An Olympic Return

The Olympics are an incredible event that is hosted once every four years and it brings together nations from all over the World in friendly competition to measure human achievement. These Olympics in Beijing, China have seen some of the most impressive feats capable by all of mankind. Take for instance, Usain Bolt, who ran the 100 meter dash in 9.69 seconds blowing away the rest of the field and establishing a new World Record. How can you talk about the Olympics without mentioning Michael Phelps and his 8 gold medals in swimming? How about the impressive performances by US gymnasts Nastia Luikin and Shawn Johnson in the women's all-around competition.

After just 11 days of competition, I've been truly impressed by the Olympics and think that this one in particular will have significant long-term impact on the World and I feel like it is already changing it in just a short time.

Anyway, aside from the remarkable performances by the athletes and the most amazing opening ceremony probably in the history of the Olympics and perhaps the history of mankind, I wanted to delve into the financial impact that the Olympics has on the World. A huge reason why the Olympics have become the show that it has is due to large investments for big multi-national corporations around the World.

Take for instance the Olympic logo. In order to become an "official sponsor" of the Olympic games and therefore be able to market your company as such, it will cost approximately $50 Million. If companies don't want to spend this enormous amount of money over a 17 day span, they can also become a "partner" of the games in which they can display the logo of the Olympics in their marketing campaigns, but they will need to also put the "USA" or any other country along with it. This typically will cost companies around $25 Million.

As you can see there is a significant investment that companies who decide to involve themselves in the Olympic games undertake. However, it really wouldn't make much sense for these companies to spend exorbitant amounts of money if there weren't any payoff involved.

Intuitively, it makes good sense to sponsor an event like the Olympic games. For example, sponsors get an enormous amount of global reach in their advertising campaigns during the course of the games. This is true of television commercials, internet advertising, as well as, advertising at the Games themselves. This gives companies a great deal of exposure to a World market.

Additionally, the advertising campaign makes sense if you believe that advertising actually works. What I mean by this is that the Olympic games are a fun event that people have positive connotations connected with it. By linking those positive connotations of the Olympic games with the corporation that decides to sponsor the games, people become more likely then to associate positive images with a particular corporation. Ultimately, this is intended to drive revenues and eventually increase profits.

Increasing profits is the name of the game and Olympic sponsorships are a huge investment and it would thus only make good sense for companies to back this event if it ends up benefiting the company.

Therefore, I did an analysis of the 2004 Summer Olympics held in Athens, Greece and looked at 9 companies in particular that sponsored the games. Each company were primary "official sponsors" in varying categories. I looked at various financial indicators since 2004 through 2008 including their revenues, EBITDA, stock price, current ratio, and leverage ratio. I wanted to evaluate whether an Olympic sponsorship effort had any significant return or increase in growth over subsequent years.

In order to do so, I compared my 9 companies that sponsored the 2004 Summer Olympic games in Athens, Greece with 48 of the top 50 Fortune 500 companies in 2008. I consider these companies to be a sufficient benchmark on which to gauge economic progress.

• Methods

The first thing I decided was which Summer Olympics to look at in particular. I chose the 2004 Athens, Greece games, because I think that the sizable investment that companies have to make in sponsoring the games ought to have quick returns, defined as those that significantly impact financial data of a company within 4 years.

Next, I found the companies that sponsored the Summer Olympics in Athens, Greece. I found a website called, INVGR.com (Invest in Greece), which itemizes the companies that sponsored the Olympic games in Athens. According to the website, the sponsors invested over $600 million in the games.

Based on this list, I then picked companies that were publicly traded and had readily available financial data. This ended with our current list of 9 companies and their category which include:

1. Hellenic Telecom (Telecommunications)
2. Heineken (Brewery)
   
3. Coca-Cola (Non-alcoholic beverages)
4. Kodak (Film/photography and imaging)
   
5. McDonalds (Retail Food Services)
   
6. Samsung (Wireless Communications)
7. Time Warner (Periodicals/Newspapers/Magazines)
   
8. Xerox (Document Publishing, Processing, Supplies)
   
9. Shell (Petroleum Products)

After determining these companies, I then looked up their financial data since 2004. All financial data is courtesy of Google Finance and all stock quote information is courtesy of Yahoo! Finance. Samsung's financial data was taken directly from their Annual Reports for 2004 through 2007.

