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The Audacity of Tom Costello (Part 5)

Posted on Sunday, Jan 11th 2009

SM: Is there really a high degree of mistrust in Europe?

TC: In Ireland you do not give your credit card to a waiter at restaurant. The waiter will bring the machine to your table where you swipe it yourself and enter your PIN. There is a high degree of mistrust. Irish people come to America and fit in perfectly, but there is a cultural difference between there and here. One of the reasons ecommerce took off here is due to the naiveté of Americans and this wonderful sense that everyone will get along and not cheat.

I have bought things on eBay, and things do go wrong occasionally. Ecommerce works here, and it is an amazing coming together of all the infrastructure pieces, including credit cards, being there. There is a social contract that people will honor simply because they are expected to. It is amazing.

SM: What is your commercial strategy? What is your business model?

TC: A good business model can be really hard. A huge success like social networking has a difficult business model. Search, however, is very lucky. There is a great business model built in. People are often looking to do a commercial transaction. They are looking to buy something and have money to spend.

SM: So you have the same business model as Google?

TC: Absolutely.

SM: Have you built your own version of AdWords?

TC: We have not started monetization yet. We are going to be a little bit different because we have tried harder to structure information. We are going to find more ways to bring that into the advertising. That is expected to make the advertising richer. We have the same basic idea as all other search monetization: when somebody comes and wants to do a commercial transaction, the people who provide that commercial transaction show it via advertising, and they have obviously paid money to get there.

SM: How closely have you studied the trends and developments in the vertical search industry?

TC: I have followed vertical search to an extent. One of the really hard things in vertical search is that people do not think they are doing vertical search. People have a hard time saying, “What I am doing right now is shopping”, or air travel, or whatever it may be. People are very bad at broad categories, yet they are very good at narrow ones. They say “I want to go hiking in Patagonia”, not “I am doing a travel search”.

SM: You think so? I think people do think about travel broadly.

TC: When you get to building an ontology people have a hard time backing up. If you ask them to tell you what generalized area you are in, they will back up very slowly. They will take hiking to outdoors, and you will have to coax them to tell you it is really about travel. That is one of the challenges. Humans do not deal very well at an abstract level. There is a certain place where humans think, and we are much more comfortable there. With vertical search, you have to accept that humans think they way they think and you cannot change that process.

This segment is part 5 in the series : The Audacity of Tom Costello
1 2 3 4 5 6 7

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Interesting comments about the naivete of Americans being a part of the success of eCommerce. Perhaps this naivete/trust is due in part (my bet is significantly) to the ridiculous culture of litigation that is so often bashed by Europeans.

A culture of credit cards and insurance also helps of course.

Tyler Monday, January 12, 2009 at 11:32 PM PT