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Summary:

Cuil — the heavily backed startup that promised to shakeup the search market — is now looking to put ads on its pages and it’s turning to…

Tom Costello Culi

Cuil — the heavily backed startup that promised to shakeup the search market — is now looking to put ads on its pages and it’s turning to its big rivals to sell them. “We are negotiating with the obvious people, Google (NSDQ: GOOG) and Yahoo (NSDQ: YHOO), and we are going to decide which is going to be the better fit,” Cuil CEO Tom Costello (pictured) tells Investor’s Business Daily. It’s unclear why Cuil is adding ads now. Costello says that the company was concentrating on building up its traffic first. But Cuil has actually attracted very little traffic since its hyped launch last July. Compete.com shows that Cuil had about 160,000 unique users in May, compared to 2 million in its first month. (For the record, Costello disputes that traffic has fallen that much).

As the article mentions, however, Cuil likely did not have enough inventory to sell on its own, which must be a concern to its investors — who have pumped $33 million into the company, including some cash at a $200 million valuation. Says Andy Beal of Marketing Pilgrim: “I understand the need to make money. After all, at some point Cuil will burn through the $33 million funding it raised, but publicly admitting you

  1. This sounds like a pressure move by the VCs. This is why it is not always a great idea or bragging point to chase after VC funding.

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  2. I think we are about to see the beginning of the death spiral for this company. Traffic dropping fast so no real way to make money and site has not changed all that much since their ill-fated launch last year. This is all pointing toward a bad ending imho.

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