Bold start-up, Powerset, about to raise $10M to take on Google

Matt Marshall | October 2nd, 2006 |

Updated

We’ve been hearing about a new Palo Alto start-up called Powerset, which says its search technology is better than Google’s.

The start-up, led by artificial intelligence and natural language expert, Barney Pell, has been pitching its business idea aggressively to Silicon Valley venture firms. The company says its idea is so promising it merits an extremely high valuation from the get-go, according to several sources.

We’ve heard Powerset is on the verge of raising $10 million, and has been asking to be valued at $20 million before the investment (Update: See the subsequent funding story here).

In other words, if it gets the $10 million, the company is valued after the deal at $30 million ($20M + $10M). That gives venture capitalists a third of the company ownership in return for their investment.

That would be a big coup for a company that hasn’t launched yet, and some would call the venture firm(s) making the investment crazy. As much as some people want to deny it, search has largely been solved by Google and others, at least for the average person. Yes, there are many incremental improvements that should be made, but is there anything new that Google’s thousand-odd engineers (or Yahoo’s for that matter) can’t figure out and copy within a few months?

Still, without seeing it, we’ll reserve judgment; it’s great to see people swing for the fences. Pell, a former NASA and SRI engineer, recently served as an entrepreneur in residence at Silicon Valley firm Mayfield, and left to form Powerset. The question arises, if it is so good, why hasn’t Mayfield invested?

The company has pitched to several firms, including to Bay and Foundation Capital. Charles Moldow, a partner at Foundation, has apparently been looking seriously at the company. Moldow has not yet responded to email and phone calls requesting comment. We heard Bay dropped talks months ago, feeling the valuation was way too high.

Earlier, Powerset raised less than $2 million from investors led by CommerceNet, and including prominent Silicon Valley angel Reid Hoffman (who went to school with Barney). This was a convertible note round, which is common these days. The money converts into shares when a first venture round (Series A) is completed.

Powerset has reportedly been hiring like crazy, poaching from Yahoo in particular — on the promise that it is about to raise the round.

Check out Barney’s statement on LinkedIn: “I’m overloaded at present and won’t be looking to meet for a lunch or network socially with new people until mid-September.” It is now October, so we’re waiting.

barneypell.jpgBeside Barney (pictured left; see his blog), who is chief executive, other key players are Steve Newcomb, who is chief operating officer, and an expert in natural language and voice search, most recently a vice president of voice search company Promptu’s mobile division (see our mention of Promptu here); and Gian Lorenzo Thione, product architect.

They are sharing offices with CommerceNet at 169 University.

Update: The founders have agreed to meet with VentureBeat, and so we should have some more about their plans soon. Stay tuned.

Update: See our resulting update story here.

Update: See search expert Danny Sullivan’s scathing critique of Powerset.

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  1. October 2nd, 2006
    10:01 am

    VentureBeat Wire » Bold start-up, Powerset, raises $2M, maybe more, to take on Google said:

    [...] See story here. VentureBeat Community [...]

  2. October 3rd, 2006
    10:09 am

    e-Fuze Mobile » Powerset to take Google on? said:

    [...] Powerset founder Barney Pell says Powerset’s search engine is superior to Google’s and wants to take the search giant head on. He is hoping to get VC backing of $10 M and says the company valuation will be $30 M once it launches. This is what Matt Marshall said from VentureBeat which is dead on: “As much as some people want to deny it, search has largely been solved by Google and others, at least for the average person. Yes, there are many incremental improvements that should be made, but is there anything new that Google’s thousand-odd engineers (or Yahoo’s for that matter) can’t figure out and copy within a few months?” Google , Powerset ShareThese icons link to social bookmarking sites where readers can share and discover new web pages. [...]

  3. October 4th, 2006
    1:14 am

    Powerset - a new kind of search « Social websites of the modern age said:

    [...] They are making a claim that their search technology is far better than Google’s. [...]

  4. October 4th, 2006
    10:43 pm

    VentureBeat » Powerset, that secretive little search engine company said:

    [...] We promised to bring you more on Powerset, that secretive company that wants to better Google with a new kind of search. [...]

