Tom Taulli is the author of "Investing in IPOs" (Bloomberg Personal Bookshelf). The book can be purchased at Amazon.com by clicking here. You can reach him at tom@taulli.com

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Funny enough, even though Yahoo, Excite, Lycos, and Infoseek are search engines, the fact remains that they are really aggregators of content, as well as hubs for commerce and community features (such as threads, free e-mail, and Web pages).

While all these services are great, many users still need a powerful search engine. Traditionally, there a two types of search engines. There are those that match keywords with the content of the Web page. However, this can be manipulated, such as by repeating certain words many times. Then there are human-centered search engines, such as Yahoo, in which editors index Web pages (in the case of Yahoo, the editors are called "ontologists"). Of course, this is time-consuming and may miss many useful sites.

Actually, using such methods is often ineffective. How many times have you done a search and got 10,000 or 20,000 results, many of which are not very relevant? There must be a better way. Drumroll, Please

Well, there is a new search engine, the mastermind of Sergey Brin and Larry Page, graduate students from Stanford University, in California. The site is Google.com. In fact, it is the misspelling for "googol," which is a number that has 100 zeroes. Why did Brin and Page misspell the name? "For one reason, it is easier for readers to remember," said Page. "Also, it makes it easier to trademark."

The founders spent about three years refining the cutting-edge search technology, known as the PageRank system. Here's how it works:

You decide to search for "Microsoft." PageRank's algorithms look at its index of sites, which it crawls the Web to find, and then bases the search on how popular a site is. This is done by looking at the number of links that point to the site. In the case of "Microsoft" query, this is the home page for the company. PageRank also looks at the linked sites and sees how many sites link back to them.

PageRank gives a site a higher rank if other highly ranked sites point to the site. For example, if Yahoo points to your site, the ranking goes up tremendously. "This means you have to convince top sites to link to you, which is not very easy to do," Page said. "So the system is nearly impossible to defeat."

Google.com has other neat features:

· Search results contain an excerpt of the text that matches your query. The search terms are in bold.
· It looks for search terms that are in close proximity to one another.
· It keeps a copy of each page it returns, making things faster.

There is also the "I Feel Lucky" button. This takes you to the first page returned for your query (for example, in the example above, the Microsoft home page). In many cases, it is the site you are looking for.

Google.com has approximately 16 million Web pages indexed and 2 billion hyperlinks in the database.

Jumping On The Competition Bandwagon

No doubt, the competition is intense. There are many companies producing the "killer" search engine. One example is Direct Hit (http://www.directhit.com). The founder of the company, Gary Culliss, actually went to Harvard Law School and was a patent agent. He submitted his business plan to Massachusetts Institute of Technology's annual $50,000 entrepreneur contest and he won. Within short order, he got $4.1 million in venture-capital funding from Fisher Jurvetson, who funded Hotmail.

Like Google.com, Direct Hit is based on the concept of popularity. Basically, the technology logs previous searches and then ranks Web pages based on the most visited links.

Another contender is goto.com. This company is backed by IdeaLab.com, a high-tech incubator that founded CitySearch, Tickets.com, and eToys. With goto.com, companies pay to get listings. Pricing is based on an auction model, and goto.com has strict relevancy requirements. Goto.com, last September, was the 24th most trafficked site on the Web.

By being at Stanford, Google.com has a tremendous advantage. The two other search engines -- Yahoo and Excite -- came from this fertile university. Late last year, the company talked to various angels for investment capital. "They all said yes," according to Page. One notable investor is Andy Bechtolsheim, the co-founder of Palo Alto, Calif.-based Sun.

The company is expected to get a venture-capital round in a few months. Who knows -- perhaps Google.com will be the next Stanford start-up to get its Nasdaq ticker symbol and multibillion-dollar market cap.

For comments/questions, contact Tom Taulli at ttaulli@bpia.com.

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