The following Is a transcript of Big Technology Podcast, edited for length and clarity. You can listen to the full episode on Apple Podcasts, Spotify, or your app of choice.
Sridhar Ramaswamy is CEO of Neeva, an ads-free search engine he helped found after running Google’s ads and commerce business. Ramaswamy spent seventeen years inside Google, and eventually grew disillusioned with its ad business. Now, he’s trying to build the solution with $77.5 million in funding. In this conversation, we discuss his evolving view on advertising, what decoupling search from ads allows from a product standpoint, and how the current antitrust environment is opening Google up to competition.
Alex Kantrowitz: Google, where you used to work — they call it Alphabet now — made $31.9 billion in search ad sales last quarter alone, up from $24.5 billion in Q1 2020. YouTube ad sales were up 49% to $6 billion in Q1. This growth is going to hit a ceiling, one would imagine?
Sridhar Ramaswamy: That will happen when digital advertising is most all of advertising, and we have not quite hit the ceiling yet. We’ve hit ceilings in a number of areas, like smartphone sales — year on year it’s not really growing significantly — but he move to online advertising is part of the way there.
Yet you’re building a search engine with no ads?
In the history of business, there has never been a company that’s commanded 90+ percent market share in a market that’s $100+ billion. If you look art previous cases of what has disrupted them? It is typically a subscription play. What did HBO do to Time Warner? What did Netflix do to ad-supported television? What did Amazon Prime do to traditional e-commerce?
The common theme is the subscription model. Back to my earlier point about how smartphone sales have tapered off, Apple has actually not grown revenue significantly, but its subscription business and stock are growing because it has invested more and more into services and subscriptions.
So, Neeva is an entirely subscription-based search engine, trying to follow this pattern?
The ads model has always gotten disrupted. I know from both personal experience and the enormous amount of user studies that we have done, that there is resentment about it. So we wanted to create Neeva as a product that catered only to customers and was very, very strict about things like not having ads in it.
To us, subscription search was the way to create a superior product. And having really squeaky clean business principles — not just no ads, but no affiliate links ever, no data getting packaged and sold ever, being privacy-first — all of those are consequences of the model where we say, “We want to create the best product for you.”
So is your product going to be a nice luxury product — privacy for the rich — or do you think it can be something that will appeal to the masses? And if so why?
Our aspiration is to be a product that everybody will want. Search is something that people do a dozen times a day, there are not many things that people go back to time and time and time again. We think of ourselves as creating a daily-use product without any worries, without any gadgets, so we think will be able to price this at a point where lots of people really, really get value from it, and will pay for it.
Scott Galloway, who wrote “The Four,” compares Google to God. It used to be you would ask God, “When will my sick kid be healed?” Now you type the symptoms into Google. I suppose it doesn’t occur to us that when we’re speaking to our god stand-in we’re speaking to an advertiser at the same time.
You know something? The ad-supported model, even for queries like that sick child, tends to favor high engagement sites that have figured out how to get your attention, and how to cram a lot of ads. In fact, I joke to people that anytime I do a medical search and go to a medical health site, generally my conclusion is like, “I have a serious problem and I’m dying.”
It’s awesome to be a monopoly in a growing economy: Google expert
I went to WebMD a little while ago and it was for scratchy throat, and WebMD was like, “Well, you may just have the common cold, or you might have Ebola.”
It’s the same as clickbait. It’s the system that is working as it is designed, On those queries the features we at Neeva think about are, “How do we surface government website? How do we surface high authority websites, and not the ones that are chasing after clicks?” Part of the benefit of the subscription model is that it can focus a lot more on what is authoritative, what is higher quality information for you.
Okay, but isn’t the purpose of Google to get you useful results so that you just keep coming back?
The answer depends on what queries you’re thinking about. When it comes to commercial queries, the algorithm is now optimized towards showing your results in which you click on ads, and those are the ones that are taking up more and more of the space. One of the ways in which you get that growth is by taking that extra line, and search ads over the years have gone from taking 3% of the result on the page to 10%, 20%. I joke to people, if you search on a place like yahoo.com, even on a large screen you only see ads. And so, there is now this very strong incentive to show you results that are ads. And ads are a conflict of interest for the search engine. Should they show you an ad or should they show you the best result?