The financial data includes measures for the current ratio of each company and leverage ratio for each company. The current ratio is found by dividing the current assets by the current liabilities and is a measure of a company's ability to pay its short term liabilities and its capacity to turn products to cash. The leverage ratio is a measure of the financial leverage of a company and gauges its ability to meet financial obligations. This ratio is found by dividing total assets by equity.

After performing the initial analysis of Olympic Sponsor companies, I then needed to benchmark my results against an average. I decided to use the top companies in the Fortune 500 List as my benchmark because of its inherent diversity of companies. In addition, the companies on the Fortune 500 list typically perform well and if I wanted to see if companies perform unusually well this would be a good group to compare it against.

I took the top 50 companies of the Fortune 500 List in 2008 and compared their revenues and stock prices since 2004. My sample included only 48 of the top 50 companies due to mergers and acqusitions that had occurred since 2004. I decided to leave these two companies out, because the merge may have inflated or slowed growth.

• Results

• Compound Annual Growth Rate (CAGR) Revenue

Since 2004, the 9 companies that sponsored the 2004 Athens Summer Olympic games had an average CAGR of 5.4%. The company with the highest CAGR was Samsung. Their CAGR was 17.7% and went from revenues of $55.2 billion in 2004 to $106.0 billion in 2007. The company with the lowest CAGR was Kodak. Their CAGR was -6.6% and went from revenues of $13.5 billion to $10.3 billion.

Compared to our benchmark of the top 48 of 50 companies in the Fortune 500, these results are dissapointing. The Fortune 500 companies had an average CAGR of 11.0% since 2004. The company that had the highest Revenue CAGR since 2004 was The Goldman Sachs Group, 30.1% and went from revenues of $23.6 billion to $88.0 billion. The company with the lowest Revenue CAGR since 2004 was General Motors, -1.4% and went from revenues of $195.6 billion to $182.3 billion.

Additionally, if we evaluate each sample's standard deviation we can determine a range in which we would most likely find 68% of the companies in each sample by looking at +/-1 standard deviation.

The Olympic sample had a standard deviation of 6.3%, which determines a range for Revenue CAGR for companies sponsoring the Olympic games as between -1.0% and 11.6%. The Fortune 500 sample had a standard deviation of 7.5%, which determines a range for their sample of 3.5% to 18.5%.

• CAGR Stock Price

Since 2004, the 9 companies that sponsored the 2004 Summer Olympic Games in Athens had an average CAGR for their Stock Price of 7.5%. The best performing stock was McDonald's which had a CAGR of 17.9% and the worst performing stock was Kodak who had a CAGR of -5.4% for their Stock Price.

The top 48 of 50 Fortune 500 companies had an average CAGR for their Stock Price of 7.1%. The best performing stock was Valero Energy which had a CAGR of 35.6% and the worst performing stock was The Ford Motor Company who had a CAGR of -12.9%.

To determine a range in which we would most likely find 68% of our sampled companies we take a look at standard deviations. The standard deviation for the sponsoring companies was 8.2%, which defines a range of -0.7% to 15.7% CAGR for stock price. The standard deviation for the Fortune 500 companies was 10.1%, which defines a range of -3.0% to 17.2%.

For further comparison, we can look towards three widely used indeces in the United States Stock Exchange, the Dow Jones Industrial Average (.DJI), NASDAQ (.IXIC), and S&P 500 (.INX). Since 2004, the Dow Jones Industrial Average has had a CAGR of 3.8%, the NASDAQ has had a CAGR of 3.0%, and the S&P 500 has had a CAGR of 4.0%.

• CAGR EBITDA

CAGR for EBITDA was only evaluated for the sponsoring companies. On average, the group's EBITDA had a CAGR of 2.9%. The highest performing company in terms of EBITDA was Time Warner, who achieved a 12.0% CAGR for EBITDA. Time Warner went from an EBITDA of $6.1 billion in 2004 to $9.6 billion in 2007. The worst performing company in terms of EBITDA was Kodak at -22.0%. Kodak went from an EBITDA of -106 million to -235 million.

• Revenue Percentage Growth and Year over Year

The 9 sponsoring companies of the 2004 Summer Olympic Games grew on average by 7.5% from 2004 to 2005, 5.7% from 2005 to 2006, and 8.7% from 2006 to 2007. Between 2004 and 2006, Samsung grew the most each year. In 2006 to 2007, Coca-Cola had the highest percentage growth in revenues. Kodak was consistently the company that performed the worst from 2004 to 2007. Aside for a -0.1% growth by Xerox between 2004 and 2005, Kodak was the only company that had negative growth over this period.

