerset may be hyping the product now because they want to sell, and fast. Dodge says:

What should Powerset do? There no easy and obvious answers…they only appear easy 10 years later. Powerset’s strength is in Natural Language Processing, or understanding the meaning and context of words. Lots of words like those found in a magazine, text book, or newspaper article. Rather than focusing all this NLP power on understanding the typical 2 or 3 word search query, why not help advertisers better target their ads on unstructured content?

What is Yahoo’s problem? Untargeted traffic. Yahoo has tons of traffic to its home page and Yahoo Mail, but no way to effectively target ads. AOL, MSN, and every other portal has this same problem. So they all end up selling low cost, low margin, CPM ads rather than high margin Pay Per Click (PPC) ads like Google. If Powerset technology could be used to “understand” the context and meaning in an email message, they could effectively target ads…and triple the portal’s revenues. If Powerset could scan a portal’s dynamic home page, or each users personalized home page, they could better target ads.

If Dodge is right, Pell is playing a very high stakes game of poker. If he wins, they get bought fast and all those Yahoo’ers go right back to Yahoo. If he loses, his product better be damned good once it launches. Because a lot of people will be watching to see if all this hype is justified. And if it isn’t, Powerset will have a very hard time getting any press at all.

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