How They Started (32 page)

Dropbox pokes fun at its foolproof system.

The meeting was at Apple’s Cupertino offices, and Jobs was interested in buying the plucky startup. After pleasantries, Jobs made his pitch. But Drew told him to stop. He was well and truly flattered, but he wasn’t selling. He wanted to grow the company. And as Dropbox surged past the 25-million-user mark in the months following and has today breached 50 million, Drew is well on course to achieving his dream.

Google. We all know its name
and use its website probably more than any other. We also know that it is extremely successful and that its founders have become billionaires. Yet amazingly, in 1999, almost none of us had heard of it, let alone used it. Its growth has been more substantial than most of the world’s greatest business success stories, and it happened faster, too.

But Google hasn’t always been such a gold mine. In fact, when they started, Google’s co-founders Larry Page and Sergey Brin weren’t even sure how their site would make money.

The pair met at Stanford University in the spring of 1995, where they were both enrolled in its prestigious Computer Science PhD program. Located in Silicon Valley, Stanford had already spawned some of the world’s most successful technology companies, such as Hewlett-Packard and Sun Microsystems, and the academic environment encouraged risk-taking and entrepreneurship. Its office of technology licensing offered technologists resources, advice and assistance with the patent process to help its students commercialize their research projects in return for a stake in the businesses. It was also a stone’s throw from Sand Hill Road, home to some of America’s most successful venture capital firms.

Sergey and Larry had both grown up surrounded by science and technology. Larry’s father was one of the first-ever recipients of a computer science degree from the University of Michigan. His mother was a database consultant with a master’s degree in computer science. Sergey was born in Moscow and came to the US when his parents moved here; his mother was a scientist at NASA and his father a mathematics professor at the University of Maryland. Sergey had completed his BS in Mathematics and Computer Science at the University of Maryland by the age of 19, while Larry had built a working inkjet printer out of Lego blocks in high school. So by the time they met, both were highly accustomed to computers and how they worked. They struck up a strong friendship at Stanford, fueled greatly by their shared love of academic debate and discourse.

At the time, several rudimentary search tools existed, but a search on one of them would generally yield thousands of results, which were not ranked in any order of relevance. Fellow Stanford PhD students Jerry Yang and David Filo had developed Yahoo! to tackle the problem, but they employed a team of editors to assemble a Web directory and were already struggling to keep up with the mushrooming World Wide Web. Convinced there was a better way, Sergey, an expert in extracting information from vast amounts of data, joined forces with Larry, who was studying the leading search engine Alta Vista. Never short of ambition, Larry set out to download the entire Web onto his PC to study the relevance of Web links, which Alta Vista didn’t appear to be taking into account. The project took far longer than expected and cost the computer science department around $20,000 every time they sent out a crawler program to capture online data—but the effort was definitely worth it.

Never short of ambition, Larry set out to download the entire Web onto his PC to study the relevance of Web links.

They concluded that the number of links pointing to a site was a measure of its popularity. Furthermore, they decided that links could be weighted. For instance, if CNN (which itself receives high volumes of traffic and has many links pointing to it) links to your Website, this is worth more than a link from a less popular site. Naming it after himself, Larry called the algorithm he developed to establish this pecking order PageRank. By adding this to traditional search methods (which matched keywords on pages with those in the search terms) the pair devised a search engine that produced results that were highly accurate and relevant to the user’s request. Google was conceived.

The founders did not set out to build a business. Coming from backgrounds where academia was revered, they were more excited to have stumbled across the basis of a killer thesis. They developed a prototype of their search engine, called BackRub, which was renamed Google in 1997. The term was a play on the word “googol,” a mathematical term for the number 1 followed by 100 zeros, and it represented the vast amounts of data on the Web. Working day-in, day-out from a room on campus, the founders unleashed their creation on Stanford’s student body via the university’s intranet. Its popularity among this information-hungry population soared through word-of-mouth recommendations, as users quickly discovered how much faster and more relevant its search results were.

Not wanting to get too distracted from their academic pursuits, but certain they had created something far superior to anything else available at the time, they attempted to sell their technology to Excite, Yahoo! and then market leader Alta Vista for up to $1 million before patenting it. Amazingly, each company passed on the opportunity. Search did not present any obvious revenue-generating opportunities, and Google’s goal to produce results in a split second did not make it an ideal space for advertisers. Feeling passionately that they had developed something that people truly needed, Sergey and Larry were left with no choice but to take Yahoo! co-founder David Filo’s advice and take Google to market themselves.

By amassing email feedback from their academic peers, they refined their offering before seeking funding to make it scalable. In August 1998, they met private investor Andy Bechtolsheim, a co-founder of Sun Microsystems who had sold another business to Cisco for hundreds of millions of dollars. Despite the lack of a clear business model, Bechtolsheim was so taken with the idea that he wrote out a check to Google Inc. for $100,000 on the spot, compelling Sergey and Larry to incorporate the company. Google was born.

Bechtolsheim was particularly impressed with Sergey and Larry’s plans to rely solely on the strength of their product and word-of-mouth recommendations to market the brand, instead of blowing huge sums on advertising. Instead, they planned to invest in IT as no other company had done before. From the outset, Sergey and Larry had been extremely efficient in their use of computers. They were downloading, indexing and searching the Internet using a network of off-the-shelf PCs they had custom built and linked together themselves. On them ran the software and algorithms they had also designed to crawl through and rank Web pages. The intention was to continue with this strategy, scaling it up cost-effectively by adding more and more PCs to the network to ensure their lightning-fast search results kept up with the growing number of websites and users.

The well-known Google home screen.

Google’s stated mission is “to organize the world’s information and make it universally accessible and useful.”

Following Bechtolsheim’s endorsement, several friends and family members also backed the pair, who were able to raise a total of $1 million. After running their operations from a garage for a while, where they hired their first staff member, the duo moved into offices in Palo Alto, California, in 1999. A mention in
PC Magazine
’s top 100 websites created a huge surge in user numbers, and before long, Google was dealing with upwards of 500,000 searches each day.

Struggling to maintain the level of IT investment they needed to keep up, the team was forced to seek further backing before long. Luckily for them, the economic climate worked in their favor. Google’s story is set against the backdrop of the dot-com rise (and subsequent fall). Following the buzz created by the stock market flotation of Internet browser producer Netscape in 1995, which valued the company at $3 billion after the first day of trading, Wall Street stockbrokers were on the prowl for more Internet success stories.

In 1999, Google closed a deal with two of the world’s most prestigious venture capital firms, both based on Sand Hill Road in Silicon Valley: Sequoia Capital, which had backed Yahoo!, and Kleiner Perkins Caufield & Byers, which had backed Amazon and many others. In an unprecedented move, the renowned venture capitalists agreed to invest equally in Google, with neither having a controlling interest. So eager were they to back the search pioneer while they had the chance (despite it still not having a successful business model) that each firm put up $12.5 million, while Sergey and Larry remained in sole charge of the company they had created—a non-negotiable condition for them.