By keeping the 2004 revenue of each company constant, it can give an idea as to how much the company grew over the four year period. On average for the group, revenues increased by 7.5% in the first year, by 14.4% by the second year, and by 25.2% by the third year.

• Current and Leverage Ratios

In order to evaluate current and leverage ratios it is best to take a look at them as they deviate over the four sampled years. Overall, the average for the group's current ratio deviated by 0.146. The largest deviation in Current ratio was 0.491 by McDonalds. The smallest deviation was by Shell which was 0.079. The average current ratio for the 9 sampled sponsor companies over the four year period was 1.20.


The average deviation for leverage ratios was 0.515. The largest deviation was by Kodak, 2.912, and the smallest deviation was by McDonalds, 0.046. The average leverage ratio for the 9 sampled sponsor companies over the four year period was 2.83.

• Conclusion

Companies will pay a tremendous amount of money in order to sponsor the Olympic games. Marketing campaigns and rights to the Olympic rings can cost in excess of $50 million. With such a large investment, it would seem strange for companies to not profit from it.

Based on the financial research of 9 sampled companies that sponsored the 2004 Summer Olympic games held in Athens, Greece, there is no significant benefit to sponsoring the Olympic games.

In terms of revenues, it appears as though those companies that sponsored the Olympic games actually lagged behind. Olympic sponsors had a CAGR of 5.3% since 2004, whereas the benchmark for this research (48 of the top 50 Fortune 500 companies) had a CAGR of 11.0%. This would suggest that the investment in the Olympics is unfounded.

However, when comparing stock price CAGR, Olympic sponsors outperform the benchmark slightly, 7.5% versus 7.1%. This, however, is very close and shouldn't be seen as a significant difference. EBITDA gains for sponsoring companies, 2.9% CAGR, further indicates the lack of impact that the Olympics has on the profitability of a company.

Current and Leverage ratios practically stay in line and there is no significant jump in these financial categories.

However, it is interesting to note that companies that invest in the Olympics typically have a strong stock return. As of January 1, 2008 the 9 sampled companies were up 50.8% on average, with the highest returners, McDonalds and Hellenic Telecom, up 127.5% and 117.4% respectively. It is also important to point out how companies who sponsor the Olympics have strong revenue growth. Although our sampled group didn't outpace our benchmark, the revenue growth after four years (without Kodak) is on average 31.3% with the highest growth coming from Samsung, 91.9%, Coca-Cola, 32.7%, and Shell, 33.6%. These are extremely strong numbers and 6 out of 9 companies had in excess of 20% revenue growth.

It's important to remember the larger picture and purpose of the Olympics in general. It's a momentous occasion that brings together the finest athletes in the World to compete together and promote good-will. Companies have the opportunity to benefit from the immense audience that is drawn to the Olympics, but there is certainly no proven formula.

Alternative Modes of Transport: Bus

Several weeks ago, I ran a survey relating to modes of transport between Ann Arbor and Chicago. The impetus for this survey was the result of the spiking oil prices, which have receded since then, but are still staggeringly high. Oil has been creeping up for quite some time. Starting from October of 2007, when oil was $92/barrel, the vast increase started to alarm people (Source).

Since then, it has topped out at $141.71/barrel on June 27, 2008. This is the highest price that oil has ever reached, even in real and inflation-adjusted terms. As of today, August 11, 2008 the NYMEX Crude Futures are at $114.68/barrel, a decrease of 19.1%. With this extreme spike in oil prices has come a lot of other baggage along with it.

For instance, while oil was spiking the economy was also dealing with the ongoing subprime mortgage woes that have truly and utterly paralyzed the American economy in my opinion. The growth outlook for the rest of 2008 is projected to be 0.7%, which is a snails pace when you consider the long term growth trends of the US Economy, and especially now when it is trying to keep stride with China and the growing World economy.

Additionally, the rise in oil prices have effected all things from apples to transportation. The price of food has increased along with oil prices, and transportation costs have spiked because they are linked to oil prices, which has meant that all goods that need to be transported (and that's pretty much everything you consume unless you go to the Farmer's Market in Aurora, Illinois) have risen with it.

Increasing oil prices are never a good thing and compounded on the rest of the economy's troubles, this hasn't been the best economic years in recent time for the American economy.

