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© Service des relations industrielles (SRI)
                                                                                                          © EPFL




                                            Fall 2011
                                          Hervé Lebret
                                      www.startup-book.com

Disclaimer: this is the Google story, not the Google history …
some information may be untrue as it comes mostly from the Internet
© Service des relations industrielles (SRI)
                                                                      © EPFL




1995   1996     1997       1998                     1999




              since 2000
The sky seems to be the limit
                          © Service des relations industrielles (SRI)
                                                              © EPFL
© Service des relations industrielles (SRI)
                                                                                                                                    © EPFL




Year          1998       1999     2000     2001    2002   2003    2004    2005     2006     2007        2008          2009          2010
Documents     24M                 1.3B      3B      4B      6B     8B              25B?
indexed

Employees            8      39     60       284    682    1‟628   3‟021    5‟680   10‟674   16‟805       20‟222      19‟835       24‟400

Revenue                    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
© Service des relations industrielles (SRI)
                                                                                                 © EPFL




“In the spring of 1995, Larry Page and Sergey Brin
first met at a social outing in San Francisco
designed to welcome new applicants to Stanford
Doctoral 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 of
Technology Licensing – vol. 9 – no. 2 – Spring 2000
and The Google Story by D. Vise - Random House, 2005
© 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
© Service des relations industrielles (SRI)
                                                                                  © EPFL




Meanwhile Brin worked on a research project within the
database group in associative data mining. Brin worked on
ways to find specific word combinations that often occurred
together on the Internet.

Later, Page combined his method of analyzing
“back” links pointing to a given website with Brin‟s
web crawler, and their combined research moved
under the Digital Library umbrella.




Source: Stanford Magazine, Nov. 2004
© Service des relations industrielles (SRI)
                                                                                           © EPFL




Google soon overgrew the bounds of their lab…
In 1996, Brin and Page disclosed the technology to Stanford
OTL which contacted several internet companies…and
companies were interested…even one company bid a
significant amount of money, but none of the offers equaled
Google‟s potential…
For the next two years, while
continually     completing     an
increasing number of searches,
the technology incubated in the
OTL 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)
© Service des relations industrielles (SRI)
                                                                                             © EPFL




Interestingly 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
© 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 business

Source: The Google Story by D. Vise            Google began in Stanford
Random House, 2005                                     Gates‟ building!!
© Service des relations industrielles (SRI)
                                                                                                                          © EPFL


"Larry and I mapped out a strategy to talk to existing search-engine
companies to see if there was any interest in licensing this," said Luis
Mejia , an OTL senior licensing officer.

Steve Kirsch, CEO of search engine Infoseek, met with them a couple of
times and made a verbal offer. Mejia declined to name the amount, but
said: "It wasn't 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 at
his firm, Kleiner Perkins, with Excite, one of its portfolio companies.
"There was a lot of disbelief in what the capabilities of the page-rank
search algorithm were," Mejia said. "They weren't convinced it was worth
much. They decided they weren't interested in licensing it.''

Mejia doesn't recall being particularly thrilled
about Google's prospects.
                              Source: Carolyn Said, San Francisco Chronicle, August 2004.
© 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 for
stvp.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.
© 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.” without
knowing the company does not exist yet.
In October 1998, Page and Brin convinced a friend to rent a Garage and
spare room for $1700/month. They quickly added 8 phone lines, a cable
modem and a DSL line. After two months, they were 8 people and they
moved again in February 1999.
Bechtolsheim, Cheriton, Jeff Bezos (Amazon‟s founder)
and a few other angels invested a total of $1M
in the A round in 1998.
© Service des relations industrielles (SRI)
                                                                                                © EPFL

I am sure Google‟s first office will soon become a legend
as it was a Garage. In fact Google had bought it!
© Service des relations industrielles (SRI)
                                                                                               © EPFL

From a first office in a garage good for small team,




                … they moved to
                165 University Ave.
                in Palo Alto after 5
                months. This is the
home of many other startups                …then in
including Logitech and Paypal…             Mountain
                                           View…

                 … and finally to the GooglePlex in 2003
© Service des relations industrielles (SRI)
                                                                                             © EPFL



In 1994, a PhD student in the database group; asked if he would join
Yahoo! as employee No. 1, he laughed: “You couldn‟t pay me enough
money to work for a company called Yahoo!”

