Can Sridhar Ramaswamy's fee-based Neeva win against Google

Sridhar Ramaswamy and Vivek Raghunathan have taken on a major but potentially lucrative business challenge. Former senior executives at Google, they co-founded Mountain View, California based Neeva, expecting some users will switch to their search engine, instead of continuing to use Google.

“We’re at a time when, for many people, trust in the internet has been broken,” Ramaswamy, 54 years old, states in a post on venture capital firm Greylock’s site. “I believe the time is now to rethink the ways we use data to create value for all the people who use it.”

Ramaswamy’s pitch to users is an advertising free search for “real results.” Neeva currently in a test phase, charges $4.95 per month, after a free trial of three months.

Why would users pay Neeva for its online search capabilities when they can get free searches on Google?

Two out of five search results on platforms like Google, Yahoo and Microsoft’s Bing are advertisements or affiliate marketing. “(A)dvertising income often provides an incentive to provide poor quality search results,” wrote Larry Page and Sergei Brin, co-founders of Google in a 1988 research paper, while they were doctoral students at Stanford University.

Neeva does not show any ads and also avoids links to affiliate businesses, unlike a YouTube link on Google search. Neeva says its mission is “to serve our users, and only our users.”

In an age of “surveillance capitalism,” as some critics describe it, Neeva offers privacy protection since it does not sell personal and other data collected from a user’s search history. Today digital sites, including CNN.com and other reputable news sources, gather whatever information they can about you and store it indefinitely: browsing data, internet address, name and profile photo.

The sites “ask for your phone number and email address so you can recover your account in case you get hacked, but then will use this data to report your online purchases to advertisers,” Neeva notes in its Digital Bill of Rights. .

Neeva also enables users to control and shape their search results. Users can ask that search results, of political issues for instance, be from independent sources, those with opinions similar to that of a leading journalist or from those who have a left or right bias.    

Ramaswamy sees demand for Google’s free ad-supported search continuing for a long time. Yet, he expects the business dynamics of free versus subscription services to benefit Neeva. There has never been a company that’s commanded more than a 90% share in a market, such as online search, that’s larger than $100 billion, says Ramaswamy in a Big Technology Podcast.

Dominant free services are typically disrupted by a subscription-based competitor, he adds. “What did HBO do to Time Warner? What did Netflix do to ad-supported television? What did Amazon Prime do to traditional e-commerce?”  

Ramaswamy led Google’s ad business

In January 2019, Sridhar Ramaswamy and Vivek Raghunathan, who met in the early days of search ads while both were working for Google, came up with the idea for Neeva over hikes and coffee. In June 2020, after working in a stealth mode for about 18 months, they launched Neeva in test mode, inviting a group of users. Earlier this year, they expanded the test to a wider audience, currently more than 4,000 users.

Neeva has raised $78 million in funding, the latest in March this year at a reported valuation of $300 million. Ramaswamy, 54 years old, is also an investor in his company, according to Crunchbase. Greylock and Sequoia Capital, two leading Silicon Valley venture firms, are key outside investors. Sequoia, founded in 1972, was an early investor in Google and Yahoo! while Greylock was an early investor in Airbnb and LinkedIn.

In March, Udi Manber, one of the most influential computer scientists behind the evolution of search, joined Neeva’s product team. He has solved some of the deepest technical challenges in search over the last 20 years.

In 2018, Ramaswamy joined Greylock as a venture partner, after leaving Google.  Earlier, he spent 15 years at Google where, as a senior vice president, he oversaw all of its advertising and commerce products, including search, display and video advertising, analytics, shopping, payments, and travel. When he joined the company in 2003, Google Ads was a $1.5 billion business. By the time he left in 2018, its annual revenue run rate was $100 billion.

While at Google, Ramaswamy led the development of new businesses as well as several significant company pivots, including the transition from desktop to mobile. His team also pioneered early infrastructure work in machine learning, storage, and analytics.

Prior to Google, Ramaswamy spent four years as the director of engineering at the startup E.piphany, where he oversaw marketing automation product development. He also held research positions at Bell Labs, Lucent Technologies, and Bell Communications Research, focusing on databases and query processing on large scale data.

Ramaswamy has published several papers on database systems and theory and holds several patents. A health and fitness fanatic, he views himself as a reformed academic. He holds a bachelor’s degree in computer science from the Indian Institute of Technology Madras and earned his Master’s and Ph.D. in computer science from Brown University. His wife is a dentist and they have two adult sons who are also software engineers, according to thespinoff.

Neeva co-founder Vivek Raghunathan spent 12 years at Google, most recently as a vice president leading all engineering for YouTube’s monetization. Earlier he was an intern at BBN Technologies and Microsoft. In 2007, he earned a Ph.D. and in 2004 an M.S., both in electrical and computer engineering, from the University of Illinois, Urbana Champaign. In 2001, he earned a B.Tech. in electrical engineering from the Indian Institute of Technology, Bombay.

Can Neeva Succeed Using Microsoft’s Bing

Neeva, which has more than 50 employees, plans to open up to public access next month. Besides Google, Microsoft’s Bing, Mozilla’s Firefox and Yahoo!, Neeva’s competitors include start ups like DuckDuckGo and Brave. At least compared to the start ups, Neeva has a strong technology team led by Ramaswamy and Raghunathan as well as deep funding and business support from Sequoia and Greylock.

Search results on Neeva are a duller version of a comparable search on Bing, duller since it is without the hype words and phrases of advertisers who pay the most to be displayed with the search word. The similarity is not surprising since Neeva uses Bing's search engine for basic results, instead of building its own platform from scratch, according to The New York Times. Neeva also gets stock prices, Wikipedia information, maps and weather from the same sources as Bing or Google.

While similar to Bing, Neeva’s search results are apparently more relevant since they are not driven by Bing’s advertising algorithms. This implies that, while the search and ad engines work together on Bing’s own platform, Neeva is able to switch off Bing’s ad functions on its platform.

In recent years, Bing's ad revenues have grown, reportedly bringing in about $8 billion for Microsoft in 2020. Yet this is a fraction of Google search's $104 billion ad revenues last year. Also, Bing has under 3% of the global online search market, compared to Google's 90%, according to StatCounter. In the short term, given Bing’s position relative to Google search, Microsoft supports Neeva's use of Bing to try and reduce Google’s market share as well as a new source of revenue at little or no additional cost.

Ramaswamy’s “bet is that (Neeva) will have a double-digit percentage market share,” in five to ten years, at least in a dozen affluent Western countries where people can afford to pay subscriptions for online search, he told thetakeoff.

If Neeva gains market share, will most of its profits flow to Microsoft as payments for use of Bing? Is there an undisclosed agreement for Microsoft to buy Neeva, if the latter has say 10 million paid users or more? Or, can Microsoft hurt Neeva’s business by launching its own ad free search platform, charging users a fraction of what Neeva charges? Does the agreement with Microsoft prevent Neeva from building its own search engine? If not, can Neeva raise the capital and have enough time to build its search engine, while Microsoft sells a cheaper ad free product?

Whatever the outcome of the Neeva’s Microsoft Bing dependency, users seeking privacy and ad free online search could benefit. Consumers don’t care that they pay for water that comes through the tap, Ramaswamy told Forbes. Water is “a low-cost, high-quality product. Why don’t online services work the same way?”

Photo of Sridhar Ramaswamy from his Neeva profile.

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