It’ll surprise you to know that one of the biggest feature asks that we have, are things like, “I want to control what retailers I see. I do not want to see big retailers when I search. I want smaller retailers. If I’m looking for clothing I only want to be shown stores that make a commitment to ethically sourcing their material.” Not showing the top retailer in the country is not an option for an ad-driven search engine. For us, it’s a feature we must build because that’s what keeps you as a customer.
Right, because that top retailer is also going to be a top advertiser for Google.
That’s right.
You also allow people to also tailor the news results they want to see. On NFL draft weekend, I was searching for the Jets picks and Neeva let me decided whether I want to see more ESPN or more of the fan blogs when I search. That struck me as a cool feature — now I have some more control in terms of what I’m seeing when I search — is that intentional?
That’s 100% intentional. Giving you agency over the search results is one of the things that we focus on a lot. The other features we have built around personalization being able to bring your personal data into a safe environment where you can search. Lots of us have multiple email accounts multiple [Google] Drive-like accounts, I was talking to someone I think that had nine email accounts that they connected to their Neeva account because they were like, “Yeah, how am I going to search through all of them?”
So, things like personalization, giving you agency, is very much a core part of the product. And in some ways we are impatient about the tech that we have to build, because we want to be able to support things like this more and more.
With news, we worry about things like filter bubbles. We have ideas for how we present different perspectives. In a couple of months I want to be able to come back to you and say, “Hey, Alex you’re a public personality, would you be open to having your news preferences be available to any nearby user, so they can see the world the way you see it?”
Oh that’s interesting.
I often have diametrically opposite viewpoints on my screen. I like looking at CNN on one side and Fox News on the other side and going, “This is the same country, this is my country. Let’s see what’s here.” It goes back to this thing of — you have choice and we should make it possible for you to exercise choice in different ways.
I was going to ask you the filter bubble question but you preempted me. The most basic layer of this is to pick your news sites. But then one level deeper than that is starting to pick viewpoints — do you want the left or the right view?
Or, do you want a particular person’s view? We relate to people we don’t relate to abstract concepts. So, you want to see the world that Alex does, or David Brooks? To me that’s super cool. We are a signed-in product, we are a subscription product, I’m not ashamed of either of these. I believe capitalism should enable great products at scale, so I don’t think of ourselves as creating somehow this elitist premium product. You pay for it but that makes the product better, that allows us to serve you better. And along the way we want to be able to build the features that make the product your own.
Could any of this stuff happen at Google? Because I imagine Google allowing people to customize the publishers that they get, or making decisions about what type of publications to show, would be a little bit tricky…
Google can do anything. It’s an enormously powerful, enormously successful company. But then people ask me, “Why did you not want to do this within Google?” The answer is that sometimes principles have to be thought over from the ground up, and a successful company is necessarily and correctly hesitant about what it sees as heretical ideas. And so this is the reason why I felt it was really important that I press the reset button in my life. Some things are easy, but will Google ever really want to create a completely ads-free product in which you can customize everything? I say they can do everything, but at this point in their history with all the antitrust stuff, it is also going to look very odd if they were to do that right now. I think this is one of those classic cases where success hinges on a set of parameters that are going to become hard to change, especially after you achieve, what, $120 billion of success. That’s a lot of dollars speaking here.
When you talk about “heretical ideas,” would it be a heretical to bring this ads-free idea up inside Google?
I’ve done many of these things before. Even the move that we made to have desktop and mobile advertising be a single concept, we call this enhanced campaigns, this was like 2013, 2014….
Inside Google?
Inside Google. And it is just so hard to pull off because you have people that are wedded to one way of doing things. I was in charge of making all of the shopping property into a paid property. So, I’ve gone through these changes, but some changes are extra super hard.
I want to hear a little bit more about your personal story. We talked a little bit about how ads have started to fill up more and more of the Google page. This happened under…
So did it happen slowly where you started to say, “Maybe this isn’t the right way to do search,” or did it happen all at once?
I was the exec in charge of many of the increases in ad load, there was an expectation of a certain amount of growth, there were a set of techniques that were available for how you increased growth, you’re always very thoughtful about the trade-offs implied by growth. There came a certain point in time that when it came to the overall ad ecosystem I said, “I don’t want to be working on that anymore.” I’m an accidental ads person, I had nothing to do with ads before I joined Google. I joke to people, my first boss found the word “database” in my resume and sent me to work on the ad system, that was the reason why I’ve worked on ads for 15 years.