In 1995, worked with Brin on the process of finding pieces of information
that commonly occur together. Brin wrote his “crawler” program. Lent did
not stick around, a decision he confesses he regrets. But in early 1996,
Lent explains, “We all said, „There will never be another Yahoo!‟ Their
research seemed purely an academic exercise.”

He got a call from Microsoft in 2003, telling him the company wanted “to
kill Google,” he recalls. He declined.
In 2004, he has not given up: he has an algorithm he calls “Dynamic
PageRank,” and he is CEO of Medio. “I need to give it a try. Google and
Yahoo!, be warned.” Did anyone say, “There will probably never be
another Google?”

Source: Stanford Magazine, Nov. 2004
© Service des relations industrielles (SRI)
                                    © EPFL
© Service des relations industrielles (SRI)
                                                                                           © EPFL


After raising $1M with angel investors, Google nearly went out of money
quickly. The founders also wanted to keep control of their company, so
they built the strategy to attract the best 2 VCs so that one would
neutralize the other one. Thanks to their angels, it worked!!!


This “divide and conquer” strategy enabled Google to raise $25M in May
1999 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 and
many others (Arnold Schwarzenegger, Tiger Woods, …).
Schmidt, the new CEO, joined in 2001 before the company
went public in 2004 (raising $1.6B)
© Service des relations industrielles (SRI)
                                                                                 © EPFL




Googleware is the nickname given to Google‟s very powerful
combination of Hardware and Software.

Founders are known to be extremely smart … and pragmatic



Today, Googleware
means tens of 1000‟s of
simple PCs
© Service des relations industrielles (SRI)
                                                                      © EPFL



A technology first ….




                         apparently gives
                        the right answer…



                            … and even more
© Service des relations industrielles (SRI)
                                                                                    © EPFL



A technology first …. a business model second




                                      advertising
                                 in the right column
                                 is the secret sauce
© Service des relations industrielles (SRI)
                                                                  © EPFL




             advertising
           on others’ sites
         is another revenue
               source



NB: this example does not imply Google is Bluewin ad provider.
© Service des relations industrielles (SRI)
                                                                                 © EPFL




Larry Page certainly has a business-oriented mind,

Larry may have been helped by his old brother, Carl, who
founded eGroups and sold it to Yahoo.

Sergey has qualities in cost cutting and it is known Google
is not wasting money. They made cheap computers; they
did 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.
© Service des relations industrielles (SRI)
                                                                                            © EPFL
                               “Genius is 10% Inspiration and 90% Transpiration”
                                                              Picasso? Einstein?


I was recently reminded that nothing comes without hard
work, even at Google.
At Google, there is free food; one of the early hires was a
cook. 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 have
the energy and not too much family or private commitments.
And be young?
© Service des relations industrielles (SRI)
                                                                                        © EPFL



It is well known that it is extremely difficult to keep on being
innovative.

Google has taken creative approaches: employees work in
small teams (3 ideally) and are free to use 20% of their
working time on their personal projects that may become
future Google products.

Google News, Froogle, Gmail have roots in this 20% time as
well as   .
And they do not seem to lose their humor…
© Service des relations industrielles (SRI)
                                                                                   © EPFL



the “Google” name comes from …

                    GOOGOL = 10100

The Google‟s people seem to love numbers:

at IPO, they planned to raise $2‟718‟281‟828
                               e=2.718281828
at IP0, 14‟142‟135 shares were finally newly created
    2= 1.4142135
at their secondary, they sold 14‟159‟265 shares…
                               =3.14159265
© Service des relations industrielles (SRI)
                                                                                                                                                            © EPFL

                                 Cap. table at Series A                                                Cap. table at Series B


          Shareholder                         Shares               Ownership    Shareholder              Shares                 Ownership

