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Snap: the future of transparency?

We caught up with Bill Gross earlier this month to see how his interesting new search engine is coming along. Gross unveiled Snap at the Web 2.0 conference in San Francisco in early October and vowed to do something we'd not seen at another company: share the daily financial details of his company with its users.

Sure enough, looking at Snap's stats page today, we see that:
- They've served 2.6 million searches since they first launched.
- They made $55.88 yesterday.
- They have 1,235 advertisers.
- And they had 624 clicks on ads yesterday that generated revenue.

Digging deeper, we find that the most searches in one day was 59,723. In early November, the number of advertisers shot up from single-digits to the 1,235 that Snap has today. Last month, Snap made $1,176.40 in gross revenues. So far, this month it's made $1,558.56.

Now that the business is up and running, we asked Gross if he'd changed his mind about this level of transparency.

Not in the least.

"Now whenever I want to find out how we're doing, I just go to the home page," Gross said from his Southern California office at Idealab.

Although Snap's revenues and search counts are but a sliver of its competitors, Gross is thrilled with the speed with which the Web site has grown.

"We never thought we'd see a million searches this fast,'' he said. "But now that we have, advertisers are starting to see that there's a market.'' (Snap crossed the 2 million search mark shortly after we chatted with him.)

Gross said that once the site opens up its self-serve advertising service -- similar to what Overture and Google offer -- the number of advertisers will shoot up.

"As soon as that goes up, we'll have thousands. We have a lot of pent-up demand.''

We asked Gross if it really made sense for companies to be so forthright about their financial situation, particularly if they are new and off to a slow start. Won't investors and potential business partners, sensing a dud, shy away when they see the numbers. It doesn't give new companies much time to build momentum.

Consider, too, how the stock market would react to a company's daily business diary. On the one hand, investors would get to see the daily life-cycle of a company. But how would investors react to daily or weekly blips in traffic or revenues? (Witness the dip and then spike in searches and revenues that Snap experienced around November 20 as an example.)

"That's a good point. I would countercontend that we make the marketplace more interesting to advertisers. I'm predicting this is the wave. You can't write that story for a year, but I'm predicting this is the way to go.''

"It's kind of scary to put that data out there,' he added. "But it's liberating at the same time. I think it's good in the long-term. I think it will be a trend. In every aspect, it's better to be open.''


The stock market is transparent in terms of:

1) bid and ask price for stocks (equivalent to bid prices for positions on PPCSE's)
2) historical returns (equivalent to CTR or conversion rate data Snap proposes to provide transparently)
3) stock ownership (equivalent to Snap listing its advertisers)

I absolutely agree with Bill Gross that his PPCSE will benefit in the long run by transparency. He'll have his challenges growing traffic, but assuming he can build traffic the concept will resonate well with advertisers. Open, liquid markets always get more capital flowing through them than closed ones.

Chris Zaharias on November 22, 2004 8:13 AM
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Hm. Two hundredths of one percent of Google's search volume in November, with little discernible volume growth during the month. One quarter of one percent of the search volume of Ask Jeeves.

Not clear this is winning with users. Search engines have to win over users first. Only then can they get clever about how the advertising works.

ZF on November 29, 2004 9:24 PM
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Not to defend Bill or Snap, but the relevant comparison is with Google or Jeeves in it's first month after launch. I don't think Snap compares unfavorably in that light.

Gotta give credit to Bill for trying something new that enhances the user experiences. He's also no fool in launching at Web 2.0, which got Snap off to a fast start.

I think Snap finds it's niche of devotees who like the transparency concept and aren't loyal to another search.

Whether this makes for a good investment is another question altogether . . .

Derrick Chen on November 30, 2004 5:29 AM
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60k searches/day for a brand new search engine is pretty good. Snap could be making over $1000/day with that traffic if they plugged into an existing ad network. Bill is instead investing that opportunity cost into developing his own advertiser base.

If successful in the end, that will have several advantages, such as getting 100% of the take on his ads instead of having to split the dough with Google or Overture, and allowing him to syndicate his ads to other sites with traffic, as AdSense does.

Rich Skrenta on November 30, 2004 7:58 AM
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These are really great comments here. We know we have a lot more to do to improve the product, but that's why this is in beta, and we have many great things in the works to come out soon. But we have found some things working really well, and we're growing very nicely organically with lots of repeat visitation. The whopping $55 / day is growing, but it's actually much more than that, because we only report money that we've collected. In fact, because of the CPA model, we give most of our customers 30 days to determine that their transactions are fully complete (i.e. no returns) so we are not reporting that revenue until that time occurs. Consequently, with the big run up in shopping recently at the site, those transactions are not appearing yet, since there is a chance that some of those could be cancelled. That said, we're not a big revenue threat yet, but it DOES look like the model is working and scaling nicely. Most importantly, the transparency part is working, and teaching us a lot about how to improve the results for users.


Bill Gross on December 1, 2004 7:04 AM
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I've known Bill for over a decade and have been eyeing his various endeavors. Mostly winners -- some huge winners. And I suspect that idealab ventures have done better than most top-tier VC funds in Silicon Valley.

Not sure if Snap will make it into the Majors, but I'm sure Bill can wrap it into another venture and make the morphed gig a success.

Godspeed, Bill!!

P.S.--Look me up if you're ever in China. See my "Letter from China" columns on AO: http://www.alwayson-network.com .

David Scott Lewis on December 1, 2004 4:17 PM
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David, thanks for your nice comments.

Hey Rich, we broke $100 per day a few days ago. Things are continuing to go well. I don't know if we can keep up 20% per week growth, but it's nice while we have it.

We've added some new interactive features in the listings that are continuing to improve things, and we'll be rolling out some new things after the Holidays too that should be exciting.


Bill Gross on December 9, 2004 8:58 PM
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