An Update to our post yesterday about Sequoia-funded search startup SearchMe. The company needs a new round of financing or a quick acquisition to stay online, but so far neither are happening. CEO Randy Adams wrote to me this morning with an update on where things stand. I reprint most of it below with his permission. Bottom line, The site may go offline at least temporarily tomorrow if a buyer does not step in (Update: The site now redirects to Google):
You are correct, we haven’t closed the financing. We knew when we started the company that to compete with the likes of Microsoft, Google and Yahoo,it was going to take at least $100 million, half to build the back end across thousands of servers and half to get distribution (maybe more with Microsoft spending $100 million on Bing advertising alone). What we didn’t plan on was the terrible downturn in the economy which made it impossible to raise another $50 million to get distribution (mainly through toolbar deals). In this economy nobody wants to invest that kind of money in a company that is pre-revenue, even if the net result is potentially a multi-billion dollar company.
There are some positive things though. In the process of trying to engage strategic investors we discovered that our tech really resonates with the people in the emerging broadband TV market where you will soon be able to easily access all the internet’s video on your TV. Directories don’t scale well so you’ll absolutely need search to find things to watch and visual search for multi-media content works much better than a list of links on your TV which you can’t read from 10 feet away. We are putting together some deals with chip vendors and set top box manufacturers to port the software over to their platforms and we are going to concentrate on that market going forward.
So the plan now (unless a buyer or white knight jumps in at the last moment) is to significantly downsize, take the site down for a while (probably tomorrow) and refocus the tech in a space where we don’t have to have 3,000 servers costing a million a month to run on the back end. We are going to have to do some serious restructuring to deal with our debt and recapitalize with a different capital structure but at the end of the day we should be able to create a healthier company with a MUCH lower burn rate, with the IP intact and a significant distribution channel. Headcount will go from 45 in the current company to probably about 10 in the new one which is very difficult for everyone but unfortunately necessary. We’ve brought back our former recruiter, Deva Santiago, to handle placement for those affected employees and we have some great talent so I’m sure they will get snapped up pretty quickly.
appreciate the transparency of this company. seems unusually frank for a company that raised so much. (maybe reeks a bit of desperation, too)
Adams is solid.
For once I agree with you germ fetish guy
WTF is SOLID, why dont you have the balls to call out failure instead of edifying a friend or buddy or even anyone
Uh, probably because Randy Adams also founded FunnyorDie.com and other extremely successful websites. So, calling him a failure would be an ignorant and false statement.
The only totally consistent people are dead. He’s smart enough to diversify.
This is not correct. Adams did not found funnyordie.com. It was Mark Kvamme’s son MIchael Kvamme’s idea, and the original money came from Will Ferrell and Adam McKay. Adams cloned some UI code for the web site.
not really
I have used SearchMe quite a bit and like the interface a lot. I am a huge fan of Apple computers and SearchMe seems like a nice fit for their products. Apple also has several billion cash in the bank, and their relationship with Google is getting more competitive. I think SearchMe might be the kind of product Apple could use to help integrate internet search directly in to their OS X system.
s/tomorrow/RIGHT NOW. searchme.com redirects to google for me.
now why does it redirect to google? is google funding this company? why can’t it get redirected to Bing? hahahah
because of the Sequoia connection between both Goog and Searchme
Sigh – the absolute classic statement of the current times
” In this economy nobody wants to invest that kind of money in a company that is pre-revenue, even if the net result is potentially a multi-billion dollar company.”
The key being “pre-revenue” and “multi-billion dollar company”. Aka twitter, aka youtube aka facebook (although changing)
I still really believe in business model before idea – not idea then business model. Sure, you may agree – but the simple truth is – if you have a business model you dont need $100 million – you need at most – 1% of that.
Oracle? Microsoft? Apple? Didnt see them needing $100 “pre-revenue”. Fact of the matter is, build a business model – build a business – don’t build a business model, find yourself on the raw end of investors.
Anyone else see searchme.com being forwarded to Google’s main page?
Looks like the site is already offline. Redirecting to Google.
redirecting the google through some sort of affiliate link maybe
As of now, searchme.com takes me to google search. A google search of searchme sends me to dead links. Example: http://www.searchme.com/about
The only thing I can find about them is their blog, which hasn’t been updated since 26 June.
http://web.arch...chme.com/about/
Looks down right now, redirects to google.com
SearchMe you have a great idea. It seems like wasteful spending is hurting your bottom line. Two companies having problems can bring improvement. Call “Cuill” they have what you need. You have what they need. Not so difficult to comprehend. Combined you both can really turn something out good and make an impact.
