Been enjoying Jason Calacanis‘s private email newsletter, at least, when it’s relevant to me as in the Microsoft/Yahoo Search deal, where Jason mentions Fred Wilson‘s opinion that  you can’t beat Google at Search 1.0 - and many companies have tried, and failed.

“….”You need to double down on the right hands and the way Yahoo! was playing the search hand wasn’t going to end in a win for them. I believe that Google has won the “web search version 1.0″ game and the only thing that is left is second place.

Yahoo! and Microsoft essentially agreed to share second place instead of fighting each other for the spoils. We lost a search engine last week but we also gained one. And that’s a promising sign. There are new veins to mine in search and that’s where you want to make your bets these days. You don’t want to compete with Google head on. You want to find a new angle of attack.”

One good thing – there is a version 2.0 and 3.0 of the Search Game – and  Google might NOT win it – it depends on how the cards are played out.

Count on Google to rig the cards as best they can, but they can’t foresee everything –  though they have the biggest repository of knowledge the world has ever seen – their own search engine – they can be taken by surprise as more asutue innovators not making everything searchable (on purpose).

Google’s reliance on Pagerank, it’s dependence on back links (made perfect sence 11 years ago) puts it, in some sense, in the same boat  WebTrends is for Web Analytics – though the comparison is a streach, I admit.  WebTrends was one of the originators of Web Analytics, they got market share early but had a poor interface that was hard to work with, and when new platforms came out, they were able to innovate faster and better than WebTrends because they were not trying to be compatible with their existing base of clients.

WebTrends is still a major force in Web Analytics, one of the leaders, and they’re trying to position themselves as innovators with the Radian6 and Salesforce deals, but at the end they day, they are circumscribed by what they have have built, and limited by it.

In way, Google might have great ideas, like Google Search Wiki, but due to their commanding position in the Web 2.0 Economy, they are constrained in how much they can shake things up before people who make their livelihood on Google and their business partnerships, complain – over every single change Google makes. A smaller, more agile start-up, could, take Google on in Search 2.0 (probable be bought up by Google before had a chance to truly compete) and win, because they don’t have as much invested in the current state of affairs.

I also liked the point about “Google Envy” that Jason brought up:

“….many folks have Google envy and that it’s a distraction:

“I believe that board rooms all over America were heavily distracted by Google’s rise. Envious of Google’s success, many companies wanted to remodel themselves as a Google look-alike.

This affliction was most prominent with the Internet’s four leading non-Google players: Ebay, Yahoo, Amazon, and Microsoft.

For the past 5-10 years, these companies have been distracted from their core mission and focus in life, and more importantly from areas and markets where they actually had a competitive advantage, to try and follow Google (using Google’s playbook).”

Like Fred Wilson said – You can’t beat Google at Search 1.0.   But know this, Google is vulnerable in Search 2.0 and 3.0 much as Microsoft was at the dawn on the Internet as we know it.  Just because Google’s creators are smart, doesn’t mean they are infallible.

A couple of people have taken stabs at guessing what Google’s mistakes though I don’t agree with all of them – here’s someone who has made a list of  top 10 mistakes of Google.

I went to the  social media roundtable tonight and  took a few videos and got the sense that Social Currency is about earning “points” and “credits” we can use on a social network – here they are ( a list of speakers, directly below).

Dennis Crowley and Naveen Selvadurai, Co-Founders of FourSquare
Richard Lawson, Entertainment Editor, Gawker
Ryan Brown, Vice President of Operations, Fame Game
Caroline McCarthy, Writer, The Social, CNET News

The first video deals with metrics and how social capital is defined by this group – as credits or other things one can get awarded.

The Second video I took focuses on overdoing something and getting banned  – or unfriended – how much of an activity is too much?

The last video I took focuses on Facebook and how Facebook uses Social Capital. In that sense, I suppose,  social capital is virtual.

It was a good event – one of the better one’s that happened here – and I noticed there are more “Social Media Roundtable” events popping up  – I guess no one really “owns” the concept of bringing people together for Roundtables, and in this case, the panel was very qualified to talk about Social Capital and Social Currency.

