That was an interesting piece of news today morning – Google’s acquisition of Aardvark, a social search provider started by ex-Googlettes, for $50 million. Aardvark essentially provides a platform which enables a user to ask questions of friends and family aka their social network. From my understanding of the firm, it was an invitation only network so as to maintain the quality of the experience and relevancy of the answers. Sometime in April ’09 they had about 10,000 users. I would have assumed a 10x growth in the user base since then, but fortunately didn’t need to make any assumptions even though accurate. Here’s a research report they published some time earlier this month. http://blog.vark.com/?p=352
What was interesting to me was the transaction from the investors perspective. August Capital invested about $5.5 million in October 2008. With some other VCs and angels, the total investment in the firm was ~$6 million not counting the $750k invested in 2007 when the firm was setup. That’s an IRR of close to 300% with the assumption of a post money valuation of $12 million from the last round. 3x return in one year, that to in a year like 2009.....and these are funds which can now be re-invested during the life of the fund further multiplying returns.
Almost exactly a year ago, another social search engine Delver was acquired by Sears Holding. Delver at that point in time was going to shut shop because they hadn’t been able to get any VC interested and raise funds. What a difference.
It does make one sit up and look at some of the other companies in this space. The companies which come the closest:
Fluther: which is once again collective answering, not necessarily people you know but people best equipped to answer the question.
Sidestripe: which searches through google and facebook friend profiles to throw up relevant people who may be able to answer queries.
A few others:
The Israeli Yedda which has been around since 2006. Users register and tag the areas on which they are comfortable receiving emails with questions; emails from the Yedda platform of course.
Eurekster has been around since 2004 but then they also boast of 20 million searches per month. They seem to be providing (perhaps it’s in the past tense – not sure) search widgets for websites. So if I understand it right they are building up their search engine while not requiring people to come to their platform. Not really the social networking model which is the current ‘in’ thing.
Closer to home there’s True Knowledge, a slightly different solution since it is more a semantic search platform to make a search engine more efficient.
They are all attempting to make the answers to queries or searches more relevant but with completely different approaches. And the business model? – It’s an eyeballs game all right. But in spite of my general reticence on pure advertising based model, even I have to agree there’s certainly a lot of potential here. During the teething stages of Seed Catalyst, I think I could have used at least 30% of my time more productively had there been a search which answered the question on the first page rather than the fourth.
And one afterthought - Aardvark was a Michael Dearing discovery too - he sure knows how to pick them.