  5. October 5th, 2006
    12:50 am

    Techcrunch » Blog Archive » Will Powerset Pull a Google? said:

    [...] Powerset is looking for big money to launch their new engine. Venture capitalists are always the best source of rumors (the best time to hit them up for information is right after they’ve passed on a deal, or have lost it to another firm). If they don’t have a financial interest in the company, loose lips abound. With respect to Powerset, the rumors are that the company is trying to raise $10 million on a $20 million pre-money valuation. That’s a lot of money, but if Powerset pulls a Google, no one will care. Powerset [...]

  6. October 5th, 2006
    3:25 am

    The New Google? « Ray-Deo said:

    [...] Powerset is looking for big money to launch their new engine. Venture capitalists are always the best source of rumors (the best time to hit them up for information is right after they’ve passed on a deal, or have lost it to another firm). If they don’t have a financial interest in the company, loose lips abound. With respect to Powerset, the rumors are that the company is trying to raise $10 million on a $20 million pre-money valuation. That’s a lot of money, but if Powerset pulls a Google, no one will care. [...]

  7. October 5th, 2006
    9:25 am

    Seo Update said:

    [...] Because they don’t have a big budget to spend on the developping costs of the site, there looking for big money to launch their new engine. Venture capitalists are always the best source of rumors (the best time to hit them up for information is right after they’ve passed on a deal, or have lost it to another firm). If they don’t have a financial interest in the company, loose lips abound. With respect to Powerset, the rumors are that the company is trying to raise $10 million on a $20 million pre-money valuation. That’s a lot of money, but if Powerset pulls a Google, no one will care. [...]

  8. October 5th, 2006
    10:16 am

    TechCrunch Japanese アーカイブ » PowersetはGoogleに迫るか？ said:

    [...] Powerset はこの新しい検索エンジンをスタートさせるために大金を必要としている。ベンチャーキャピタリストはいつも噂の火元としてかっこうの存在だが(投資を見送ったときか、別のファンドに投資の機会を取られてしまったときが彼らから情報を引き出すのによいタイミングだ)。金銭的利害関係がないと、自然に口が緩むものである。、噂では、Powerset は投資直前の会社の価値を$20M (2000万ﾄﾞﾙ)と見積もった上で、$10M (1000万ドル)の調達をもくろんでいるという。これは大金だが、もしPowersetが第2のGoogle になるのだったらそんなことは誰も気にしないだろう。 [...]

  9. October 16th, 2006
    12:10 pm

    linguify - Christopher Johnson’s blog » Blog Archive » Natural language search: Powerset said:

    [...] There’s a natural language search (NLS) startup that’s been getting lots of attention lately: Powerset. In response to this article in VentureBeat, many bloggers, including the likes of Michael Arrington and Danny Sullivan, have weighed in on the promise (or lack thereof) of NLS. It’s exciting to read all the different opinions and ideas about this topic. [...]

  10. November 4th, 2006
    11:15 am

    Trying to Be like Bill Gates » Wright bill passes in Senate, House vote expected said:

    [...] This is defintely worth your time and money Washington Business Journal - My bill will repeal the Wright amendment in eight years and achieve a balance between Love Field and the Dallas/Fort Worth … flights from Dallas Love Field airport to Texas and eight nearby states. The compromise calls for the reduction of gates at … Wow… I love this using this what Problem Does Natural Language Search Solve Matt Marshall recently posted a story about a new search engine looking to raise a lot of money at a very high valuation, which has created quite a bit of buzz as people argue over whether or not the company has a chance, or deserves such a high valuation. Matt followed up with more details on the company, though he still expresses some reasonable skepticism. Like many people, my first reaction on hearing about it was that I can’t remember a year that’s gone by without someone claiming to have come out with a revolution in natural language search. However, when it comes to search engine news, no one can go through the history and explain why something is a bad idea quite like Danny Sullivan can. He lists out all the attempts at natural language search, and shows how each one failed (in some cases, miserably). He also points out that the problem with natural language search is that it requires everyone to change their behavior. As with any startup, when you’re looking at their chances, the big question to ask is pretty simple: what problem does it solve? Plenty of people have figured out how to search with keywords. In fact, many of us find it more natural and faster than trying to construct a natural language query. So, while all the natural language search engines that come along insist that searches suck because they can’t understand the the searcher, it’s not clear that’s the real problem. When people want to use a search engine, they want to find what they want. That means being able to search quickly. Dumping two or three keywords into a box is always going to be a lot faster than figuring out the natural language equivalent. So, perhaps someone can enlighten us. What is the problem natural language search solves?.Did you know that Natural means an Afro hairstyle. I should add that %keyword% music publishers say Kazaa deal reached (AP) AP - The music publishing industry reached a tentative deal with operators of the Kazaa file-sharing network over claims of copyright infringement, an industry group said.Did you know that Deal means an indefinite quantity, extent, or degree: has a great deal of experience. I also noted that [...]

