A Brief History of Google - Lebret

© Service des relations industrielles (SRI) © EPFL

Disclaimer: this is the Google story, not the Google history …

some information may be untrue as it comes mostly from the Internet

Fall 2011 Hervé Lebret

www.startup-book.com

http://www.startup-book.com/




1995 1996 1997 1998 1999

since 2000

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


Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Documents

indexed

24M 1.3B 3B 4B 6B 8B 25B?

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

Revenue

($M)

0.2 19.1 86.4 439 1‟465 3‟189 6‟139 10‟610 16‟593 21‟795 23‟650 29‟321

Income ($M) -6.7 -14.7 7 99 105 399 1‟465 3‟077 4‟203 4‟226 6‟520 8‟502


“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.”

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

Despite their differences and not initially working

together, they became friends and were quickly

known as “LarryandSergey”.


Source: Stanford Magazine, Nov. 2004

The PageRank system, invented by Larry Page (and

named after him) judges a site‟s

importance by analyzing

outside links to it.

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.



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.


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.

Google soon overgrew the bounds of their lab…

Source: Brainstrom, the news letter of

Stanford Office of Technology Licensing

vol.9 – nb.2 – Spring 2000

(and www.archive.org for the picture)


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


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.

Google began in Stanford

Gates‟ building!!

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”

Source: The Google Story by D. Vise

Random House, 2005

Later, with the help of Stanford professors and OTL, they contact

Excite and other search engines without success.

Yahoo‟s founder, D. Filo then advised them to take a leave of absence

from their PhD and to start their own business

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.


"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.)

Source: Carolyn Said, San Francisco Chronicle, August 2004.

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.


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.

Tip 3: Have a healthy disregard for

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.

Source: Stanford Technology Ventures Programme

stvp.stanford.edu


“We had to buy a Terabyte (which costs about $15,000) …

and put it on our credit cards…”

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.

After an hour, he makes a $100,000 check to “Google Inc.” without

knowing the company does not exist yet.

Bechtolsheim, Cheriton, Jeff Bezos (Amazon‟s founder)

and a few other angels invested a total of $1M

in the A round in 1998.

In August 1998, thanks to David Cheriton,

a Stanford professor, Page and Brin meet

Andy Bechtolsheim, founder of

Sun Microsystems and working

at Cisco.


I am sure Google‟s first office will soon become a legend

as it was a Garage. In fact Google had bought it!


…then in

Mountain

View…

… and finally to the GooglePlex in 2003

… they moved to

165 University Ave.

in Palo Alto after 5

months. This is the

home of many other startups

including Logitech and Paypal…

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


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?”




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)


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


A technology first ….

apparently gives

the right answer…

… and even more


A technology first …. a business model second

advertising

in the right column

is the secret sauce


NB: this example does not imply Google is Bluewin ad provider.

advertising

on others’ sites

is another revenue

source


Larry may have been helped by his old brother, Carl, who

founded eGroups and sold it to Yahoo.

Larry Page certainly has a business-oriented mind,

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.


I was recently reminded that nothing comes without hard

work, even at Google.

… 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?

At Google, there is free food; one of the early hires was a

cook. Working environment is nice…

“Genius is 10% Inspiration and 90% Transpiration”

Picasso? Einstein?


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

innovative.

And they do not seem to lose their humor…

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 .


The Google‟s people seem to love numbers:

at IPO, they planned to raise $2‟718‟281‟828

at IP0, 14‟142‟135 shares were finally newly created

at their secondary, they sold 14‟159‟265 shares…

the “Google” name comes from …

GOOGOL = 10100

e=2.718281828

2= 1.4142135

=3.14159265


Shareholder Shares Ownership

Brin 38'490'304 42%

Page 38'490'304 42%

Bechtolsheim 1'600'000

Cheriton 1'600'000

Bezos 1'600'000

Shriram 1'600'000

Stanford 1‟842‟000 2%

Others * 7‟118‟782

Series A 15'360'000 17%

Total 92'340'608

*: others include a number of angles not identified

NB: data compiled from Google‟s S1 documents but numbers give only an idea,

precise data are not known


Brin 38'490'304 27%

Page 38'490'304 27%


Cheriton 1'600'000

Bezos 1'600'000

Shriram 1'600'000

Stanford 1‟842‟000 1.3%

Others 7‟118‟782

Series A 15'360'000 11%

Kleiner Perkins 23'893'800 17%

Sequoia 23'893'800 17%

Series B 47'787'600 34%

Total 140'128'208 Series A: $960k

Capitalization: $5.7M

Series B: $25M

Capitalization: $70M

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



Brin 38'490'304 26%

Page 38'490'304 26%


Cheriton 1'600'000

Bezos 1'600'000

Shriram 1'600'000

Stanford 1‟842‟000 1.2%

Others 7‟118‟782

Series A 15'360'000 10%


Sequoia 23'893'800 16%

Series B 47'787'600 33%

Series C 6‟479‟000 4%

Total 146„607'208

NB: data compiled from Google‟s S1 documents but numbers give only an idea,

precise data are not known

Series C: $15M

Capitalization: $348M


Brin 38'490'304 14%

Page 38'490'304 14%


Cheriton 1'600'000

Bezos 1'600'000

Shriram 1'600'000

Stanford 1‟842‟000 0.6%

Others 7‟118‟782

Series A 15'360'000 6%


Sequoia 23'893'800 9%

Series B 47'787'600 18%

Series C 6‟479‟000 2%

Common (ESOP) 105‟557‟498 36%

Eric Schmidt 14‟758‟800 5.4%

Common (IPO) 19‟600‟000 7%

Total 271‟764‟706

IPO: $1.67B - Capitalization: $23.1B

in 2005, secondary of 14‟159‟265 shares at $295, raising $4B;

Stanford announced they made $336M with Google.

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


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”


http://www.startup-book.com/tag/google





“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.”

The Google‟s motto: “Don‟t Be Evil”


The story gives hints:

Develop early stage ideas?

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


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
