Startup Cemetery

A big resource for entrepreneurs and startup owners, in which we have collected and analyzed why +100 big companies have failed. Learn from mistakes, and avoid being part of the 90% of businesses that fail.

ChaCha

Search engine with a live human being

General Information
Category
Software and Hardware
Country
United States
Started
In 2005
Business Failure
Business Outcome
Shut Down
Closed
By 2016
Cause of Failure
Competition
Founders & Employees
Number of Founders
Two
Name of Founders
Brad Bostic & Scott Jones
Number of Employees
Between 51 And 100
Funding
Number of Funding Rounds
9
Total Funding Amount
$96M
Number of Investors
9
Description

ChaCha was a bit of “fresh air” being blown into the search engine industry. Back in 2006 when Facebook was in its infant years and Google had sort of established itself as a frontrunner to being the number one search engine on the Internet, ChaCha arrived seemingly out of nowhere.

In short, what the startup offered was a search engine where you could interact with a live human being - a “guide” of sorts, and then get the guides to manually search for the things that you were looking for on the Internet. So basically you just sat in the comforts of your own home and instead of having to search for things on your own, you could get someone to do it for you. What you did was simply logging on a chat interface and you told the guide what to search for. You could also chat and interact with the guide during the search.

Cause of Failure

To understand why ChaCha failed it’s important that you understand how search engines functioned back in 2006 and the early 2000’s. Back in the day, you couldn’t just type one single word and the search engine would find every, single relevant result, including results ‘near you’, as Google can nowadays. 

No, you really had to dig deep to find exactly what you were looking for. Search engines weren’t as complex as they are now, and their algorithms certainly didn’t do much of the thinking for you. In many cases, you had to manually search at least 3-4 pages of the search engine before you found a decent result, and even then it wasn’t as tailored to your request as it is nowadays. 

If you needed something specific found on the Internet, you needed a librarian who could quickly scout through a number of articles, websites and publications. A lot of the people who really understood how to find information fast on the Internet had a master’s degree because it was so complex and difficult to scour through the tons of information without any proper algorithm. 

However, ChaCha soon got stiff competition. Google released its Panda algorithm back in 2011 that virtually put it as the de facto information source on the Internet. If you searched for something on Google, you would be lucky to find results from sites like ChaCha, Ask.com, and Answers.com. They all got pushed further down. 

Not only that but at its peak, ChaCha had 55,000 virtual employees. They faced big management problems and there were even some cultural issues they had to take care of as well. The costs of hiring people to manual do research simply became too high, when comparing them with the results you could get from Google. And in addition, it became more difficult for the guides to give proper answers on subjective matters like politics, religion and so on. 

Ultimately, hiring people to manually search and give answers to questions wasn’t a sustainable project when Google offered the same thing, only through a simple online search.

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