A brief history of google


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A summary of chapter 1 of the book, Start-Up what we may still learn from Silicon Valley, published in 2007. More on www.startup-book.com

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A brief history of google

  1. 1. © Service des relations industrielles (SRI) © EPFL Fall 2011 Hervé Lebret www.startup-book.comDisclaimer: this is the Google story, not the Google history …some information may be untrue as it comes mostly from the Internet
  2. 2. © Service des relations industrielles (SRI) © EPFL1995 1996 1997 1998 1999 since 2000
  3. 3. The sky seems to be the limit © Service des relations industrielles (SRI) © EPFL
  4. 4. © Service des relations industrielles (SRI) © EPFLYear 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Documents 24M 1.3B 3B 4B 6B 8B 25B?indexedEmployees 8 39 60 284 682 1‟628 3‟021 5‟680 10‟674 16‟805 20‟222 19‟835 24‟400Revenue 0.2 19.1 86.4 439 1‟465 3‟189 6‟139 10‟610 16‟593 21‟795 23‟650 29‟321($M)Income ($M) -6.7 -14.7 7 99 105 399 1‟465 3‟077 4‟203 4‟226 6‟520 8‟502
  5. 5. © Service des relations industrielles (SRI) © EPFL“In the spring of 1995, Larry Page and Sergey Brinfirst met at a social outing in San Franciscodesigned to welcome new applicants to StanfordDoctoral Program.” Despite their differences and not initially working together, they became friends and were quickly known as “LarryandSergey”.Sources: Brainstrom, the news letter of Stanford Office ofTechnology Licensing – vol. 9 – no. 2 – Spring 2000and The Google Story by D. Vise - Random House, 2005
  6. 6. © Service des relations industrielles (SRI) © EPFL Garcia-Molina, Brin‟s adviser, recalls how it all started. Page came into his office one day in 1995 to show him a neat trick he had discovered. The AltaVista search engine could show what other sites linked to them but did not exploit this link information; Page suggested it would be a good way to rank sites. The PageRank system, invented by Larry Page (and named after him) judges a site‟s importance by analyzing outside links to it.Source: Stanford Magazine, Nov. 2004
  7. 7. © Service des relations industrielles (SRI) © EPFLMeanwhile Brin worked on a research project within thedatabase group in associative data mining. Brin worked onways to find specific word combinations that often occurredtogether on the Internet.Later, Page combined his method of analyzing“back” links pointing to a given website with Brin‟sweb crawler, and their combined research movedunder the Digital Library umbrella.Source: Stanford Magazine, Nov. 2004
  8. 8. © Service des relations industrielles (SRI) © EPFLGoogle soon overgrew the bounds of their lab…In 1996, Brin and Page disclosed the technology to StanfordOTL which contacted several internet companies…andcompanies were interested…even one company bid asignificant amount of money, but none of the offers equaledGoogle‟s potential…For the next two years, whilecontinually completing anincreasing number of searches,the technology incubated in theOTL portfolio of technologies. Source: Brainstrom, the news letter of Stanford Office of Technology Licensing vol.9 – nb.2 – Spring 2000 (and www.archive.org for the picture)
  9. 9. © Service des relations industrielles (SRI) © EPFLInterestingly enough, Derwent gave in 2006- 3 patent filings with Page‟s name (2 from Stanford and 1 Google)- 6 patent filings with Brin‟s name (all Google)- Page‟s key patents as US only
  10. 10. © Service des relations industrielles (SRI) © EPFL In 1997, Google has become the De Facto search engine for the Stanford community. Page‟s advisor funds $10k for new computers but Google quickly reach limits in resources. In March 98, Page and Brin try to sell the engine to Alta Vista for $1M but DEC (Altavista‟s mother company) was not “very open to outside technology” Later, with the help of Stanford professors and OTL, they contact Excite and other search engines without success. Page‟s advisor, Terry Winograd, contacts VCs but they are not interested by search engines anymore. Brin and Page, “who have a skeptical view of authority” are frustrated but more determined. Yahoo‟s founder, D. Filo then advised them to take a leave of absence from their PhD and to start their own businessSource: The Google Story by D. Vise Google began in StanfordRandom House, 2005 Gates‟ building!!