However, with every cloud there is always a silver lining (or at least I remember hearing that in Kindergarten and I hope and pray that this adage holds up). With rising oil prices, one of the major shifts that could occur is in how people commute. National gas prices for a gallon were in excess of $4 at one point, and this severely hurt demand. For the first time in many registered years, the demand for oil in the US declined as a result of the high price of oil. For the first time this century, OPEC has projected a decline in demand for oil by the year 2020 according to their 2008 World Oil Outlook.

People are simply not driving as much, because they just couldn't afford it. It made sense to me that if people weren't going to drive their own vehicles, they would have to turn to some other means in order to get around (I assume that people are productive and will continue to get out of their homes even if they can't drive their own cars).

So, in order to make this idea a little more tangible for me, I broke it down to a lengthy commute that I typically go on and wondered if people would change their habits due to the rise in oil. I wanted to see whether people would consider taking a bus as an alternative mode of transportation from Chicago to Ann Arbor, where the University of Michigan is, or vice-a-versa.

I often perform this commute. It takes about 4 and a half hours to get from one place to the next and its a pretty simple and easy drive to do. However, with the rising oil prices, the cost of the journey each way was amounting to around $54 (I'm assuming a car that can go 20 miles per gallon at a rate of $4.50/gallon). Anyway, that's a lot of money to have to pay, and that only gets you there. You have to pay another $54 on the way back. So a trip from Chicago to Ann Arbor is going to cost the average person $108 automatically.

There's got to be a better way. That led me to think about alternative modes of transportation. I was immediately led to the idea of starting a bus service that goes between Ann Arbor and Chicago. I hadn't really heard of too many before and I thought the idea to be quite novel. Since thinking this idea up, however, I have come to learn that bus services between Ann Arbor and Chicago is not only plentiful with different bus services but also highly competitive. It was a great idea in principal, but its already been explored. However, I wanted to see what people's propensity towards alternate modes of transportation were as a result of the rise in the price of oil.

• Results

I received 17 respondents for this survey. Therefore, I can't call my results statistically significant, but I like to consider them at least an indication of what people may generally do.

The respondents were composed of 10 males, 6 females, and 1 unknown. The average age of respondents was 24 years of age with a mode of 21 years of age.

I first wanted to gauge how many times people actually frequented Chicago from Ann Arbor during a typical school year. Therefore, I asked them how many times they made the trip in a given school year. The average amount was 2.25 times, with a median of 1.5 and a mode of 1. The most times a person traveled to Chicago was 6 times, and the least amount was 0 (answered by 3 different respondents).

The following graph indicates how these people who traveled to Chicago typically get there. As you can see a number of them Drove there, 80%, and the rest of the 20% was split between bus and train. I find it surprising that none of the respondents replied that they take the plane to Chicago. I realize that the journey is only 4.5 hours by bus, train, or drive, but I have taken a plane in the past and its quite pleasant and very fast.

I then wanted to gauge how the price of oil had affected peoples habits in their everyday lives and how it had specifically affected their mode of transport. According to my results, only 6 out of 17 people had had the price of oil affect any of their spending habits. Quite similarly, the proportion of people who responded "yes" to the rise in oil affecting their habits as they relate to their mode of transportation, 7 out of 17 people, agreed that the price of oil was affecting their habits of transportation.

When I first considered these proportions, they didn't seem all that significant, but both are very indicative of the climate and the present state of the economy. I would contend that people don't typically think about the price of oil when they're picking out their Cheerios at the grocery store, or buying a song on iTunes, but apparently that is the case with 6 of 17 of our respondents. Even more significant, is the fact that 7 out of 17 people have changed their habits when it comes to modes of transportation to accommodate the rise in oil prices. If humans are creatures of habit, oil is mighty powerful in changing those habits.

I also wanted to know what price it would take for people to change their spending habits (if they hadn't already). My results indicate that at a price of $5/gallon (mode), people's habits would most likely change when it came to their respective modes of transportation. Our oil prices came very close to making that number a reality, but as of right now they are most certainly on the retreat, and I believe the national average has dropped well below $4/gallon.

I then gauged whether or not people believed that as prices continued to increase for a gallon of gas, if "alternate methods of transport would actually become a realistic alternative to driving their personal vehicle." My results indicate that 10 out of 17 people believe this to be the case. That is a solid majority, and although these results are statically significant, that is an interesting idea to say the least.