  11. November 5th, 2006
    9:42 pm

    VentureBeat » Powerset gets $12.5M at whopper valuation, to go after search holy grail said:

    [...] Significantly, the company also raised its venture capital at a sky-high valuation — even higher than VentureBeat originally reported a few weeks ago when we first broke the Powerset story. The company raised money at a pre-investment value of more than $30 million, giving the company a value of more than $42.5 million after the money was put in. [...]

  12. May 11th, 2008
    9:02 pm

    Alt Search Engines » Blog Archive » Powerset Launches into the Search Space! said:

    [...] day a quick flash-back was in order. Let’s go back to October 2nd, 2006. Writing for Venture Beat, Matt Marshall makes this announcement: Bold start-up, Powerset, about to raise $10M to take on [...]

24 Comments

  1. October 2nd, 2006
    9:57 am

    Jonathan said:

    Are you sure Google has really solved search?
    If you search for “I want some pizza” in Google there are no results that take me closer to eating a pizza. “How much is powerset worth” doesn’t give me any good information either. “Who writes venturebeat” doesn’t bring up your name. “How much does an ipod nano cost” doesn’t work, you have to type “ipod nano 1gb price.”
    There is plenty of room for improvement in general web search.

  2. October 2nd, 2006
    10:05 am

    Matt Marshall said:

    Ok, sure, natural language search you point to is clearly important, and Google has thinking about this and has been pouring resources into this since day one. Craig Silverstein, the first employee, says that is the ultimate goal of Google, but says it will take decades to get there, and even that might be optimistic. I guess I’m skpetical because Ask Jeeves (in its original form), and a string of other companies have come along over time saying they have solved the problem, and can answer your questions as written in the search bar, but the results have been underwhelming.

  3. October 2nd, 2006
    10:13 am

    Yakov said:

    How is Powerset really different from the other web search startups?

  4. October 2nd, 2006
    12:17 pm

    Matt Marshall said:

    The founders have just agreed to meet with me, so I’ll have answers to some of these questions in short order, though maybe not all of them. Stay tuned…

  5. October 2nd, 2006
    1:50 pm

    Edwardo said:

    My biggest gripe with Google (+Yahoo) is the signal to noise ratio. Having to manually filter out SEOs’ efforts is time-consuming, and ’solving’ search to me means filtering out that. I really don’t care about natural language support in a typical web search (voice recognition is another story). If Powerset uses natural language to _make_ its search secret sauce, that’s where it gets interesting.

  6. October 2nd, 2006
    6:26 pm

    Jonathan said:

    I totally agree, Matt. Natural language search and SEO-busting are both huge technical problems that will take years to solve. I’m happy to see someone stepping up and trying to join the competition in a big way. If these guys can attract top talent they’ll inevitably make some of the breakthroughs, and the rewards are obviously huge. I’m excited to hear more about how they plan on doing this.

  7. October 2nd, 2006
    9:38 pm

    Shannon Clark said:

    Search is far from solved - but it is also crucial to consider that “search” is really a LOT of very different and distinct things.

    For example - I’m flying to NYC later this month, so I need to “search” for the best fares, flight times, hotel accomodations etc - keeping in mind not just what is available but also my personal needs and family/professional obligations (i.e. I’ll trade spending more for arriving functional and in time to visit my sister). Google hasn’t (yet) solved this, neither has great sites such as Kayak.com (though they are getting much, much better - they specifically don’t usually show red eye options for some reason).