  11. 11. © Service des relations industrielles (SRI) © EPFL"Larry and I mapped out a strategy to talk to existing search-enginecompanies to see if there was any interest in licensing this," said LuisMejia , an OTL senior licensing officer.Steve Kirsch, CEO of search engine Infoseek, met with them a couple oftimes and made a verbal offer. Mejia declined to name the amount, butsaid: "It wasnt sufficient for us to feel he was really committed to it."(Kirsch told the Wall Street Journal that he had offered $250,000.)Yahoo declined to meet, Mejia recalled.He contacted venture capitalist Vinod Khosla, who set up a meeting athis firm, Kleiner Perkins, with Excite, one of its portfolio companies."There was a lot of disbelief in what the capabilities of the page-ranksearch algorithm were," Mejia said. "They werent convinced it was worthmuch. They decided they werent interested in licensing it.Mejia doesnt recall being particularly thrilledabout Googles prospects. Source: Carolyn Said, San Francisco Chronicle, August 2004.
  12. 12. © Service des relations industrielles (SRI) © EPFL Tip 1: it is very important to find great people you are compatible with. Tip 2: There is a benefit from being real experts. Experience pays off.Source: Stanford Technology Ventures Programme Tip 3: Have a healthy disregard forstvp.stanford.edu the impossible. Stretch your goals. Tip 4: It is OK to solve a hard problem. Solving hard problems is where you will get the big leverage.
  13. 13. © Service des relations industrielles (SRI) © EPFL“We had to buy a Terabyte (which costs about $15,000) …and put it on our credit cards…” In August 1998, thanks to David Cheriton, a Stanford professor, Page and Brin meet Andy Bechtolsheim, founder of Sun Microsystems and working at Cisco.After an hour, he makes a $100,000 check to “Google Inc.” withoutknowing the company does not exist yet.In October 1998, Page and Brin convinced a friend to rent a Garage andspare room for $1700/month. They quickly added 8 phone lines, a cablemodem and a DSL line. After two months, they were 8 people and theymoved again in February 1999.Bechtolsheim, Cheriton, Jeff Bezos (Amazon‟s founder)and a few other angels invested a total of $1Min the A round in 1998.
  14. 14. © Service des relations industrielles (SRI) © EPFLI am sure Google‟s first office will soon become a legendas it was a Garage. In fact Google had bought it!
  15. 15. © Service des relations industrielles (SRI) © EPFLFrom a first office in a garage good for small team, … they moved to 165 University Ave. in Palo Alto after 5 months. This is thehome of many other startups …then inincluding Logitech and Paypal… Mountain View… … and finally to the GooglePlex in 2003
  16. 16. © Service des relations industrielles (SRI) © EPFLIn 1994, a PhD student in the database group; asked if he would joinYahoo! as employee No. 1, he laughed: “You couldn‟t pay me enoughmoney to work for a company called Yahoo!”In 1995, worked with Brin on the process of finding pieces of informationthat commonly occur together. Brin wrote his “crawler” program. Lent didnot stick around, a decision he confesses he regrets. But in early 1996,Lent explains, “We all said, „There will never be another Yahoo!‟ Theirresearch seemed purely an academic exercise.”He got a call from Microsoft in 2003, telling him the company wanted “tokill Google,” he recalls. He declined.In 2004, he has not given up: he has an algorithm he calls “DynamicPageRank,” and he is CEO of Medio. “I need to give it a try. Google andYahoo!, be warned.” Did anyone say, “There will probably never beanother Google?”Source: Stanford Magazine, Nov. 2004
  17. 17. © Service des relations industrielles (SRI) © EPFL
  18. 18. © Service des relations industrielles (SRI) © EPFLAfter raising $1M with angel investors, Google nearly went out of moneyquickly. The founders also wanted to keep control of their company, sothey built the strategy to attract the best 2 VCs so that one wouldneutralize the other one. Thanks to their angels, it worked!!!This “divide and conquer” strategy enabled Google to raise $25M in May1999 with - John Doerr of Kleiner Perkins (Amazon, AOL, Compaq, Genentech, Sun,…) - Mike Moritz of Sequoia (Apple, Cisco, Oracle, Yahoo, youtube,…)Another $15M of round C with Yahoo, Eric Schmidt andmany others (Arnold Schwarzenegger, Tiger Woods, …).Schmidt, the new CEO, joined in 2001 before the companywent public in 2004 (raising $1.6B)
  19. 19. © Service des relations industrielles (SRI) © EPFLGoogleware is the nickname given to Google‟s very powerfulcombination of Hardware and Software.Founders are known to be extremely smart … and pragmaticToday, Googlewaremeans tens of 1000‟s ofsimple PCs
  20. 20. © Service des relations industrielles (SRI) © EPFLA technology first …. apparently gives the right answer… … and even more
  21. 21. © Service des relations industrielles (SRI) © EPFLA technology first …. a business model second advertising in the right column is the secret sauce
  22. 22. © Service des relations industrielles (SRI) © EPFL advertising on others’ sites is another revenue sourceNB: this example does not imply Google is Bluewin ad provider.