Finally, I presented the respondents with a scenario in which I asked them to consider going to a location called Zanzibar, which was a mere cover for Ann Arbor from Chicago (I'm sneaky). The trip was planned on short notice, and I provided them with time, distance, and cost variables for plane, train, and bus. I then wanted to see what most people would do considering these various constraints.

As it turns out, a huge percentage of people would opt for the bus. According to this study, 76% would take the bus, 18% would fly, and 6% would take a train. I find these results a little overwhelming. I want to attribute these results to bias, but I truly believe that if there was an affordable and enjoyable service that got people from A to B in the same amount of time as driving but at a cheaper cost, I really see no reason why they wouldn't go for it.

There are similar services in New York City that go from Washington, DC to New York or vice-a-versa, and that seems to do very well. It is a comparable distance between Ann Arbor and Chicago as it is from New York City to Washington, DC, and I have taken that bus and I enjoyed the ride.

I calculated that a competitive rate for a ticket from Ann Arbor to Chicago could cost anywhere in the range of $20-$30 for a one way ticket on a bus. I'm not sure what competitors are currently offering, but after factoring in bus rental (or lease), paying the driver, insurance, and cost of fuel, a pretty hefty margin can be attained if you charge a person $20-$30 each way. This kills the rate of $54 if you were to drive your own personal vehicle.

However, when giving the option of using one's own personal vehicle as the mode of transportation to Zanzibar, 9 out of 17 people still would opt to drive. This draws on the habit that people have to drive their cars to get around. There are definitely other ways though, and they can be a lot more cost effective, especially today when the economy is slumping and oil is going through the roof.

• Conclusion

The results indicate that people would be willing to take a bus from Chicago to Ann Arbor in order to satisfy their transportation needs on short notice trips. I am not sure as to how this statistic would vary if time were taken out of the equation.

Although the bus became the number one choice of transportation, the advent of one's own personal vehichle still loomed and was far more widely accepted if given that as an option.

In order for people's transportation habits to change, the price of gas will have to soar to extreme heights, probably in excess of $180/barrel for oil and $5/gallon. The bus transport industry can be very effective and profitable if managed properly.

The Standardization of Time

I've recently gained new and lasting respect for the power of time. I've come to realize that time is my most important and valuable commodity, because it is limited and ever-fleeting. I really started to gain a true appreciation for time when I was traveling around Europe. When I was over there, I realized that the things that I chose to do with my time were important and I had to choose carefully.

At any given moment, I could have decided to be in Prague, Amsterdam, Copenhagen, Budapest, or anywhere else. All I had to do was decide where to be and make it happen. Additionally, while being over there, I realized that no matter where I went, there was always something interesting and fantastic going on that I enjoyed and loved taking part in.

This indicated that no matter where I decided to be in the world at any given moment, I was going to have a great time, so the most important thing to decide was simply where to put my time.

It's a very empowering feeling to know that anything is possible. Anyway, I really feel like I have a greater realization of time and how important it is to my life.

Therefore, I wanted to write about the accomplishment of strandardizing time. I think about how many things a day that are contingent on me coordinating activities with other people, and I think that without a standardized method of discussing our places and locations in the universe (aka, time), then I'm not sure how productive or how much humans could get accomplished.

I think that much of the reason why humanity has progressed as it has over the past couple million years is due to the fact that we have not only figured out a very sophisticated and impressive linguistic understanding of one another, but we've also been able to coordinate our activities based on an agreed standardization of time.

Surely there will be counterarguments from people who can't understand the bigger picture of what I'm trying to convey. You may contend that people don't really agree on the standardization of time because of various things like daylight savings time, especially the case of Indiana in the United States. They didn't agree to daylight savings time until 2005, around 120 years after daylight savings time was first initiated.

However, when you consider humanity's entire existence and then fathom that we only began to think about standardizing time aroung 120 years ago, we most certainly have come a long way in just a couple years.

As for a little history lesson, standardized time in North America was the result of issues relating to train schedules. On October 11, 1883, the heads of the major railroads met in Chicago at the former Grand Pacific Hotel to adopt the Standard Time System. The new system was adopted by most states almost immediately after railroads did so and finally officially adopted by the U.S. government almost fifty years later.

In 2007 the United States enacted a federal law formalizing the use of Coordinated Universal Time as the basis of standard time, and the role of the Secretary of Commerce (effectively, the National Institute of Standards and Technology) and the Secretary of the Navy (effectively, the U.S. Naval Observatory) in interpreting standard time (Source).