This is gibberish. Searchme implemented a bad idea – nobody needs or wants little pictures of web pages. It adds no value. Cuil claims to have built a cheaper indexing infrastructure – who cares? It does nothing useful for the consumer.
You are completely wrong. I am in the middle of launching a real estate website business that was using searchme Stacks and apture.com technology.
I was going to use it in my real estate business and sell the website concept to other real estate agents nationally.
I am heartbroken.
Stacks have a great use for websites for real estate listings, affiliate links, neighborhood information, maps, blogs, videos, squeeze pages, inspection reports, slesdisclosures, maps, aerial photography, purchase agreements, virtual tours, sister websites, school information, tax records, data sheets, lending information, flood maps, insurance info, etc…
I am heartbroken.
If their idea was so great, why did the website numbers go down to zero after they stopped spending 500k/ month buying traffic?
SearchMe is currently being redirected to Google.
I tried posting this on the previous article about Searchme, but it keeps getting deleted. Please allow this comment to stand:
Though I’ve been gone from the company for nearly a year, as one of the founders of Searchme, I think it’s a fair assessment to assign blame to the leadership of the company, and I accept full responsibility. We had committed investors, buckets of cash, great technology, and a fantastic team. While I was at Searchme, we made many mistakes, which I do not care to enumerate in this forum. I can’t speak to decisions and events after I left Searchme; I will simply let the current reality speak for itself. We often said, “it’s ours to f up,” and I still believe that. So, if you want to blame leadership, fair enough.
However, I think it’s unfair to criticize the skills, commitment, and accomplishments of Searchme’s dedicated employees. Their passion, courage, and creativity energized me on a daily basis. Their talents never ceased to surprise, delight, and amaze me. Denigrating their contributions betrays a profound ignorance of the immensely difficult task of building a search engine from scratch, not to mention the many ground-breaking innovations that were fundamental to the product.
I am extremely grateful to this amazing team of people who tirelessly poured their lives into our collective vision. They became my best friends. They deserve full-credit for the many successes we experienced at Searchme, and I wish we could have been more capable leaders so that their brilliance and hard work could be better rewarded.
Stand up CEO, best of luck guys.
A million a month just to run is a lot of money.
SearchMe should be admired for having big ambitions and the guts to “go for it”. A lot of people just talk, they actually did real work.
those who lost their $$$ should be admired anyway, not necessarily those who lost others cash for them
One of the most honest and no-bullshit CEO responses. Stand up CEO.
(But, 7 children – that is something. I’m in hell with two, ….)
7 children? i smell jesus. it’s always disappointing when someone shows guts to try something and it turns out they’re doing it for the lord.
Appreciate the transparency and straightforwardness.
To Google Page ..
It’s Already offline ..
Sad ending.
All those startups who believes that doing stuff in 3D is a sufficient effort for attracting users, should rethink about their Business model.
Searchme would’ve failed even if they had Google brand itself attached to the service, and was built into native browser feature.
You simply can’t search in CoverFlow view, how simple is that?
100MM needed…that’s insane…
I’ve work with Randy Adams twice. Visionary and Great leader.
Wow, I can’t believe how low SearchMe has gotten. I can see now that their ideas were not as innovative as they thought and it didn’t catch on for the internet.
Great CEO? Really? He drove the company off the cliff! Months ago, he should have known that company is not viable and should have given the money back to VCs.
sometimes the best things happen in desperate times. Playing the hand until the end isn’t something to criticize. I’m sure the investors knew exactly what was happening.
absolutely agree with arrington on this point. given the circumstances, it was the right play, and randy always maintained full visibility with the board.
randy has more successes than most people have failures. his stats are better than most. it would be small of us not to accept responsibility, but it would also be wrong to suggest that randy screwed the board. in fact, he worked closely with the investors every step of the way, and slaved day-and-night for them.
Michael – setting aside the comments from those who do not seem to know what it is to be an entrepreneur, you should write a case study about this company. There is a probably few things to be learned from a failure such as this one – huge funding (but not enough to compete in search), founders who seem to have a track record, and a high profile VC like Sequoia.
I am sure there are multiple factors that contributed to their failure – some probably beyond the control of the company. Starting off with such huge funding means the business needed huge amounts of money to scale – and the mkt conditions obviously played a huge part in their ability to raise the next round.
