As a company, Google started in 1998 when Larry Page and Sergey Brin formed the entity to market a search algorithm they had developed while attending Stanford University.
The story of Google, however, starts two years earlier. As a PhD student at Stanford, Larry Page needed to find a dissertation theme. At the time, no one had built a search engine that could index and locate internet pages reliably. Several search engines existed, but they didn’t always produce results that accurately answered the user’s question.
Page recruited Brin and Scott Hassan to work on the project, which they called BackRub. (Hassan contributed to the algorithm, but left the project before it became the company Google Inc. He currently works in robotics.)
Page wanted to explore the World Wide Web’s mathematical properties, and he envisioned the results as a giant graph of links. He had other ideas for his dissertation, but his advisor encouraged him to follow the BackRub concept.
At the time, Page wanted to focus on locating citations for academic writing. He understood that the number of backlinks leading to a paper likely meant the publication had more value. Page talked to Hassan about writing code that could perform the operation. Brin joined the team shortly.
In March 1996, the group started using its web crawler to gather and analyze backlink data. BackRub had merely been a step toward making a search engine that could analyze data. Now, they had PageRank, an algorithm that did a much better job understanding the value of some data over others. Now, they had a product that could judge the “weight” of backlinks.
While other search engines were simply looking for keywords on pages, PageRank was considering how other factors influence how search results get organized.
By August 1996, PageRank was using about half of Stanford University’s bandwidth and had downloaded about 207 gigabytes of information from more than 75 million websites.
Performing the computations needed to rank pages required more much more processing power than the average computer could offer. The PageRank team solved this problem by building inexpensive servers with high fault tolerance.
Google remained on the Stanford.edu website until September 1997. The name came from a misspelling of Googol, a number that consists of one followed by a hundred zeros. Page and Brin registered a domain name for Google. They officially incorporated the company and moved it into the Menlo Park garage of their friend Susan Wojcicki in 1998.
How Did Google Get Funded Early On?
As students, Larry and Brin had relied on funding from the National Science Foundation and other federal agencies.
Obviously, their student grants wouldn’t last long. Google needed a way to generate revenue. No matter how well the algorithm worked, it couldn’t survive without making money that would pay for servers, utilities, housing, and the salaries of people who continued development.
While still students in 1998, Brin and Page had written a research paper that argued against making money from advertising. They had a special dislike for pop-up advertisements. They made a compromise, though, and started letting advertisements appear as simple, text-based ads that did not distract users from their search results.
The founders struggled to find a way to generate significant revenue even after their compromise. They believed that they should sell Google to an investor, who could then apply the technology to an existing product. They focused their attention on the company Excite.
Since its founding in 1995, Excite had become one of the most popular web portals. It provided a homepage that gave people quick access to information about the weather and weather. Excite also provided email and instant messaging services. Brin and Page thought it was the perfect fit for Google.
Excite CEO George Bell did not agree.
They offered to sell Google to Excite for $1 million. Bell turned them down. Even after a venture capitalist convinced Brin and Page to lower their offer to $750,000, Bell did not want to buy Google.
Andy Bechtolsheim, a co-founder of Sun Microsystems, had given Google $100,000 in 1998 before the business had even incorporated. Google had also received small amounts from other prominent members of the Silicon Valley tech industry. Brin and Page had enough money to keep developing and improving Google, but they were not attracting the levels of investment that they wanted.
Their fortunes changed on June 7, 1999 when Google received $25 million in equity funding. The bulk of the funding came from Kleiner Perkins Caulfield & Byers and Sequoia Capital. While $25 million might sound like a lot of money, Google was growing rapidly. They had already outgrown two locations.
Until Google found a way to make money, though, it could only attract moderate financial interest from venture capitalists looking for strong returns on their investments.
Perhaps inevitably, Google began earning money from advertisements. Beginning in 2000, clients could create text-based ads that would appear on screens. Advertisements were not random, though. Instead, they were associated with keywords that users entered into the search engine, giving the advertisements more relevance than most online ads at the time.
Google uses a bidding system for keywords. Bids start at just 5 cents, but can reach hundreds of dollars. Advertisers pay on a per-click basis, which means they don’t pay anything when their ads do not attract any attention.
On the other hand, clients can face hefty bills when the commit to high-priced keywords that get a lot of clicks.
When Did Google Get So Popular?
Google gained considerable popularity before it evolved beyond its BETA stage. As early as 1998, an article published on Salon.com argued that the search engine performed better than its rivals, including high-traffic sites like Yahoo!, Hotbot, Excite, Lycos, and MSN).
The search engine’s popularity kept growing through the 2000s. In addition to becoming the most reliable search engine, Google’s parent company, Alphabet, began acquiring companies that added to value to the Google Brand. Some of the most helpful acquisitions include:
- Applied Semantics (2004), which became Google AdSense
- Where2 (2004) and Keyhole (2004), which added to the functionality of Google Maps.
- ZipDash (2004), which gave Google Maps increased traffic analysis powers.
- Android (2005), a $50 million acquisition that gave Google a mobile operating system.
- YouTube (2006), a $1.65 billion acquisition that made Google a major video sharing service.
- DoubleClick (2007), a $3.1 billion acquisition that further enhanced AdSense.
- Motorola Mobility (2011), the largest acquisition to date ($12.5 billion) that contributed to several mobile applications and increased the company’s patent portfolio.
Many of Google’s acquisitions have played critical roles in growing the company’s popularity because it has used their technology to drive services like Gmail, Google Docs, Google Maps, Google Drive, Google Pay, Google Play Pass, and many others.
Many of these services are free to use. Google uses information from the services to improve its search and advertising functionality.
While free to use, the company does manage to generate revenue from many of them. Others are just useful projects that makes Google an authoritative figure in the tech world.
When Did Google Go Public?
Page and Brin did not want to take the company public because they believed they could accomplish more while controlling the company. Google finally submitted to an IPO in 2004. It sold for $85 per share.
The company’s valuation was a remarkable $23 billion. In 2021, a share in Google typically costs more $2,500.
3 Reasons Google Got So Big
You could cite many reasons for Google becoming a dominant presence on the internet. Three factors stand out, though.
Google Provides Better Search Results
This is the very basis of why Brin and Page started Google. The internet contains a massive amount of information. Previous search engines were unable to index the rapidly growing number of pages. They also failed to identify which websites offered helpful information.
In many cases, a website developer could pack keywords onto a page to improve its ranking. Google’s approach makes it much easier for users to find meaningful pages that answer their questions. The company’s algorithm even punishes websites for keyword stuffing and similar practices.
Since other search engines cannot compete with Google, more people want to use the service.
Google Understands the Benefit of Free
Practically anyone with internet access can open accounts for Gmail, Google Docs, and other popular services. You don’t need to provide a credit card number or other method of payment. Google lets people use these services for free as long as they do not exceed – rather generous – data limits.
Many people rely on Google as their primary source of interaction with the internet. They rarely stray from Google services unless visiting websites that they discover through the Google search engine. This approach has made Google extremely popular among users who want access to powerful products without spending any money.
Of course, Google benefits from the data it collects. Every piece of data adds to its effectiveness as a search engine and advertiser, which helps generate greater revenues for the business.
Google’s Company Culture Encourages Exploration
Google employees must get complete the projects their teams work on. They also receive free time that they can dedicate to pet projects.
The public rarely sees the results of these projects, but some of them contribute to Google’s functionality. Encouraging exploration also helps Google attract the tech industry’s most talented workers, which means it can stay ahead of its competitors.
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