  23. 23. © Service des relations industrielles (SRI) © EPFLLarry Page certainly has a business-oriented mind,Larry may have been helped by his old brother, Carl, whofounded eGroups and sold it to Yahoo.Sergey has qualities in cost cutting and it is known Googleis not wasting money. They made cheap computers; theydid not spend a lot on marketing. Omid Kordestani, their first VP Sales was previously VP Sales at Netscape and was instrumental in designing the business model.
  24. 24. © Service des relations industrielles (SRI) © EPFL “Genius is 10% Inspiration and 90% Transpiration” Picasso? Einstein?I was recently reminded that nothing comes without hardwork, even at Google.At Google, there is free food; one of the early hires was acook. Working environment is nice…… but this gives more pressure to spend long hours at work.“It was common to work 6 days a week”. You‟d better havethe energy and not too much family or private commitments.And be young?
  25. 25. © Service des relations industrielles (SRI) © EPFLIt is well known that it is extremely difficult to keep on beinginnovative.Google has taken creative approaches: employees work insmall teams (3 ideally) and are free to use 20% of theirworking time on their personal projects that may becomefuture Google products.Google News, Froogle, Gmail have roots in this 20% time aswell as .And they do not seem to lose their humor…
  26. 26. © Service des relations industrielles (SRI) © EPFLthe “Google” name comes from … GOOGOL = 10100The Google‟s people seem to love numbers:at IPO, they planned to raise $2‟718‟281‟828 e=2.718281828at IP0, 14‟142‟135 shares were finally newly created 2= 1.4142135at their secondary, they sold 14‟159‟265 shares… =3.14159265
  27. 27. © Service des relations industrielles (SRI) © EPFL Cap. table at Series A Cap. table at Series B Shareholder Shares Ownership Shareholder Shares Ownership Brin 38490304 42% Brin 38490304 27% Page 38490304 42% Page 38490304 27% Bechtolsheim 1600000 Bechtolsheim 1600000 Cheriton 1600000 Cheriton 1600000 Bezos 1600000 Bezos 1600000 Shriram 1600000 Shriram 1600000 Stanford 1‟842‟000 1.3% Stanford 1‟842‟000 2% Others 7‟118‟782 Others * 7‟118‟782 Series A 15360000 11% Series A 15360000 17% Kleiner Perkins 23893800 17% Total 92340608 Sequoia 23893800 17% *: others include a number of angles not identified Series B 47787600 34% Series A: $960k Total 140128208 Capitalization: $5.7M Series B: $25M Capitalization: $70MNB: data compiled from Google‟s S1 documents but numbers give only an idea,precise data are not known
  28. 28. © Service des relations industrielles (SRI) © EPFL Cap. table at Series C Cap. table at Series IPO Shareholder Shares Ownership Shareholder Shares Ownership Brin 38490304 26% Brin 38490304 14% Page 38490304 26% Page 38490304 14% Bechtolsheim 1600000 Bechtolsheim 1600000 Cheriton 1600000 Cheriton 1600000 Bezos 1600000 Bezos 1600000 Shriram 1600000 Shriram 1600000 Stanford 1‟842‟000 1.2% Stanford 1‟842‟000 0.6% Others 7‟118‟782 Others 7‟118‟782 Series A 15360000 10% Series A 15360000 6% Kleiner Perkins 23893800 16% Kleiner Perkins 23893800 9% Sequoia 23893800 16% Sequoia 23893800 9% Series B 47787600 33% Series B 47787600 18% Series C 6‟479‟000 4% Series C 6‟479‟000 2% Total 146„607208 Common (ESOP) 105‟557‟498 36% Eric Schmidt 14‟758‟800 5.4% Series C: $15M Capitalization: $348M Common (IPO) 19‟600‟000 7% Total 271‟764‟706 IPO: $1.67B - Capitalization: $23.1BNB: data compiled from Google‟s S1 documents but numbers give only an idea, in 2005, secondary of 14‟159‟265 shares at $295, raising $4B;precise data are not known Stanford announced they made $336M with Google.