          Brin                                38'490'304                  42%   Brin                     38'490'304                            27%

          Page                                38'490'304                  42%   Page                     38'490'304                            27%

          Bechtolsheim                                 1'600'000                Bechtolsheim                       1'600'000

                                                                                Cheriton                           1'600'000
          Cheriton                                     1'600'000
                                                                                Bezos                              1'600'000
          Bezos                                        1'600'000
                                                                                Shriram                            1'600'000
          Shriram                                      1'600'000
                                                                                Stanford                           1‟842‟000                  1.3%
          Stanford                                     1‟842‟000           2%
                                                                                Others                             7‟118‟782
          Others *                                     7‟118‟782
                                                                                Series A                 15'360'000                            11%
          Series A                            15'360'000                  17%
                                                                                Kleiner Perkins                   23'893'800                   17%
          Total                               92'340'608
                                                                                Sequoia                           23'893'800                   17%
          *: others include a number of angles not identified
                                                                                Series B                          47'787'600                   34%
          Series A: $960k                                                       Total                    140'128'208
          Capitalization: $5.7M
                                                                                Series B: $25M
                                                                                Capitalization: $70M




NB: data compiled from Google‟s S1 documents but numbers give only an idea,
precise data are not known
© Service des relations industrielles (SRI)
                                                                                                                                                         © EPFL

                              Cap. table at Series C                                                 Cap. table at Series IPO


            Shareholder             Shares                Ownership            Shareholder               Shares                 Ownership

            Brin                    38'490'304                        26%      Brin                               38'490'304                   14%

            Page                    38'490'304                        26%      Page                               38'490'304                   14%

            Bechtolsheim                      1'600'000                        Bechtolsheim                         1'600'000

            Cheriton                          1'600'000                        Cheriton                             1'600'000

            Bezos                             1'600'000                        Bezos                                1'600'000

            Shriram                           1'600'000                        Shriram                              1'600'000

            Stanford                          1‟842‟000               1.2%     Stanford                            1‟842‟000                  0.6%

            Others                            7‟118‟782                        Others                              7‟118‟782

            Series A                15'360'000                        10%      Series A                           15'360'000                    6%

            Kleiner Perkins                  23'893'800               16%      Kleiner Perkins                    23'893'800                    9%

            Sequoia                          23'893'800               16%      Sequoia                            23'893'800                    9%

            Series B                         47'787'600               33%      Series B                           47'787'600                   18%

            Series C                6‟479‟000                          4%      Series C                            6‟479‟000                    2%

            Total                   146„607'208                                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: $23.1B
NB: 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.
© Service des relations industrielles (SRI)
                                                                                                  © EPFL



Obviously the company is very ambitious and many new
things will come.
One surprising element is the founder‟s interest in clean
energies.
Another surprising element is the founder‟s interest in
genetics. It seems they may use Google‟s computing power
to develop molecular biology platforms.

“Google is teaming up with Craig Venter (of human genome
mapping fame) to use Google‟s vast computing power to
help unlock biology‟s mysteries, and maybe one day to help
you search through your genes.”

Source: The Boston Globe – Nov. 2005 and “The Google Story”
© Service des relations industrielles (SRI)
                                                                         © EPFL




http://www.startup-book.com/tag/google
© Service des relations industrielles (SRI)
                                                                                                         © EPFL




The 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.edu


The company is very paranoid: confidentiality is very high in
the company and employees are very cautious about giving
information. A lot is unavailable. Many libraries are very
uncomfortable with Google‟s NDA.
“The Google lawyers advise the Google employees not to read patent
applications or patents from non-employees because that might preclude
the Google employees from future invitations in that area. If you are
interested in selling the intellectual property, the only time Google has ever
bought IP is when there was already a start-up trying to market that IP.”
Develop early stage ideas?   © Service des relations industrielles (SRI)
                                                                       © EPFL




The               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
© Service des relations industrielles (SRI)
                                                                                                                             © EPFL




