Redeye VC

Josh Kopelman

Managing Director of First Round Capital.

espite being coastally challenged (currently living in Philadelphia), Josh has been an active entrepreneur and investor in the Internet industry since its commercialization. In 1992, while he was a student at the Wharton School of the University of Pennsylvania, Josh co-founded Infonautics Corporation – an Internet information company. In 1996, Infonautics went public on the NASDAQ stock exchange.

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Google wants your voice...

Ursula_2 Is there really something for nothing?  Almost all free services (whether it be network television, online search, or free directory assistance) offer something for free to consumers because it is being subsidized by third-party advertisers.  That’s nothing new or surprising. 

As an investor in Jingle Network’s 1-800-FREE411 service, I’ve spent a lot of time thinking about Google’s free directory assistance offering – and wondering why they are offering it without any advertising.  Why would they take on that cost (including the toll free call + call completion + SMS cost) for nothing?  Is it just to gain market share, or is there another reason?  It was only after I read Tim O’Reilly’s recent blog post, that the answer hit me: Just like the witch Ursula in the Little Mermaid, Google wants your voice.

Take this quote from Mike McCue (CEO of TellMe) from February of 2007 (just two months before Microsoft bought TellMe):

“…our search index is better than Google's right now. The grammars that we have -- we do about 10 billion speech utterances a year. So what we are able to do is make the speech recognition system smarter and smarter. And that is something that Google can't get until they get that similar kind of traffic. How are they going to get that traffic? It's a chicken-and-egg problem.”

So is Google collecting our utterances?  It appears they are – check out Google’s 411 Privacy Policy:

“We also collect and store a copy of the voice commands you make to the service, so we can audit, evaluate, and improve the voice recognition capabilities of the service.”

Assuming each call has four utterances – and costs 3 cents each on average – then it would cost Google about $8M for 1 billion utterances (or $80M to match TellMe’s 10 billion utterances).  A bargain compared to buying Tellme for $800M.  I agree with Tim O’Reilly’s conclusion that Google’s launch of a directory assistance product was accelerated (and is driven) by their desire to compete with Microsoft.

But one thing Tim didn’t discuss is the privacy implications of Google’s actions.  Google is recording and storing voice prints of all users - and it's not a stretch to imagine that they are matching them up to caller-id numbers to build out user profiles.  And this is very valuable data to have.  Collect enough voice signatures and you can tell if a caller is a male or a female – and possibly even detect where they are from by their accent. 

And Google’s privacy policy lets them save your recordings for an undisclosed period of time.  Should Google own your voice?  What privacy issues does that raise?  All of the recent   controversy   about Google’s privacy policy doesn’t even contemplate them archiving your voice.  Given the high level of concern about Google’s retention of text search logs, I imagine it won't be long until privacy advocates focus on this as well.  [Insert shameless plug here -> If you don’t want your voice recordings saved, feel free to call 1-800-FREE411 -- they don’t store any voice recordings…]

I think it’s important for consumers to recognize what they are “paying” for a free service.  With 1-800-FREE411, you’re “paying” by listening to their advertisements.  With Google, you’re paying by giving them your voice.  At least Ursula clearly disclosed her bargain to Ariel.

Comments

Andy Nardone

Talking your book, that's understandable. But as written, this is nothing more than fear mongering. Shouldn't you flesh out a scenario or three where this could come back to bite the user in the ass? I'm unconvinced. Truth be told, I've switched my information speed dial from Free411 to Goog 411. Its only been a few weeks but the results are compelling.

Anonymous

Josh, I love your posts but this seems like a post of frustration over Goog 411's considerable challenge to your portfolio's Free 411.

Consumers have no problem handing over their phone number, email, and home address for less useful things than free 411. I think it's a safe bet that they won't mind giving their voice considering that anyone who has called a call center has been recorded.

Kiko got hit by a stray Google bullet, too. It happens.

Joe Agliozzo

To repeat an earlier post I made to your blog a few weeks ago re Free 411 (which you deleted):

Google's 411 service is clearly superior to Free 411. I was a regular user of Free 411 and was resigned to the surly operators and spotty results (the service often doesn't have numbers of local businesses and the operators claim: (1) "it doesn't exist" or (2) "well you're not getting it sir, it may exist, but it's not in our directory") because I hate paying $1.50 to my cell phone company. I was even willing to put up with the often completely untargeted ads that the service plays prior to giving the number when they in fact have it.

However, Google's service (so far) has been (a) completely automated (no live operator) and (b) incredibly comprehensive. In direct comparisons (asking for the same listing), where Free 411 has no listing, Google has hit it right on the head, first time, completely automated.

Further, Google has my permission to retain my "voiceprint", etc., and when they inevitably tie in Adwords I will be happy to listen to a quick spot as well.

As you usually so insightfully point out, consumers don't care about this stuff, they care about "the power of free", and Google will now not only "reduce a market by 10x" but probably also reduce Free 411's market by "10x". (Apologies for using some of your own buzzwords/catchphrases, but in this case they seem appropriate!)

If your/Free 411's strategy to fight Google is to use "privacy" concerns, you're dead meat (and I think you know that). What your team needs to do is to make their product better. Better VR, higher quality of live operator (maybe pay more for your call centers?), buy some more directory listing information and make your ad targeting system better. The potential for this biz is there (people hate paying $1.50) but now that you have a competitor, you simply have to improve your product, rather than trying to scare people.

BTW, I have no connection to Google, call centers, directory listings or anyone/anything else in this business. Just offering my views as a consumer of the services and a somewhat experienced tech entrepreneur.

Gus

Very good post.

The best analogy I can put on this is that we are entering the top of the second inning and Microsoft is coming to bat.
I think it is pretty clear where this is heading..... AND, this is a round robin tournament.

Srini

I agree with Joe's point - many people won't care much for the privacy issues on the voice snippet storage.

There is a huge untapped value in local search, both on consumer and merchant facing sides. Jingle clearly has an advantage, having built a position. Google's move creates an inflection point, further validating your initial beliefs and creating opportunities.

There are many ways to effectively compete - providing better quality and value to consumers and merchants. Starting with storing voice snippets for better recognition, offering better completion rates with selective manual intervention, offering enhanced merchant services, and reducing the annoyance of ads upfront.

Really need to take a strategic and longer term view towards this space, especially in light of Google's announcement.

Tech Untangled

Very insightful article. However, "Google is recording and storing voice prints of all users - and it's not a stretch to imagine that they are matching them up to caller-id numbers to build out user profiles. ... Collect enough voice signatures and you can tell if a caller is a male or a female ..." is actually a stretch.

Knowing whether a caller associated with a phone number is female or male is of little value when there are no voice ads (and phone numbers change) and there's no way to link the information back to Google's mainstay properties. This is where other methods make a lot more sense. For example, with Google's recent acquisition of Grandcentral, I posit that now Google has all the information to tie users Search, Email, GTalk and other profile information with *MULTIPLE* phone numbers. See http://techuntangled.com/what-could-grandcentral-do-for-google

At the supposed acquisition cost of $50 million, this is a much easier and much cheaper way to get all that info. It's pretty straightforward to get gender information from registration although some users may fake that info.

hermes birkin

Very insightful article. However, "Google is recording and storing voice prints of all users - and it's not a stretch to imagine that they are matching them up to caller-id numbers to build out user profiles. ... Collect enough voice signatures and you can tell if a caller is a male or a female ..." is actually a stretch.

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