Fifteen years of Google

Changing the world one user at a time

Larry Page and Sergey Brin, the founders of one of the world’s most iconic companies, first met at Stamford University in 1995. By 1996 they had developed their first “web crawler” – a service called BackRub, which they ran from the university’s servers.  By 1997 it was so popular that the Stamford decided that BackRub needed its own servers and Larry and Sergey decided it needed a better name. After some brainstorming, Google was born.

The two young entrepreneurs had their work cut out for them. In 1992, the internet was small enough that one man, Tim Berners Lee, could keep a manual list of all of the servers available. By 1994 the National Centre for Supercomputing Applications was adding around 30 new sites a day to its “What’s New” list. Services like Yahoo and Gopher Jewels were trying to impose some order by organising web sites into Yellow Pages-style directories but the volume of new pages was starting to outstrip anyone’s ability to organise them.

In 1994 the first search engines started to appear and in 1996 Yahoo!, Magellan, Lycos, Infoseek, and Excite each paid $5 million to be promoted on the Netscape homepage and in the browser. By 1998, just as Page and Brin were moving into their friend Susan Woicicki’s garage, Yahoo! had taken 37.4 percent of the US internet search audience, Excite (now merged with Magellan) had 28.5 percent and Lycos had 14.5 percent of the audience. Search engines were breaking market valuation records in the dot-com bubble, with Yahoo’s shareprice topping out at $118.75 in January 2000, and Lycos selling out to Telefónica for $5.4 billion: nearly 3000 times the company's initial venture capital investment. Page and Brin thought they had missed the boat and, realising that the company was taking too much time away from their PhD studies, they offered Excite the chance to buy the fledgling company for $750,000. Excite turned them down in early 1999.

But Google still had something that these other search engines did not: working with other scientists at Stamford they had developed a better way of ranking web pages. While other search engines simply calculated the number of times that a word or phrase appeared on a page, Page and Brin’s system also looked at how popular each page was by counting the number of links from other websites, or “backlinks”.

 

In 1998, PC Magazine said that Google had “an uncanny knack for returning extremely relevant results” and recommended it as the best search engine available. Even though Google had yet to significantly penetrate the search market, by the end of 1999 they had raised $25 million in venture capital, moved into bigger offices twice and hired 40 employees and a company cook who used to cater for the Grateful Dead. Since then they’ve gone from strength to strength.

That decision to invest in a company chef with a rock band pedigree tells you a lot about the Google ethos. This is a company that works hard by playing hard. The Google philosophy states that “work should be challenging, and the challenge should be fun… Our atmosphere may be casual, but as new ideas emerge in a café line, at a team meeting or at the gym, they are traded, tested and put into practice with dizzying speed.” This ethos doesn’t just come from the founders but also from their executive chairman, Eric E. Schmidt, previously at Novell, Sun and Xerox PARC. He introduced Google’s famous 70/20/10 work structure. As he explained to CNN in 2005, “We spend 70 percent of our time on core [business activities like] search and ads. We spend 20 percent on [activities] related to the core businesses in some interesting way. Examples of that would be Google News, Google Earth, and Google Local. And then 10 percent of our time should be on things that are truly new.” So much of Google’s innovation comes from this system that Google employs managers to keep track of the division of each engineer and manager’s time to make sure that they’re getting their 20 percent time.

Some of these products have changed the way we use the web forever. Google Maps, Google Earth and Google Streetview have all resulted in new location-based services, and, with the introduction of Google’s mobile Android operating system, you’re as likely to use Google Maps as a handheld GPS navigation system as you are to use it to plan a route from your desktop. Google Docs has cornered the market in collaborative cloud-based office tools since 2006 and Google has been innovating image and video search services since 2001.

Two recent innovations represent the extent of Google’s plans for diversification: the Android mobile operating system and the Google+ Social Network.

Google Goes Social

Search and advertising make up the core of Google’s revenue stream. In the fourth quarter of 2011, Google made $10bn in revenue, split almost 50/50 between it’s US and international operations. Best-in-class search results deliver users (there were over 1.7tn Google searches in 2011) and these users receive targeted advertising based on their current and previous searches. Google’s AdWords system lets businesses “bid” for advertising space and this bid revenue is what nets over 97 percent of Google’s income.

But that revenue stream is under threat from the social network, Facebook. Google targets its adverts in response to a user’s search terms and location. A Google spokesperson explains: “Let's say that you run a bakery near Boston. Set your ad to appear to customers in just that location, and when someone living or on holiday there searches Google for "blueberry muffins near Boston", they could see your ad and click it to connect to your business.” That “term and location” model has worked well since 2000, but it is being seriously challenged by Facebook’s demographic advertising model. Since its inception, Facebook has been collecting mountains of data about its users: their age, sex, location, interests and even their estimated income are all derivable from the information that users share on their profiles.

While Google still outsells Facebook 10:1 in terms of advertising revenue (Google sold $36.5 billion in advertising in 2011, Facebook sold  $3.2 billion) Google’s stock price isn’t keeping pace with the rest of the technology sector. The price it can command per advertising click is also dropping, as Facebook and other social networks offer better targeting based on more comprehensive user data. Steven Levy, author of Google “biography” In The Plex said, "Facebook awoke Google to its shortcomings in the social aspect of the Internet. It wasn't something that could be ignored.”

