Powerset claims to be the next big thing. Would you sell the next big thing for $100 million? Here is my initial assessment of Powerset - It was an opportunistic play to make a quick buck on the Google (NASDAQ:GOOG) craze.
I was right and this transaction proves it.
When Barney Pell was at Mayfield Fund several years ago, he thought that investing in search was a bad idea. Mayfield was actually clueless about the space. However, after the Google IPO, everybody suddenly became a search expert. Mayfield started investing search related startups and Pell started Powerset and they started claiming to have expertise in search that could topple Google. The same thing happened to another of Mayfield funded startups called “JotSpot”, which was going to take on Google - which eventually got sold to Google.
Powerset was in trouble from day one (aside from the fact that it is a bad idea). The foremost goal of the company was to find a search problem that nobody cared about, make it seem like a problem nobody could solve and find a fool to part with their money.
Powerset found its fool - Microsoft (NASDAQ:MSFT). Microsoft has essentially purchased a Wikipedia search tool with its acquisition of Powerset.
Let us see a bit of objectivity here. What exactly happened with the Powerset sale? Microsoft bought a company that was indexing Wikipedia and created a query parser that supposedly understands your intent.
I read Don’s post on the matter yesterday he was dithering between, “it is the query parsing” and “it is the index!” as the value that Powerset is bringing to MS with the acquisition.
But for all practical purposes (promise/potential does not have an automatic turnaround into realization anywhere in the world), it was still technology that worked demonstrably on a single website from which people are already crawling RDF triples (Dbpedia.org).
Slapping a good query parser on top of that and getting paid $100 million for it is what Visa would have called “priceless.”