Here’s some of the marketing notes -

“Social Media and Social Currency” will examine techniques for building a brand’s social capital, including cultivating an online reputation that complements a brand’s goals, sharing techniques for gaining significance on Facebook, Twitter, YouTube and other channels and exploring the evolving role of social currency across digital platforms. “

It took a long time to happen, but it finally has – Microsoft has acquired part of Yahoo, the Search part, dumped it and is replacing it with Bing as reported in the New York Times – see Microsoft and Yahoo Reach Deal on Search Partnership.

I posted about this over three years ago – and it has come to pass – in  The Search Engine Wars – even painted about it.

…. Under the pact, Microsoft will provide the underlying search technology on Yahoo’s popular Web sites. The deal will give a lift to Microsoft’s search engine, which it recently overhauled and renamed Bing.

Bing, which tries to put search results in better context than rivals, has won praise and favorable reviews, after Microsoft spent years falling further and further behind Google in search.

With the addition of Yahoo’s users, Microsoft will be able to run more searches through the Bing technology infrastructure. It expects to deliver better answers to search queries over time as well, by learning from more peoples’ queries.

Reading Jason Calacanis’s email newsletter (he doesn’t blog anymore, so he says) – Jason said “Yahoo committed seppuku today“  – he brought up some good points:

… Microsoft’s obsession with taking Yahoo’s second place position and adding it to their 3rd place position is not an indication that it’s time to sell. Far from it. When Microsoft is interested in a space it is a clear sign that you should be investing in it–not selling it“.

” ….Microsoft is the buy sign, not the sell sign. The people at Microsoft are brilliant and not to be underestimated–history has shown this to be true.”

“…Yahoo is dying on the vine..”

[ Note: I've never met Carol Bartz so I can't speak to her abilities. Clearly she is a very competent deal maker and operator. However, she's not in the league of the growing "product genius" Google cabal of Larry, Sergey,Marrisa, Chad and Salar. ]

How true.  No one really cared about Yahoo! anymore, not as far as internet search goes .. Yahoo! become “irrelvent”.   Microsoft must have done their analysis, figured out they could win this one, and now they think they can cut into Google’s commanding lead by slowly choaking off their supply line, Paid Search.

To me, Google, as a company, is likened to Alexander the Great – with a small force they went on to conquer most of the known world – but they had supply line that went back to Greece – as I recall – cut that off, and the rest of the Alexander’s army would have collapsed (I’m not that astute a history scholoar to maybe, I don’t have all the facts right – I’ll admit that).  I think that’s what Microsoft may be trying to do – destroy Google; probably won’t work but it will give us a run for the money for the next 2 years or so.

It also means that Search Optimizers (I do SEO, still) will now have to optimize for Google AND Bing-   SEO just focused on Google as Yahoo! and Microsoft were largely “noise” and “irrelevant”, and everyone knew it. In the last two months Bing has gotten a lot of attention – it’s a better search engine than Google, it’s nicer looking too; Microsoft delivered.  Jason goes on to say:

Round Three
==============
And so ends the second chapter of search and begins the third. Chapter one was inception up until the launch of Google.

Chapter two was Google’s rise and Yahoo’s death.

Chapter three will be the two-horse race of Microsoft and Google, with the inevitable emergence of a third and fourth player.

That’s the silver lining for start-ups in all of this. As Google and Microsoft lock into a dog fight for revenue and market share, leaving the Yahoo carcass on the side of the road,the bevy of crafty start-ups will get their chance to take the third, fourth and fifth positions in this very important race.

The lesson for all start-ups–and BDC’s (big dumb companies)–is that innovation is all you have. Once you stop innovating you lose your talent and you lose the race. Never. Stop. Innovating. Never. Never. Never.

Reactions to the Microsoft – Yahoo Search deal range from EConsultancy industry expert quick  survey (which doesn’t have much info in it for me) to a description of the deal in layman’s terms from Read/WriteWeb.