CARMEL, Ind. (AP) – Back in early 2008, the excitement around ChaCha Search Inc. seemed warranted.
An exuberant Scott Jones, a pioneer of voice mail technology, was at the helm of the young Q&A-service; company. Amazon.com CEO Jeff Bezos and Compaq founding CEO Rod Canion led ChaCha’s $6 million funding round a year earlier, and more money followed. The company showered its tech-savvy employees with perks, including free haircuts and massages.
It was around that time that New York-based directory assistance giant Kgb offered to purchase the 2-year-old firm for $100 million, several people familiar with the matter said. Carmel-based ChaCha, which billed itself as the “only human-powered search engine in the world,” didn’t bite.
It’s not uncommon for founders and heavyweight investors to pass up buyouts if they believe their startup has greater potential. But the offer might have been the best exit opportunity for a company that never found sustainable footing in a rapidly changing tech landscape. Today, with ChaCha’s workforce down to 15, the jubilance is gone, Web traffic (Get 10000 free hits) continues to drain, and Jones appears ready to move on.
“I want it to have a great landing,” Jones recently told the Indianapolis Business Journal (http://bit.ly/1EnjB1M ). “I’m just not sure what that conclusion looks like.”
Investors have poured $82 million into the company since its founding in 2006, with $32 million coming from Jones himself.
That ChaCha’s funding approached $100 million is an impressive feat. Few Indiana startups have raised half that sum.
But market observers doubt that if the company finds a buyer, the price would be anywhere near what investors put into it.
Ross Rubin, a technology analyst at Reticle Research, said the value of its assets – such as its trove of question-and-answer pairs – likely will diminish with time.
“It’s like asking about the value of an encyclopedia from 1978,” Rubin said. “It’s not very useful today for many things.”
ChaCha incorporated in spring 2006. The concept was simple, yet powerful: Ask ChaCha a question and get a human-guided response for free.
In their early days, search engines worked best when users typed in pertinent words, said Jim Bumgardner, a software developer at Disney who wrote a 1998 guide to using search engines. “Instead of asking, ‘What year did Magellan circumnavigate the globe?’” he said, “I would use the query ‘year Ferdinand Magellan completed.’”
By 2006, search engines had come a long way. But in Jones’ mind, they still lacked human judgment and understanding to answer questions like, “Where can I get a late breakfast in Chicago?” on the first try.
The original version of ChaCha was, like other search engines, tethered to a desktop. But in 2008, Jones launched a text-based service and a voice-based service. People could text CHA-CHA (242-242) or call and leave a message with their question; an answer would be texted back soon after. The business was powered by a network of part-time guides around the country, and it wasn’t long before Coca-Cola signed on as one of its first major advertisers.
“It was a great concept,” said Bill Johnson, CEO of Indianapolis-based Salesvue. “My three daughters grew up using ChaCha for a number of years, often saying, ‘Hey, let’s ask ChaCha.’”
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