The Google story has become a legend of popular culture.
In 1995, Sergey Brin and Larry Page, graduate students at Stanford University, figured out a way to scan and index the Internet. By 1998, they had incorporated Google, coming up with a company name that suggested the audacity of their ambition. ("Googol" is the math term for the figure 1 followed by a hundred zeros.) And they came up with an informal company motto to signal their benign intent: "Don't be evil." Today, Google reaches billions of pages of content. And, according to ComScore, Google does an estimated four hundred billion searches a year.
In 2001, Page and Brin hired their first CEO, Eric Schmidt, who had a Ph.D. in computer science and twenty years of management experience in tech companies; most recently, he had been the CEO of Novell. They settled on an unusual power-sharing arrangement. As Schmidt describes it, "We've agreed that any major decisions the three of us agree."
By 2002, Google had become very profitable, thanks to a novel program called AdWords, in which advertisers bid to display their ads whenever the user searches for keywords. If the user then clicks on the advertisement---a "sponsored link"---Google earns revenue on a pay-per-click basis.
In 2003, Google introduced its second advertising vehicle, AdSense, which sells advertising to content sites. For advertisers, the system is a lot more scientific than the way that ads are placed on television or in magazines, because they can count clicks; for Google, the monetary benefits are obvious. In 2004, Google when public, selling its stock at an opening price of eighty-five dollars per share. Google's stock has at times climbed over seven hundred dollars a share, and a great many Google employees have become fabulously wealthy. Unlike the advertising revenues of many traditional media companies, which have slowed or fallen steeply, Google's advertising revenues have been rising from year to year; for 2007, they are expected to have increased by more than thirty percent.
Google is an Attractive Employer
Google's corporate offices reflect the determination of the two founders to make sure that employees stay focused. Employees are urged to devote twenty percent of their time to developing projects on their own. The company, which now employs about sixteen thousand, receives more than a million resumes a year, and through much of 2007 hired about a hundred and fifty people a week--half of them engineers.
How is Google Viewed by Influential People?
Lawrence Lessig, who teaches law at Stanford and has long been a student of digital culture, says, "Google's brilliant because it architects its system so that, when people do what they want to do, they give something to Google. When I do a search, I give Google my evaluation of what the best search is. Google profits from that. If I want to send an email, I give Google data." This data invites advertisers to bypass traditional media buyers and lets Google manage their Internet advertising.
As Google expands beyond search, the risk is that the company will come to believe that its engineers can master any business, solve any problem, and that Google will lose its focus. Andy Grove, the former chairman and CEO of Intel, believes that there may be more worry about Google than there was about Microsoft. "Microsoft's power was intra-industry," he says. "Google's power is shaping what's happening to other industries." Because of this, he says, Google is increasingly seen as a company "on steroids, with a finger in every industry."
What sets Google apart, says Google CEO Schmidt, is that although people like him always assumed that "Google would be an important company, the founders always assumed that Google would be a defining company."
Source: The New Yorker, January 14, 2008
First Quarter 2008 Afterthoughts:
In 2007, co-founders Sergey Brin and Larry Page each took home their customary $1 annual salary again, while a steep decline in the company's stock price chopped more than $8.5 billion from each of their massive holdings of Google shares. Brin, 34, the company's president of technology, and Page, 35, president of products, took the hits to their multibillion-dollar fortunes as shares of the Internet search leader plunged over the past five months on disappointing fourth-quarter earnings and fears the company can't sustain its torrid growth.
Google's CEO, Eric Schmidt also received his customary $1 salary in 2007, the Mountain View-based company said in its proxy statement with the Securities and Exchange Commission. Schmidt's stockpile of 9.5 million shares of Google stock - down from the 10.7 million shares he owned at the same time last year - has also taken a hit because of the stock price drop. The stock horde is now worth about $4.3 billion, about $3 billion less than at the stock's peak of $747.24 in November. At the current price of about $450 per share, that reduction of 1.2 million shares currently held would have totaled about $540 million dollars of additional personal wealth for CEO Schmidt.
Google Inc. in February 2008 had its second straight month of disappointing growth in "paid clicks," a key metric that reflects the overall health of the company, according to data released by research firm comScore Inc.
Source: Dow Jones' MarketWatch, March 26, 2008