How Search Affects Startup Valuation

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People believe what they see in a search engine result, whether it is true or not. This affects how people react, how they feel about a startup, and whether they invest.

Behavioral Finance: Search to Manipulate Groups of People

People tend to mimic the actions of the group whether the actions are rational or irrational. This is called herd mentality. Stock market crashes are big examples. Manipulation of search results for startups are a smaller, but more common example.

If a startup is of dubious value but enjoys search results reflecting a unicorn in diapers, its valuation can increase because very few people fact-check the search results. The opposite can also be true. A stellar startup can underperform simply because Google arranged search results in a certain way.

Does peoples’ negativity bias drive up searches?

Yes, it does. Put simply, people react to bad things online because of something is known as a “negativity bias”. We tend to react psychologically to negativity more than we do to positivity. Search results react to people’s actions. Thus, negative search results tend to rise. This phenomenon can not only kill a startup, it can also be used to destroy a startup.

Dogs Write the Content

There was a time when it was more difficult to manipulate the narrative. Today, “on the internet, no one knows you are a dog,” is the rule of the day. Most people get their content the same way, through many platforms that are all dependent on the third-party content of dubious reliability. Some of the more vicious dogs know they can drive search behavior, and they do. Some are at work 24/7, 365 days a year.

Can PR agencies destroy company and personal reputations?

Agents of Darkness Manipulate Search for Gain

It is an unfortunate fact that some PR agencies exist solely to sink the reputations of people and companies. A negatively spun story is carefully placed, after which supporting evidence is also planted. Flimsy citations are embedded, and the article gets juiced with aggressive SEO. Its sole purpose is to deflate public perception before an important company event.

Political Parties

Political parties secretly buy hundreds of domains readying content and commentary to drive audiences toward planted negatives about rivals. A European political party once spent four years buying domains and developing content for that very purpose.

Governments

The NSA has also been involved and was exposed by Edward Snowden via the Joint Threat Research Intelligence Group. Manipulation of the herd by altering content and search results is done by governments, politicians, corporations, hotels, and even startups, and others.

Startup vs. Startup

Venture and equity firms know that automated bots are frequently used to funnel fake traffic to websites with the purpose of inflating their true audience numbers, and so IP logs must be checked as part of the due diligence process. Reviews are engineered as well, but these are more difficult to spot. Stories are planted, journalists paid off – again, aspects which are tough to spot if done carefully.

How do startups sink their competitors?

Startups can quietly sink their competitors the same way that boutique hotels destroy the reputations of nearby larger hotels in order to gain market share. It starts out as a bad review or two, and can eventually lead to full-blown negative content and SEO campaigns.

Startups are More Vulnerable

The pursuit of success breeds competition of the darkest kind. Startups are most vulnerable because the strength of their online brand does not yet have the ability to thwart attacks by competitors seeking advantage, or venture capitalists doing whatever they can to drive down a valuation before a planned purchase.

A single teenage misstep by a startup founder, such as an arrest for drunk driving, or illegal drug possession, though long buried, will suddenly make a dramatic reappearance just before a funding round is about to close. Reviews will suddenly start to slide. A dubious, but a popular story about the questionable nature of the startup’s intellectual property will emerge. Sometimes by chance, other times by design.

How can my startup avoid vulnerability?

What to Do? Practice Safe Search

Starting out early by developing an aggressive, ethical online protection strategy is the best way startups can have their results monitored. They should also take action to develop a glowing online persona, and protect it from aggressors and any other kind of misfortune. Reputation X has been helping and protecting startups for over ten years. So if the dark side tries to move against a ReputationX managed site, they have no joy.

 

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gabby Revel
 

Gabby is a freelance writer and editor with over 10 years of experience writing about personal finance, beauty, and fashion as well as other lifestyle topics. When she’s not writing, Gabby likes traveling and exploring the world. And she loves cats.

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