    Even searches which I do on Google are often done in very different contexts - possibly even the nearly same search. I might be looking for “what movies are showing in San Francisco tonight” - and knowing Google treats it as a special search might search “movies San Francisco”. Later that same day, however, I might want to write a blog post about movies that had been filmed in San Francisco - so I might start with the SAME search phrase “movies San Francisco” - but my purpose and context for the search has changed.

    I’ve been performing electronic searches for over 16 years (yes, long before Google or the www, gopher space searches, online library catalogues etc) and the problem of search has always also been one of getting from how I think about a topic and how others, who have written resources on that topic have written and thought about it. Google does a good, but by no means perfect, job of addressing this - if I’m thinking in French (for example) and I search for “voiture” I’m highly unlikely to find any of the fantastic English sites for cars (or automobiles or autos etc).

    And in anycase a single word search gives very little context to my search.

    I wish Barney luck (full disclosure, I’ve corresponded with him over the years, long before he founded Powerset) - search has many aspects that could stand real improvement.

    Shannon

  8. October 2nd, 2006
    10:57 pm

    Dempsey said:

    Some think by the time natural language query is cracked, the masses will only think in terms of keyword searches.

    Hey Shannon,

    “the problem of search has always also been one of getting from how I think about a topic and how others, who have written resources on that topic have written and thought about it”

    In the field of Information Science (nee Librarianship), this is referred to as “the art of the reference interview.” Just a plug for my profession (insert smiley face here).

  9. October 3rd, 2006
    2:36 pm

    Joe Hunkins said:

    Search solved?! Are you kidding? The combination of spam, SEO manipulations, and especially time related issues (processing time, turnarounds on new content, etc.) means search is still in it’s infancy. I have doubts Powerset has any magic bullet here but I’m floored you think the game is over.

  10. October 5th, 2006
    7:53 pm

    Sal said:

    Search solved? Please.
    Here, let’s take an example..
    User is an accountant, searching for “finance”. Should he gets the same results as a student searching for “finance”? Or how about a housewife typing “loans” vs a banker typing “loans”?
    It is quite amazing to me peopel who call themselves technologists or are in the field believe search is anywhere close to solved.

    And on a 10m VC, while it may seem to be allot it may not be that much. Infrastructure, employess, technology, marketing, advertising, etc. You can easily spend that money in less then a year when trying to compete with the 5 big SE’s. The money is big, the competition is fearless, and the startup capital most likely to be much more significant then other industries.

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  13. December 6th, 2006
    10:12 am

    Rose Water said:

    It sounds like they are excellent marketers, which usually means the technology isn’t good.

  14. December 17th, 2006
    9:37 pm

    Sergey said:

    Powerset is looking for big money to launch their new engine. Venture capitalists are always the best source of rumors.

  15. February 12th, 2007
    9:14 pm

    Ram Malik said:

    I will like to invest a relatively a small number (say $50,000) now and may do so over a million over a period of time. Pl let me know as to work it out

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  22. January 3rd, 2008
    10:42 pm

    Brian Cellars said:

    Hi Matt,
    A very interesting and informative article, and good comments from others. Even though this was written nearly 2 years ago, I suspect the search problems have yet to be solved. I’m just getting into website development and all the rest, but it seems to me that the search problem shouldn’t be so difficult and the technology for it already exists. Why can’t it just search the same way I search for stuff on my own computer. Lots of times i can’t remember a file name or where I saved something, but I remember specific expressions contained in the file. I simply search for “A word or phrase in the file:” and presto, I find exactly what I’m looking for.

    Thus, searching my computer using ‘natural language’, like: “Where’s the best place for pizza in Jakarta.”, I will find the file that has exactly that. Of course the search takes longer, but at least I find the file I’m looking for. Obviously doing this for the web is a massively bigger task, but the principles are basically the same aren’t they. Essentially the search engine has to look for and find the expressions within the web pages rather than just in the meta tags.

    Thanks and I’d really appreciate hearing your thoughts on this concept.
    Brian

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  24. January 29th, 2008
    2:48 am

    Krishna Sapkota said:

    No..if you want pizza powerset would not give you the possible result you are looking because it only index wiki and of course wiki does not contains information about eating pizza…may be it would give the expected answers if powerset indexes whole web in near future.

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