The Generalist - All the Answers

Friends,

When ChatGPT launched in late November last year, many saw it as the beginning of the end for Google. After spending a week using ChatGPT, here was my take:

In the two months since, I’ve found myself thinking about the subject with uncommon frequency. Have I considered the issue properly? What are my blind spots? Where will Google and ChatGPT focus over the next few months and years? Whatever one thinks about ChatGPT’s ability to topple Google, it is undoubtedly a seminal moment in technological history. It may also prove to be a pivotal development in the history of search, specifically.

Today’s piece attempts to assess my initial assumption – and go beyond it.

To better understand Google’s mind-boggling strength, the uniqueness of ChatGPT’s threat, the moves and countermoves in AI, and the broader state of search, jump in.

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All the Answers

Actionable insights

If you only have a few minutes to spare, here’s what investors, operators, and founders should know about Google, ChatGPT, and the future of search.

• Google is search’s undisputed king. The $1.4 trillion company brought in $163 billion in revenue from search last year. Despite more than two decades in operation, Google retains up to 91% market share in the category. Even massive competitors like Microsoft don’t come close.
• ChatGPT is a compelling assassin. Others have tried and failed to compete with Google head-on. OpenAI’s ChatGPT is an intriguing orthogonal assault. Though not a pure search engine, it can provide better answers to many complex questions. Its remarkable power has attracted more than 100 million users in months.
• Serious limitations hamper ChatGPT. For now. OpenAI’s product has limited knowledge of events after 2021, leaving it ill-equipped to answer the world’s most popular search requests. Its tendency to “hallucinate” answers from thin air is another major deficiency. Most of ChatGPT’s flaws look fixable, however.
• Advertising remains a viable model. Though ChatGPT is embracing a $20 per month subscription model, other conversational search products may leverage advertising. Significant unused space and the directness of chat could produce an effective commercial channel. That is good news for Google, which primarily monetizes through ads.
• Expect a search frenzy. ChatGPT has re-sparked tech’s interest in conversational interfaces. That has encouraged a wave of search startups to emerge, including Perplexity, You, Andie, and others. We should expect many AI-enabled information products to receive capital in the coming months.

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Humans will travel a long way for a good answer.

The Lydian king Croesus, for example, sent seven emissaries to different corners of the region in search of the most accurate oracle. When the oracle of Delphi correctly surmised Croesus was making a lamb-and-turtle soup at the time she was consulted, the king lavished her with his formidable wealth. She was both deity and advisor, a possessor of mystical powers but capable of weighing in on such practicalities as military strategy. Even for the ancient world’s richest man, gathering the best information required a journey of many days.

Such was the predicament of almost all of our ancestors. Our forebearers crossed oceans, climbed mountains, and braved disease to visit places of illumination. To perceive the wisdom held in the Library of Alexandria, to stare into the coy eyes of a guru, to attend an institution of higher learning – these were privileges paid for in distance traveled.

Because of our drive for knowledge, the business of providing answers is often a good one. Though their names sound fusty today – redolent of mothballs and a lint-covered lozenge – the Yellow Pages and Encyclopedia Britannica were once famous enterprises. For several decades in the 20th century, both were household staples.

For both companies, the fundamental value was the same: faster access to information. They may not have offered the numinous wisdom of a bearded prophet or monkish scholar, but for most matters, practical and transactional consumers were well-served. It represented a kind of compression: bundling the answers to our most common questions into convenient packages. Inquiries that once required a visit to the library or a walk to town could suddenly be resolved in minutes.

From one vantage, this is the history of human information: the progressive shortening of the distance between question and answer.

This process reached what looked to be its logical conclusion in 1996. That was the year Stanford doctoral candidates Sergey Brin and Larry Page released the first version of “BackRub.” Though other internet search engines had come before, none had sought to organize information by the number of backlinks a source received.

We know how monumental Brin and Page’s innovation proved to be. Today, Google’s market cap sits at $1.4 trillion – a figure that would make Croesus blush – even if it is down from 2021’s high of $2 trillion. The company generated $283 billion in revenue in 2022, up 10% from the previous year, with search contributing 57% of that figure.

While its financial might cannot be ignored, the company’s civilization-scale effect is more striking. Google search is an irreligious omniscience capable of producing answers in fractions of a second. The oracle would blush, too.

Indeed, never before have we relied on one source of answers so completely. It is the place we go to ask virtually every question we can think of, from sacred to secular to profane. (The third-most common search term in the world? Pornhub.) It is the destination for nearly every one of our assorted wonders: What should I watch? Where should I work? Does my mother love me? Am I paid too little? Why is Russia invading? Is my husband having an affair? Why do I have a headache? Am I a good parent? Am I a good son? What happened in 1813? How do I recover from a stroke? Did the Knicks win?

Google’s strength is that it has all the answers. For the first time in recent memory, however, the tech community is looking at the company’s search business and asking questions.

In a meme

​​​​For the pictorially inclined, here's the whole piece — all 5,400 words of it — in a single meme.

Puzzler

​​​All guesses are welcome and clues are given to anyone that would like one. Just respond to this email for a hint. Today’s riddle was chosen by ChatGPT – let’s see if we’re sharper than OpenAI’s sentience.

Greg K kept his streak alive, nipping in fastest last time around. He was followed by Krishna N, Jim W, Vanshi T, Lee L, Ajay J, Shashwat N, Joseph H, Karan, Michael S, Saagar B, Chandar L, Sagar S, Mateo Balaña P, Vaniya D, Nathan M, Prasanna D, Aaron H, Gregg S, Nick R, Rohit K, Michael O, Keith S, Sylma M, Jeb B, Skye L, Sunil S, Gary J, Eugene H, Alexia B, Andrew S, Berry G, George R, Friedemann S, Abhinav S, Shayon C, Christopher V, Reed M, and Ariel B. All figured out the wordplay in this riddle:

The answer? The letter “r.”
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Wishing you all a lovely rest of your day, wherever you are in the world. Until next time!
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Mario