It wasn’t long ago that Sridhar Ramaswamy was the king of Google advertising.
During his 15-year career at the search startup that became an Internet giant, Ramaswamy built, scaled and ultimately ran Google’s $115 billion advertising division. However, he finally left in 2018 after becoming disillusioned that Google’s obsession with growth was affecting everything from search quality to consumer privacy. Initially, he did the expected: He joined top drawer venture firm Greylock Partners as a partner. Then the 54-year-old did the completely unexpected: Launching a startup to build an entirely new search engine from scratch — but this time without data tracking and without ads. In other words, without the things that make money.
It’s a bit like the world’s most successful butcher opening a vegan restaurant, or the top oil engineer for Exxon starting a wind farm. To pay the bills, Ramaswamy is planning on a subscription model for Neeva, the search engine he cofounded in 2019 in Mountain View, Calif., just down the road from Google’s headquarters. Helping on the revenue side will be Ramaswamy’s cofounder Vivek Raghunathan, who spent nearly a dozen years at Google working on everything from monetizing Google Search and YouTube to working on what has now become Google Assistant. Ramaswamy serves as CEO; Raghunathan oversees engineering.
Neeva users will pay between $5 and $10 a month to get the search results they want rather than what advertisers want them to see. The challenge, obviously, is getting folks to pay for something they are used to getting for free.
“Sometimes I joke with people: Listen, all of us pay for the water that comes through our tap,” says Ramaswamy. “And they just don’t care. Because you know what? It’s a low-cost, high-quality product. Why don’t online services work the same way?”
The idea is getting traction. Neeva announced today that it raised an additional $40 million funding led by Greylock and Sequoia Capital. The round brings Neeva’s total funding to $77.5 million with a valuation of $300 million. The funding will be used to expand beyond the invitation-only alpha-testing they launched in June 2020 into a much wider Beta release this spring.
Neeva is also bringing on Udi Manber, Google’s former head of search, to work with the startup two days a week. Additionally, Margo Georgiadis, Google’s former president of Americas is joining Neeva’s board. In total there are now about a dozen ex-Googlers among Neeva’s 45-person full-time staff.
Neeva is debuting at a time when Google and other digital advertising companies like Facebook are under unprecedented pressure as people become increasingly aware of their data privacy — or lack thereof. The concerns have prompted a wave of newly proposed government regulations and antitrust investigations, both in the U.S. and abroad.
“I don’t think anyone that worked on ads or is working on ads even now built ads with the intention of let’s create an amazing misinformation engine,” Ramaswamy says. “No one’s that smart…But what happens over a very long period of time is when you push along a certain way and then you create systems that are running at world scale, that’s when you see the problems.”
Reid Hoffman, the billionaire cofounder of LinkedIn who is now a partner at Greylock, says people forget how much room for innovation still exists outside of tech giants.
“Neeva has this notion that all of this search is ad-driven, and that vectors a lot of things which are great for consumers and great for the ecosystem to have kind of non-ad-driven search,” Hoffman says. “Just think about, for example, the pollution bias when you’re looking for healthcare results, about an ad-driven model versus a subscription to the model. And that extends across e-commerce trends and across organizations.”
For example, Neeva is working on prioritizing product reviews rather than advertisements for big-box retailers. It tries to surface news stories based on a user’s interests as gleaned from their subscriptions. And plug-ins from other sources lets users more easily search for information in a single personalized dashboard.
In some ways, Neeva is going back to the basics. When Google cofounders Sergey Brin and Larry Page were outlining their idea for their search engine in a Stanford University research paper, they argued that an ad-driven ad model wouldn’t produce quality search results. The future billionaires who made their fortunes from advertising wrote: “we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers.”
Even while Neeva plots out its rollout for 2021, Google is making moves of its own to change the way it tracks users and serves them ads across the web. Last week, Google announced it would not develop tools for individual tracking when it phases out supporting third-party tracking cookies next year. That news sent several publicly traded ad-tech companies stock tumbling.
Ramaswamy says it’s good that Google and Chrome are “finally taking steps to protect user privacy.” However, he points out Google still tracks people through first-party tools like Google Analytics.
“Reading between the lines, it appears that emails from advertisers still flow back to Google ads for use in targeting on YouTube and Google Search,” he said. “It’s not clear which of its various constituents Google is optimizing for — the end users of the Chrome browser, the publishers who derive ads-revenue from its AdSense business, or advertisers who depend on browser tracking to micro-target users.”
Obviously, Google isn’t Neeva’s only competition. Several other browsers have been pitching privacy for years. Along with Mozilla’s Firefox, there’s also Paoli, Pennsylvania-based DuckDuckGo, which has raised $13 million and allows ads without tracking users. Then there is Brave, founded in 2015 by ex-Mozilla CEO Brendan Eich, which pays people in cryptocurrency to watch ads. And, of course, there’s more mainstream competition from Microsoft’s Bing.
Search engine experts doubt Neeva will be able to do much damage to Google, at least in the short term. Some say Google’s gravitational pull is too strong for users to leave. Arun Kumar, CTO at Interpublic Group of Companies, Inc. a New York-based advertising holding company, says while Neeva might “find a few takers, but you’re not going to shake the kingdom.”
“When you consider the value of an ecosystem that’s driven purely by pay from the consumer with no ads,” he says. “There has to be something of value for the consumer to say, ‘I’m getting such a better experience in Neeva compared to what I’m getting from Google that I’m going to pay $10 a month for it,’ or whatever it is.”
Investors think that value comes from providing access to information unpolluted by advertising. “I would say search has revolutionized access to human information,” says Sequoia Partner Bill Coughran, who started at Google on the same day as Ramaswamy back in 2003. “And the reason I’m interested in Neeva is I have believed for quite a while that you can have an unadulterated product if you don’t have to worry about advertising and monetization products into the search experience.”
Timing is one of Neeva’s biggest opportunities, says Noam Dorros, director analyst in Gartner’s marketing practice. He praises Ramaswamy’s vision, adding that Neeva will have more freedom since it’s not bound by the same growth expectations as Google. Plus, there’s always appeal for “anti-establishment” disruptors that challenge the dominant players.
“There is a stigma associated with paid search advertisements,” Dorros says. “Despite every search engine’s best efforts to dispel it, there still remains in consumers’ minds to this day a disbelief in their veracity, an annoyance of being sold something that wasn’t requested and a skepticism…Enter Neeva’s search platform, free of advertisements – that’s an opportunity to offer these consumers an experience they are craving.”