From 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 n'est pas bonne, qui est plus ou moins mauvaise : l'homme ne doit pas
avoir des passions. Mais passion n'est pas tout à fait le mot qui convient pour ce que je veux désigner ici . Pour
moi, l'activité humaine en général dérive d'intérêts particuliers, de fins spéciales ou, si l'on veut, d'intentions
égoïstes, en ce sens que l'homme met toute l'énergie 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 s'est fait sans être soutenu par l'intérêt de ceux qui y ont collaboré. Cet intérêt,
nous l'appelons passion lorsque, refoulant tous les autres intérêt ou buts, l'individualité entière se projette sur un
objectif 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 s'est accompli dans le monde sans passion. » La raison dans
L‟Histoire – éditions 10/18, p. 108
© Service des relations industrielles (SRI)
                                    © EPFL

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A brief history of google

  • 1. © Service des relations industrielles (SRI) © EPFL Fall 2011 Hervé Lebret www.startup-book.com Disclaimer: this is the Google story, not the Google history … some information may be untrue as it comes mostly from the Internet
  • 2. © Service des relations industrielles (SRI) © EPFL 1995 1996 1997 1998 1999 since 2000
  • 3. The sky seems to be the limit © Service des relations industrielles (SRI) © EPFL
  • 4. © Service des relations industrielles (SRI) © EPFL Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Documents 24M 1.3B 3B 4B 6B 8B 25B? indexed Employees 8 39 60 284 682 1‟628 3‟021 5‟680 10‟674 16‟805 20‟222 19‟835 24‟400 Revenue 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. © Service des relations industrielles (SRI) © EPFL “In the spring of 1995, Larry Page and Sergey Brin first met at a social outing in San Francisco designed to welcome new applicants to Stanford Doctoral 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 of Technology Licensing – vol. 9 – no. 2 – Spring 2000 and The Google Story by D. Vise - Random House, 2005
  • 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. © Service des relations industrielles (SRI) © EPFL Meanwhile Brin worked on a research project within the database group in associative data mining. Brin worked on ways to find specific word combinations that often occurred together on the Internet. Later, Page combined his method of analyzing “back” links pointing to a given website with Brin‟s web crawler, and their combined research moved under the Digital Library umbrella. Source: Stanford Magazine, Nov. 2004
  • 8. © Service des relations industrielles (SRI) © EPFL Google soon overgrew the bounds of their lab… In 1996, Brin and Page disclosed the technology to Stanford OTL which contacted several internet companies…and companies were interested…even one company bid a significant amount of money, but none of the offers equaled Google‟s potential… For the next two years, while continually completing an increasing number of searches, the technology incubated in the OTL 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. © Service des relations industrielles (SRI) © EPFL Interestingly 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. © 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 business Source: The Google Story by D. Vise Google began in Stanford Random House, 2005 Gates‟ building!!
  • 11. © Service des relations industrielles (SRI) © EPFL "Larry and I mapped out a strategy to talk to existing search-engine companies to see if there was any interest in licensing this," said Luis Mejia , an OTL senior licensing officer. Steve Kirsch, CEO of search engine Infoseek, met with them a couple of times and made a verbal offer. Mejia declined to name the amount, but said: "It wasn't 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 at his firm, Kleiner Perkins, with Excite, one of its portfolio companies. "There was a lot of disbelief in what the capabilities of the page-rank search algorithm were," Mejia said. "They weren't convinced it was worth much. They decided they weren't interested in licensing it.'' Mejia doesn't recall being particularly thrilled about Google's prospects. Source: Carolyn Said, San Francisco Chronicle, August 2004.