Anyway, I feel like so much hinges on this ability of ours to coordinate activities. It makes us work together as a species, which has allowed us to progress rapidly and reap the benefits of this universe.

I think about how the whole world was watching the opening of the Beijing Olympic games last night. This event had been seven years in the making, and everyone knew exactly when and where it was going to be, even though in Chicago, Illinois (where I was), being thousands of miles away from it didn't make a difference.

I think about how I caught a train yesterday. I got there a little earlier than I normally do. I had to sit around for about an hour and a half before the first train came to where I needed it to go. What I found remarkable was that while I was sitting in the train station, for the first hour and twenty minutes before the train came, I was practically by myself. There was the odd person who walked through the train terminal, but for the most part I was just there sitting by myself.

However, within 10 minutes of the train arriving, hundreds of people began showing up. Their actions all coordinated by a simple time mechanism. It was no coincidence that all of these people showed up at the same time. They had all taken into account when they needed to be somewhere, and because humans have generally agreed on a standardization of time, hundreds of people could simultaneously coordinate their activities independently.

It just boggles my mind. Your time is special, use it the best way you know how.

The Search is On

I want to make reference to the sudden resurgence in the online search engine market that I am finding quite titillating at the moment. Within the past two weeks I have become aware of two equally impressive and significantly different search engines.

The first one that caught my eye was referred to a friend of mine who attends the University of Illinois (who is typically on the cutting edge of most technological innovations which I am continually in awe of). The website is called Scour and as the name suggests the website is a search engine that in effect “scours” the Internet combining the powers of Google, Yahoo!, and MSN. Who cares! You may think that this a show of hubris, attempting to topple Google and Yahoo! using their own technology.

Well, where Scour is slightly different is in that it pays you to search. I’m not sure of how this works exactly, but the best understanding I have of it is that you search enough times, accumulate enough points, and then they set you up with an online American Express card. Some people were weary that they didn’t ask for an address, but just because you don’t have an address doesn’t mean you can’t surf the Internet (at least these days).

There are several problems with this search engine, however, that I think will stop it from becoming the next big thing. First, the search itself is quite a lengthy process. When I say lengthy I mean it takes around 3 or 4 seconds to find the information you’re looking for. In the age of Google and Yahoo! blasting at relevant results in mere split-seconds, 3 or 4 seconds turns into an eternity very quickly. If they want to really compete with the big boys, they’re going to have to drastically lower this wait time.

Second, getting paid for search is great, but in order to reap any of the benefits you have to attain something ridiculous like 6400 points. In order to get a point you can do several things. You can search, this will result in 1 point being added to your total. So, getting to 6400 searches won’t take that long I guess, at around 20 searches a day for a year that’s an American Express card. Then again, when I look at my own Google search history (a very nice feature if you ask me), I’ve searched 4923 times in the past year. So, I suppose it is possible.

Aside from merely searching, however, you could also do two of the other options. You can vote on the relevance of your search by clicking the thumbs up or thumbs down icon. This will generate 2 points. Wow, now we’re talking. That’s going to cut my time in half in order to get that American Express card!

Another feature you’re definitely going to want to make use of if you’re on the 6400 point track is the comment section for each search result. By inputting a comment for a particular search this will yield 3 points. My goodness, this American Express card doesn’t seem so far off anymore.

I have some theories about these additional features that Scour has made use of. If you recall back to my post about Doogle, in which I explored ideas about creating the next generation search engine, I made it clear that the next generation search engine would have both the analytical capabilities of Google’s algorithm and also the compassionate understanding of humanity. The search engine must be both flawless in its approach to digging up data on the Internet, but it also has to have a human component.

I think that if Scour were smart, and the more I think about this the more I realize that they must be doing what I’m about to explain and are indeed smart, they would start compiling a database of the information that is being input into it at the moment. For instance, when someone searches “cat” using Scour, people can vote on and comment on the most relevant.

However, how often does someone actually search for something as trivial as “cat”? I’m not saying there is anything wrong with this search term, rather that searches are becoming more complex, and typing in the string, “how can I get from Memphis to Cincinnati by taking a plane and then a bus,” are probably becoming far more commonplace.