Anyway, hope you can get the founders to share their trials with your readers – it should be a good case study
Exactly. 1M/3000 = 300/mo/server. Horrible deal.
Exactly. 1M/3000 = 300/mo/server. Horrible deal.
Quad processor AMD, 8 gig of memory, 3 terabyte of disk, and a gigabit connection to the internet per server. Find me that for $300/Month that goes to $150/month next year when the lease is paid off – not such a bad deal IMHO.
Wish they woulda done something more interesting than redirect to Google. Redirect to Bing for some controversy, or a Rickroll video to show they’re really throwing in the towel.
come on mike……somebody…..say the magic words….. “SearchMe has been added to the Dead Pool”.
Where are the TC headlines:
-Sequoia Capital 40 million dollar search engine ends up a free redirect to Google.
Tragic. Ever since I found out about Search Me I was all over it. It’s all I have used since.
I am bummed that it just gone. It saved me a lot of time searching for things. You guys have the best.
I wish you the best and I think the big guys are just jealous that they didn’t think of it and do it.
That’s right DO IT and Do It right the way search’s should be done. I give you guys a A++++. I will miss Search Me.
Searchme was actually pretty good; such a shame that it’s gone offline now.
From what I see on Compete, these guys were barely nudging 50k uniques in the last month (http://siteanal...m/searchme.com/)
Why do you need 3,000 servers for that?
Sounds like a build-it-and-they-will-come sort of business and more fool of the investors for taking a $44m risk with something that was basically a punt (in 2006) on access to capital.
The technology is kind of cool and differenty and maybe searchme are going back to the business plan they should have had in the first place.
What news on Cuil?
Well, you know investors believe search is a very profitable business model, so if you’re going to take a big gamble on something, taking a gamble on a search engine is the way to go because the return can be monstrous.
One of the reasons Mahalo raised so much money was because it was able to convince investors that the site falls into the “search category.”
@azeem
The 3000 servers were for indexing and imaging hundreds of millions of webpages, I’m guessing.
To any sizable SearchMe publishers looking for a toolbar provider, W3i just launched a new toolbar technology called 3Quency (http://blog.w3i...mer-engagement/) integrated with our installation management process and we are looking to expand our distribution. W3i is a well capitalized company which has been profitable for 30 straight quarters…
why is TC slow to say “Dead Pool” here? have we ever seen a company crash and redirect to googl?
headlines we did not see:
Sequioa 40 million dollar search engine ends up a free redirect to Google.
Searchme was very inspirational me. They will definitely be missed. Custom catalogs still have huge potential for growth. This is a sad day.
Just proves how hard it really is to compete against the almighty Google. User momentum/laziness is just too great. Bing/Yahoo are the only thing that have a chance, and even that is slight.
I don’t believe the investor’s really believed this company had a shot on its own (if they did, they were fooling themselves). They were hoping for a Google or Microsoft buyout….and money from those two giants isn’t as forthcoming as it used to be.
I would have to imagine that if the site actually gained traction, it could have easily been bought out by another search engine. Unfortunately for SearchMe, it raised too much money to be bought for a price as low as say Powerset.
So, it really needed lots and lots of growth and then could only have been sold for an amount higher than $130 million.
For those who don’t understand, the 1 million a month most likely includes:
- office space
- server payments (unless they bought all upfront which is doubtful)
- switches, firewalls, load balancers, replacement equipment purchases (failing hard drives, etc)
- probably their own little datacenter in their office so by doing so bandwidth is a LOT more expensive than through a dedicated datacenter as the carriers such as Cogent (as far as I know) charge one fee for unmetered bandwidth whether 1mbps, 10mbps, 100mbps, or 1000mbps. probably around $2000 for one 100mb uplink, searchme probably had multiple gigabit uplinks = 100k+ a month alone
- 3k servers or whatever sucks up an insane amount of hydro plus cooling
1 million a month is not definitely NOT a high number for this, Google’s monthly bill is probably 15 million.
Wow!! Tough to have to shutter and then find a buyer, but likely no other choices. Great to see willingness on both founders part to accept responsibility. That’s rare. Sounds like assets will be picked up for pennies on the dollar. For somebody this will be a great deal.
I thought they had a decent business model. Good luck to all the gang.
You got to give them credit for not running it to the deck. Downsizing to 10 means they still have some powder and they are refocusing on a new market.