  • 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 for stvp.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. © 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.” without knowing the company does not exist yet. In October 1998, Page and Brin convinced a friend to rent a Garage and spare room for $1700/month. They quickly added 8 phone lines, a cable modem and a DSL line. After two months, they were 8 people and they moved again in February 1999. Bechtolsheim, Cheriton, Jeff Bezos (Amazon‟s founder) and a few other angels invested a total of $1M in the A round in 1998.
  • 14. © Service des relations industrielles (SRI) © EPFL I am sure Google‟s first office will soon become a legend as it was a Garage. In fact Google had bought it!
  • 15. © Service des relations industrielles (SRI) © EPFL From a first office in a garage good for small team, … they moved to 165 University Ave. in Palo Alto after 5 months. This is the home of many other startups …then in including Logitech and Paypal… Mountain View… … and finally to the GooglePlex in 2003
  • 16. © Service des relations industrielles (SRI) © EPFL In 1994, a PhD student in the database group; asked if he would join Yahoo! as employee No. 1, he laughed: “You couldn‟t pay me enough money to work for a company called Yahoo!” In 1995, worked with Brin on the process of finding pieces of information that commonly occur together. Brin wrote his “crawler” program. Lent did not stick around, a decision he confesses he regrets. But in early 1996, Lent explains, “We all said, „There will never be another Yahoo!‟ Their research seemed purely an academic exercise.” He got a call from Microsoft in 2003, telling him the company wanted “to kill Google,” he recalls. He declined. In 2004, he has not given up: he has an algorithm he calls “Dynamic PageRank,” and he is CEO of Medio. “I need to give it a try. Google and Yahoo!, be warned.” Did anyone say, “There will probably never be another Google?” Source: Stanford Magazine, Nov. 2004
  • 17. © Service des relations industrielles (SRI) © EPFL
  • 18. © Service des relations industrielles (SRI) © EPFL After raising $1M with angel investors, Google nearly went out of money quickly. The founders also wanted to keep control of their company, so they built the strategy to attract the best 2 VCs so that one would neutralize the other one. Thanks to their angels, it worked!!! This “divide and conquer” strategy enabled Google to raise $25M in May 1999 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 and many others (Arnold Schwarzenegger, Tiger Woods, …). Schmidt, the new CEO, joined in 2001 before the company went public in 2004 (raising $1.6B)
  • 19. © Service des relations industrielles (SRI) © EPFL Googleware is the nickname given to Google‟s very powerful combination of Hardware and Software. Founders are known to be extremely smart … and pragmatic Today, Googleware means tens of 1000‟s of simple PCs
  • 20. © Service des relations industrielles (SRI) © EPFL A technology first …. apparently gives the right answer… … and even more
  • 21. © Service des relations industrielles (SRI) © EPFL A technology first …. a business model second advertising in the right column is the secret sauce
  • 22. © Service des relations industrielles (SRI) © EPFL advertising on others’ sites is another revenue source NB: this example does not imply Google is Bluewin ad provider.
  • 23. © Service des relations industrielles (SRI) © EPFL Larry Page certainly has a business-oriented mind, Larry may have been helped by his old brother, Carl, who founded eGroups and sold it to Yahoo. Sergey has qualities in cost cutting and it is known Google is not wasting money. They made cheap computers; they did 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. © Service des relations industrielles (SRI) © EPFL “Genius is 10% Inspiration and 90% Transpiration” Picasso? Einstein? I was recently reminded that nothing comes without hard work, even at Google. At Google, there is free food; one of the early hires was a cook. 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 have the energy and not too much family or private commitments. And be young?
  • 25. © Service des relations industrielles (SRI) © EPFL It is well known that it is extremely difficult to keep on being innovative. Google has taken creative approaches: employees work in small teams (3 ideally) and are free to use 20% of their working time on their personal projects that may become future Google products. Google News, Froogle, Gmail have roots in this 20% time as well as . And they do not seem to lose their humor…