Google has excelled in simplifying search, and perhaps that is where it will find its limits. Typing in more complex strings don’t need algorithms, but rather human input to reach and arrive at an answer. At this point in our computing ability, no computer can truly answer some complex human queries in the most relevant way.

That is why I think Scour is smart to begin using everyone’s favorite search engines. Anyone who is anyone, literally almost anyone on the planet with access to the Internet, has used one of the three search engines that Scour employs. This makes people feel comfortable when they are searching. They see those happy symbols of accurate searches and feel warm on the inside.

Every time Scour gets a really complex search query and users put a thumbs up or thumbs down and comment on why the search they went to was more or less accurate, they can put another coin in the piggy-bank.

I think what they will eventually do after probably a year of compiling enough data is release another search engine that they claim to be the most accurate in the entire world, and you know what, they’re going to be right.

They’ll have both elements to the next generation search engine. Not only will their searches be faster (because it will be their own technology and draw from their own servers, etc.), but it will also be absolutely incredibly relevant, especially when it comes to asking it insanely hard questions.

I think that there is a tremendous amount of potential to Scour and they may not topple the giant that is Google and Yahoo!, but heck, I think that they’re going to give them a run for their money.

The second search engine, which I have done considerably less thinking about and know far less about is Cuil.com. Apparently it was just launched within the past couple weeks and is doing fantastically well.

From the little I know about it, it was started by someone Google Executive who started their own company with what they perceived to be a better product.

After searching on it for a little, I can see why some may perceive it to be a little better. It provides the results in a far more stylish way. The layout is a little different with three columns of search results that have pictures associated with them and a little more description than the two-liner than Google typically provides.

I have to admit, the website is fresh looking and it is fast and semi-reliable. It will probably have to work out a couple kinks in the next couple weeks if it has any chance of competing.

I also have to commend the designer of the search engine for their idea about grouping information that is relevant to a particular search term. For instance you can type in “University of Michigan” and then the results will provide you with some categories that you can look into deeper if that was perhaps what you were really referring to when you typed in “University of Michigan.”

There are several problems with this. First, it is attempting to predict what you’re searching for and I think that’s a bad strategy for search engines. People typically know what they want, they don’t want to be led down random roads where they fall into an abyss of the Internet garbage that is out there.

Second, who and how is the determination made for particular categories that certain search queries get filtered into? I don’t like people to make decisions about my search habits and Cuil.com is attempting to do this. Not clever. Not Skoda.

Here is why I think Cuil.com is just Google with a pretty dress on, except now Google is more annoying and doesn’t give you what you want.

Cuil.com has nice pictures next to their search terms and sweet descriptions. Wow, these are all wonderful features, but Ask.com tried the same technique and they haven’t move an inch after their initial marketing push to gain market share when they made their changes at first. People want simplicity when they’re searching (unless they’re searching for really complex things, in which you need a more complex search engine like Scour).

The problem with entering into the search engine market right now is that if you’re not significantly better at doing something than Google, you’re not going to be able to take any market share away from them. They have a stranglehold on search. That is because they consistently provide relevant results in a quick and timely manner. That’s a tough practice to leave.

Cuil.com does the same thing. They provide search results quickly. It just looks a little different. It doesn’t really do anything much better.

Then again, I still need to do some searching with Cuil.com, and I could be wrong about all of these things. But, I just don’t know why I would stop using Google to use Cuil.com, there isn’t really anything in it for me. I’m so comfortable with my sweet sweet Google, for me to use anything else would take something drastic (or do something far better like solve my complex search needs).

• Conclusion

Scour.com is a search engine that uses the powers of the three largest search engines on the Internet to find the most relevant search results. However, through their implementation of voting and comments they are adding a human element to search, which I believe they will direct into a future enterprise that will be unbelievably helpful when dealing with complex searches. They also pay you for your hard work, so that’s not bad.

Cuil.com is a new search engine that has a fresh look and apparently the largest database of archived Internet pages within its system of any search engine, even Google. While this is a mighty feat, the Internet was big enough as it is, and having a couple hundred million more pages doesn’t really impress me all that much. Additionally, the interface is far “fluffier” than that of Google, which I don’t think provides it with a competitive advantage of any kind.

I think that Scour.com has a huge chance of stealing a ton of “complex” search market share in the coming years. They are building the foundation at the moment. But, like most thinks that attempt to take on Google, both of these search engines will probably be eaten up and fed to one of Google’s many spiders that scour the Internet.

Nobody outsearches the Googmonster!