  29. 29. © Service des relations industrielles (SRI) © EPFLObviously the company is very ambitious and many newthings will come.One surprising element is the founder‟s interest in cleanenergies.Another surprising element is the founder‟s interest ingenetics. It seems they may use Google‟s computing powerto develop molecular biology platforms.“Google is teaming up with Craig Venter (of human genomemapping fame) to use Google‟s vast computing power tohelp unlock biology‟s mysteries, and maybe one day to helpyou search through your genes.”Source: The Boston Globe – Nov. 2005 and “The Google Story”
  30. 30. © Service des relations industrielles (SRI) © EPFLhttp://www.startup-book.com/tag/google
  31. 31. © Service des relations industrielles (SRI) © EPFLThe Google‟s motto: “Don‟t Be Evil”“They shut down Stanford network once”“They could have begun earlier”Source: Stanford Technology Ventures Programme - stvp.stanford.eduThe company is very paranoid: confidentiality is very high inthe company and employees are very cautious about givinginformation. A lot is unavailable. Many libraries are veryuncomfortable with Google‟s NDA.“The Google lawyers advise the Google employees not to read patentapplications or patents from non-employees because that might precludethe Google employees from future invitations in that area. If you areinterested in selling the intellectual property, the only time Google has everbought IP is when there was already a start-up trying to market that IP.”
  32. 32. Develop early stage ideas? © Service des relations industrielles (SRI) © EPFLThe story gives hints: yes, focus on great technologies, but more importantly focus on great people who - are ambitious - keep on innovating - with patience and determination - believe in their ideas
  33. 33. © Service des relations industrielles (SRI) © EPFLFrom Hegel„Nichts Großes in der Welt ist ohne Leidenschaft vollbracht worden““Nothing great in this world has ever been accomplished without passion”« La passion est tenue pour une chose qui nest pas bonne, qui est plus ou moins mauvaise : lhomme ne doit pasavoir des passions. Mais passion nest pas tout à fait le mot qui convient pour ce que je veux désigner ici . Pourmoi, lactivité humaine en général dérive dintérêts particuliers, de fins spéciales ou, si lon veut, dintentionségoïstes, en ce sens que lhomme met toute lénergie de son vouloir et de son caractère au service de ses buts,en leur sacrifiant tout ce qui pourrait être un autre but, ou plutôt en leur sacrifiant tout le reste . [...]Nous disons donc que rien ne sest fait sans être soutenu par lintérêt de ceux qui y ont collaboré. Cet intérêt,nous lappelons passion lorsque, refoulant tous les autres intérêt ou buts, lindividualité entière se projette sur unobjectif avec toutes les fibres intérieures de son vouloir et concentre dans ce but ses forces et tous ses besoins.En ce sens, nous devons dire que rien de grand ne sest accompli dans le monde sans passion. » La raison dansL‟Histoire – éditions 10/18, p. 108
  34. 34. © Service des relations industrielles (SRI) © EPFL