Facebook’s user data powerhouse is its Opengraph Protocol. This is the system that allows web developers to place Facebook “like” buttons on their pages, to let users log in with their Facebook accounts, and to share everything they do on third party sites on their Facebook timeline.  It may not sound like much, but with a few lines of code, Facebook can monitor everything you do on the web. But the Opengraph Protocol is anything but open: Facebook has a monopoly on this information and can sell premium advertising services based on what it knows about its users.

Google+ is the company’s attempt to harvest social data in the same way. As both a social network and a way of integrating user information across multiple Google services, Google+ is, Larry Page hopes, the key to Google’s continued dominance of the online advertising market. Although Google+ has been widely derided in the technology press as being a “ghost town” it already has more users than Facebook did at this stage of its development. Larry Page wrote in his Q4 2011 letter to investors: “I am super excited about the growth of … Google+, which now has 90 million users globally – well over double what I announced just three months ago. By building a meaningful relationship with our users through Google+ we will create amazing experiences across our services. I’m very excited about what we can do in 2012 – there are tremendous opportunities to help users and grow our business.”

Of course it’s advertisers and, by extension, Google shareholders who stand to benefit most from the introduction of Google+. Now our hypothetical baker can exclude those people who have joined a dieting community on Google+, or can even target specialist products to people who have identified themselves as gluten intolerant or vegan. Google is hoping that it can use Google+ to maintain its advertising dominance as the web evolves.

 

Dominating the mobile web

Google also invested heavily to acquire and develop Android, the first open source mobile operating system. Apple looked to be set to dominate the mobile browsing market with the iPhone in the mid 2000s and Google perceived that this might be a threat if it was “shut out” by Apple’s proprietary software at some point in the future. By Q3 2011, Android handsets were outselling iPhones and accounted for over 50 percent of the world smartphone market. Google is tight-lipped about its revenue model for Android, but company figures show that each handset nets the company about $10 in income. While that doesn’t compete with the average $580 income Apple generates from each iPhone handset, it keeps Google at the forefront of mobile search and advertising.

 

The Google Culture evolves

Fifteen years after it was founded, Google may be bigger but the ethos hasn’t changed much. It is still regularly voted as one of the best employers in the US by its employees and Fortune Magazine. The company offers onsite childcare, gyms and healthy food. “The goal is to strip away everything that gets in our employees’ way,” says Eric Schmidt. “We provide a standard package of fringe benefits, but on top of that are first-class dining facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning, commuting buses – just about anything a hardworking employee might want. Let’s face it: programmers want to program, they don’t want to do their laundry. So we make it easy for them to do both.”

Google also has an excellent diversity program that includes funding for women’s engineering scholarships, the Black Googlers Network in New Orleans and the Gayglers: an LGBT organisation within the company. Most of all, employees consistently say that they feel that they can make a difference, no matter what level of the organisation they may be in.  Google prides itself on its “everyone counts” ethos. Saying that it “listens to every idea, on the theory that any Googler can come up with the next breakthrough,” and “provides the resources to turn great ideas into reality… In the same way Google puts users first when it comes to online services, Google puts employees first when it comes to daily life in its offices.”

Google’s company motto has long been “Don’t be evil” but the company has attracted some criticism recently both for the way it has filtered search results in countries like China, and for what some see as a rather high-handed approach to user privacy. But the company has remained responsive to user criticism – eventually moving their servers from the Chinese mainland and refusing to self-censor search results and engaging in an ongoing discussion about privacy on the net.

Google also undertakes philanthropic and environmental work. “Google Green” permeates every part of the organisation, from organising shared commuting services and buying locally sourced food for staff kitchens, through to recycling all of their electronic equipment and reducing energy consumption through smart building design. Google has also invested almost a billion dollars in green energy projects. 30% of their own power comes from renewable resources, and they’ve taken equity stakes in a number of large-scale wind and solar projects in the US and Germany. The ethos even stretches to the Google Maps product which offers biking, walking and public transport navigation as well as displaying electric vehicle charging points.

Google’s philanthropic arm, Google.org, is responsible for the company’s charitable giving. It awards over $100 million annually in direct grants that focus on support for science, technology, engineering and math (STEM) education; girls' education; empowerment through technology; and fighting human trafficking and modern-day slavery. They also offer support to humanitarian agencies in the aftermath of natural disasters and other crises by offering their services to host data-rich maps with information about the event, creating missing person databases and disseminating public alerts.

While Google is having to change as the web evolves it still hasn’t taken its eye off its goal of changing the world, one internet user at a time. It is placing the tools of democracy in the hands of users, by providing channels like the Tunisia Talks video channel for the country’s landmark post-uprising elections, or the Google+ discussion with President Barack Obama. Fifteen years after Google began, it’s changed the world in countless ways. And Sergey Brin is still on leave from his Ph.D. programme in Computer Science at Stanford University. 

Company : 1902 Media