internet

Introducing Auctions in Unexpected Places

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Google didn’t become the behemoth that they are by having the best technology. They didn’t invent a faster computer to retrieve the most accurate search results in .15 seconds. They became the leader in search and online advertising by being creative – and they did it through auctions. Yes, Google is the world’s largest auction company.

Have you noticed the advertisements that come up whenever you do a common Google search? They show both on the top and side of your search results (see image) and match incredibly closely to what you are looking for. Have you ever thought about how Google decides to place the accurate ads? Behind the scenes a genius little auction is held for every search that takes place.

Advertisers place bids for what they would be willing to pay to show up next to search terms that they believe are close to their product. Google also ranks the relevance of the ad using a complex algorithm. These two pieces of data are combined to rank each potential advertisement. Then a Vickrey auction is held to determine the price each advertiser must pay and the order of the ads. I highly recommend this extremely concise explanation from Wired magazine (only 226 words).

Well that isn’t so complicated, how much money did they make with that idea? Sure one step of the process is technologically complex, but even if their relevance ranking was created in one day, it would be able to get the job done. The real genius is applying an automated auction system to online advertising, optimizing for price and relevance while allowing the advertiser a high degree of control. So that begs the question – where else can I apply an efficient auction process that will make me billions of dollars?

Of course there are a lot of reasons Google is where it is today, I don’t mean to oversimplify things. But this simple auction is a good chunk of the $24 billion in revenue they made last year.

More:

  • Descending-clock auction for electricity – Trade Electricity Like Pork Bellies
  • Terrific full Google article in the Wired magazine issue – Secret of Googlenomics: Data-Fueled Recipe Brews Profitability

The Top 3 Reasons Everyone Should Read Blogs

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Photo: Marya

A couple of my friends have told me that Pedantic Posts is the only blog they read. I was shocked that these very intelligent people don’t take advantage of this relatively new communication medium. I personally only started reading blogs a few years ago (and thought the word “blog” moronic at the time), but since have come to realize how valuable they are as a source of information. Here are the top 3 reasons:

An opportunity to hang out with people much smarter than you
Some incredibly smart people are willing to share their thoughts online for everyone to enjoy. Individuals such as marketing guru Seth Godin, venture capitalist Fred Wilson, serial entrepreneur Marc Andreesen, and the capricious Tim Ferriss. No matter the subject that interests you, there is probably an expert blogging about it.

You may be blessed to hang around brilliant individuals in both your business and personal life. Even if this is the case, odds are you only discuss the same handful of things over and over again, which leads us to the next reason to read blogs.

Exposure to new ideas
One of the first things I learned about via blogs was polyphasic sleep (where you sleep 20-30 minutes every 3-4 hours). While I am not personally interested in drastically changing my sleep schedule, I enjoyed reading about this new idea. I realized there are people in this world doing interesting things and sharing them in the form of short posts that take less than 10 minutes to read.

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Godwin’s Law of Nazi Analogies – A Warning that You’re in Danger of Being Compared to Hitler

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Photo: MattGo74

In the early days of the internet, discussion boards were all the rage. These discussions took place on the Usenet long before chat rooms or blogs even existed. During this time Mike Godwin made a simple observation that people were being maliciously being compared to Hitler or the Nazis across a wide array of topics.

There are some discussions that practically beg for these comparisons – for example arguments pro gun control or censorship (both supported by Hitler). But no matter the topic, as the online discussions grew longer the participants resorted to attacking each others credibility. From there it is a only short and eventual hop to call someone a Nazi.

More generally, reductio ad Hitlerum (dog Latin term – made up Latin to make it sound official) extends this principle beyond the realm of the internet. Comparisons to Hitler and the Nazis show up in all types of debates – even if you think you are in a civilized discussion where such an immature comparison wouldn’t take place.

It was Godwin’s contention that these comparisons only serve to weaken the intended point and make the entire debate look like childish name calling. To quote the great Jay-Z – “A wise man told me don’t argue with fools cause people from a distance can’t tell who is who.”

Herein lies the problem: if you stay in the debate forever a comparison to Hitler will eventually be made and you will look like an idiot, even if you were not the one saying it. The takeaways: avoid YouTube comment debates at all costs, stick to areas of the internet where mostly intelligent people congregate, end the debate as soon as possible, and don’t be surprised if you still end up falling pray to Godwin’s Law of Nazi Analogies.

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