I fail to understand why you would build a 3000 server, million dollar a month infrastructure when the core product had yet to catch on with consumers. The core idea here was worth pursuing, but you have to iterate fast and find the model that can scale before pouring money into it. This is a classic example of the old model of silicon valley and I am surprised to see Sequoia caught up in a business requiring “$50M of distribution expenses” in addition to a bloated infrastructure buildout.
We had to index 3 billion web pages, so you need that many machines just to hold the index even if you only serve one search a day. A million a month is just the entry fee in this business – very expensive, but if you can get distribution and usage, it is a very profitable business. From day one everyone involved knew it was a “swing for the fences” either a home run or a strike out and everybody bought into that risk. Nobody is happy about the outcome, but nobody is surprised either. It is a very difficult task to serve up the best 10 results out of billions in 200 ms, with only 2 words as a clue. Our brilliant engineers succeeded in this task in one tenth the time it took previous search companies. I’m very proud of them.
I don’t seem to recall Google burning through a million a month when they entered this market… In fact I think they started in a garage… running their own servers.
Google did something different. They focused on quality search when no one else cared about search. They solved a problem that no one has solved… which is why they succeeded.
SearchMe did not solve a problem. The user-interface of current search engines is not broken, folks like it and folks use it successfully to find things very quickly.
SearchMe slapped lipstick on the search results for 44 million…
This is correct. Tell it like it is. Searchme was a hugely expensive implementation of a bad idea. It’s a nearly perfect example of bad entrepreneurship – much better to run dozens of experiments each costing ~$100K, and push the ones that work. All-or-nothing is a dumb strategy. No reason to congratulate anyone for that move, not the founders, the CEO or the investors.
i don’t think this is fair. searchme was a useful thing. they banked on the utility of the human ability to quickly accept or reject a visual of what they are looking for. don’t be so self-elevating to mock them, they tried something with a really good idea. for christ’s sake, they raised $40 million dollars!! they deserve our applause, not mockery.
creating value where it did not exist?
There is nothing mocking in the reply. You are missing the point. The fact that $44M was invested in the company proves absolutely nothing other than that you can fool some of the people all of the time. A far better question to answer than “what went wrong with searchme” (it’s obvious), is this: “what else could have been done with $44M?” Answer: a lot more interesting and useful stuff.
2009 has been a tough year for some of the best entrepreneurs in our little pond, and the plight of the SearchMe guys reinforce this.
SearchMe iPhone App went down also. It’s not working anymore. So sad…it was a pretty cool app.
Check out http://www.spacetime.com if you would like to keep using Visual Search. SpaceTime is the originator of Visual Search and allows you to search Google, Flickr Images and Wikipedia.
Thank You Tony
This will help my clients immensely.
Sandy R
I dunno it gained some traction probably 2 million or uv a month more what can be said by a lot of sites featured on here abeit they havn’t burnt through 50 million.
I tried it a couple of times. Never found it useful. Not surprised it failed.
Google bougth SearchMe.com?
http://geekeand...com-google.html
Well no offense but building all that infrastructure was probably a huge mistake. Especially since it wasn’t apparent they had customers.
when tried its url forwarding me to google.com
Redirecting to Google = Google acquired SearchMe for $0M.
I`m so disapointed. Two days ago theyr subdomain ads at wich I payed 50$ was working, now is no longer available. So what happent to my money?
I sent an email to my bank to see if I can place a chargeback since the services i payed for was never served, and neither a way to contact them is no longer available.
I need an explanation on why the hell do they place Ads option on the same day, if they knew will shut down?
I know now why I should never trust any other ads business except Google AdWords.
my2cents
$50 million is quite a bit of money. I suppose the technology can be sold to companies that need that sort of search, but why not just buy a Google Mini or Enterprise?
come back searchme all is forgiven…i loved you albeit briefly…pls return so we can resume our liaison…waiting with bated breath for your re-emergence…
I have used SearchMe quite a bit and like the interface a lot. I am a huge fan of Apple computers and SearchMe seems like a nice fit for their products. Apple also has several billion cash in the bank, and their relationship with Google is getting more competitive. I think SearchMe might be the kind of product Apple could use to help integrate internet search directly in to their OS X system.
This sucks. Not only did they not beat Google, they have to deliver their traffic to them.
http://bing.com
Start using it – it’s not too bad. Even if everyone used it half the time or less, it would still make an impact with Google.
I’m missing Searchme!!! Hope it all works out soon…