  • 26. © Service des relations industrielles (SRI) © EPFL the “Google” name comes from … GOOGOL = 10100 The Google‟s people seem to love numbers: at IPO, they planned to raise $2‟718‟281‟828 e=2.718281828 at IP0, 14‟142‟135 shares were finally newly created 2= 1.4142135 at their secondary, they sold 14‟159‟265 shares… =3.14159265
  • 27. © Service des relations industrielles (SRI) © EPFL Cap. table at Series A Cap. table at Series B Shareholder Shares Ownership Shareholder Shares Ownership Brin 38'490'304 42% Brin 38'490'304 27% Page 38'490'304 42% Page 38'490'304 27% Bechtolsheim 1'600'000 Bechtolsheim 1'600'000 Cheriton 1'600'000 Cheriton 1'600'000 Bezos 1'600'000 Bezos 1'600'000 Shriram 1'600'000 Shriram 1'600'000 Stanford 1‟842‟000 1.3% Stanford 1‟842‟000 2% Others 7‟118‟782 Others * 7‟118‟782 Series A 15'360'000 11% Series A 15'360'000 17% Kleiner Perkins 23'893'800 17% Total 92'340'608 Sequoia 23'893'800 17% *: others include a number of angles not identified Series B 47'787'600 34% Series A: $960k Total 140'128'208 Capitalization: $5.7M Series B: $25M Capitalization: $70M NB: data compiled from Google‟s S1 documents but numbers give only an idea, precise data are not known
  • 28. © Service des relations industrielles (SRI) © EPFL Cap. table at Series C Cap. table at Series IPO Shareholder Shares Ownership Shareholder Shares Ownership Brin 38'490'304 26% Brin 38'490'304 14% Page 38'490'304 26% Page 38'490'304 14% Bechtolsheim 1'600'000 Bechtolsheim 1'600'000 Cheriton 1'600'000 Cheriton 1'600'000 Bezos 1'600'000 Bezos 1'600'000 Shriram 1'600'000 Shriram 1'600'000 Stanford 1‟842‟000 1.2% Stanford 1‟842‟000 0.6% Others 7‟118‟782 Others 7‟118‟782 Series A 15'360'000 10% Series A 15'360'000 6% Kleiner Perkins 23'893'800 16% Kleiner Perkins 23'893'800 9% Sequoia 23'893'800 16% Sequoia 23'893'800 9% Series B 47'787'600 33% Series B 47'787'600 18% Series C 6‟479‟000 4% Series C 6‟479‟000 2% Total 146„607'208 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: $23.1B NB: 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. © Service des relations industrielles (SRI) © EPFL Obviously the company is very ambitious and many new things will come. One surprising element is the founder‟s interest in clean energies. Another surprising element is the founder‟s interest in genetics. It seems they may use Google‟s computing power to develop molecular biology platforms. “Google is teaming up with Craig Venter (of human genome mapping fame) to use Google‟s vast computing power to help unlock biology‟s mysteries, and maybe one day to help you search through your genes.” Source: The Boston Globe – Nov. 2005 and “The Google Story”
  • 30. © Service des relations industrielles (SRI) © EPFL http://www.startup-book.com/tag/google
  • 31. © Service des relations industrielles (SRI) © EPFL The 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.edu The company is very paranoid: confidentiality is very high in the company and employees are very cautious about giving information. A lot is unavailable. Many libraries are very uncomfortable with Google‟s NDA. “The Google lawyers advise the Google employees not to read patent applications or patents from non-employees because that might preclude the Google employees from future invitations in that area. If you are interested in selling the intellectual property, the only time Google has ever bought IP is when there was already a start-up trying to market that IP.”
  • 32. Develop early stage ideas? © Service des relations industrielles (SRI) © EPFL The 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. © Service des relations industrielles (SRI) © EPFL From 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 n'est pas bonne, qui est plus ou moins mauvaise : l'homme ne doit pas avoir des passions. Mais passion n'est pas tout à fait le mot qui convient pour ce que je veux désigner ici . Pour moi, l'activité humaine en général dérive d'intérêts particuliers, de fins spéciales ou, si l'on veut, d'intentions égoïstes, en ce sens que l'homme met toute l'énergie 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 s'est fait sans être soutenu par l'intérêt de ceux qui y ont collaboré. Cet intérêt, nous l'appelons passion lorsque, refoulant tous les autres intérêt ou buts, l'individualité entière se projette sur un objectif 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 s'est accompli dans le monde sans passion. » La raison dans L‟Histoire – éditions 10/18, p. 108
  • 34. © Service des relations industrielles (SRI) © EPFL