Google and Innovation – A History
Google has become such a massive, dominating company in the field of web
search that it has entered the cultural lexicon as the de facto verb for
searching for information on the World Wide Web. Founded by Larry Page and
Sergey Brin, two Stanford PhD candidates , in 1998, Google started as a
fledgling search engine in a sea of competitors, including Yahoo, Excite, Hot bot,
Lycos, Info seek, Alta vista and a slew of other small start-ups vying for a
piece of the lucrative Internet search pie. One by one these competitors fell,
and Google remained as the last man standing, a search engine that dominates
almost every major Western market, and has since expanded into advertising,
mobile technologies and cloud computing. During its rapid growth, the company,
worth nearly $200 billion, has made enemies of the entire tech industry as well
numerous national governments, due to anti-competitive practices and privacy
concerns. Just how did a tiny little research project from two graduate
students evolve into the 800-pound gorilla on the Internet?
Humble Beginnings
Google grew up in the late 1990s, when competing search engines were
attempting to find the fastest algorithms for their web spiders crawling the
Internet. Like its future arch-nemesis Apple, Google was first established in a
garage in Menlo Park, California. Page and Brin then hired Craig Silverstein, a
fellow PhD candidate at Stanford, as the first employee, and together they
attempted to create a search algorithm faster, more powerful and more accurate
than its peers. As Google attracted more visitors, it got the attention of some
major players in the tech industry. In August 1998, Andy Bechtolsheim, the
co-founder of Sun Microsystems, invested $100,000 in Google to help it get
incorporated, but the winds suddenly picked up in June 1999 when a group of
major venture capital firms ploughed $25 million in the company, betting that
Google would be the last search engine standing by the start of the new millennium.
In 2001, Page and Brin hired Eric Schmidt from Sun Microsystems as the
“grown-up” of the self- proclaimed “Google triumvirate”, and appointed him CEO.
IPO and Corporate Culture
Google’s IPO in August 2004 was well-timed, after the dot-com crash
became a distant memory, and attracted massive investor interest. Its IPO
shares were priced at $85 per share, but jumped to $100 on the first day of
trading and later would hit $700 in October 2007. Page and Brin became instant
paper millionaires, but maintained that the company mantra, “Don’t Be Evil”,
would never change. Although many investors were concerned that Google would be
irreparably changed by going public, the company proved them wrong by
continuously promoting innovation in its Googolplex, which has become an icon
and template for designers of office space with a focus on fostering employee
innovation.
Growth and Innovation
Ever since the beginning of the 21st century, Google has been focused on
acquiring other technologies to outlast its fallen search engine brethren. In
2004, Google acquired Keyhole, Inc., which produced a product called Earth
Viewer which would eventually evolve into Google Earth and become a major part
of its Google Maps initiative. In 2005, Google acquired Android, a developer of
mobile software which would become the company’s main weapon in the smartphone
war, which would erupt three years later. In 2007, Google acquired YouTube, the
most popular video sharing site on the Internet, and DoubleClick, a major part
of its advertising initiative. These purchases are but a few of Google’s many acquisitions
over the past decade, but are symbolic of Google’s foresight for the future of
the Internet.
Google also became obsessed with the “cloud” before anyone was even
aware of the term. Google realized that Bill Gates’ attempt to embed
Microsoft’s browser into the operating system in 1998 was the future of the
Internet. However, Gates was struck down by the U.S. government since he was
trying to sell it for a profit. Google came in with a different angle. By introducing
cloud based services such as Docs, Mail, Photos, Video, Blogs and Books all
accessed by a single sign-in, Google created the content before they introduced
the operating system – Chrome – which was in fact just the company’s Internet
browser locked to all of its cloud-oriented sites. It then used Microsoft’s
strategy to force widespread adoption of its new mobile operating system,
Android, by spraying its system across multiple platforms of fragmented
hardware. Best of all, Google offered all of these services for free, much to
the chagrin of rivals Microsoft and Apple.
Although the company has profited handsomely from its innovations, there
have been some questionable missteps. In 2010, the company famously started its
own power company, Google Energy, investing $38.8 million into two wind farms
in North Dakota. Investors wondered just how these power plants, which would
power 55,000 homes, fit into the company’s long-term game plan. The company has
also made some bizarre investments, such as a human-powered monorail and a
self-driving car running on Google maps. Many of these missteps have led
investors to question the company’s fiscal discipline and long-term strategy.
The company has also been fighting a losing war with Facebook, which has
a very different, inside-out approach to becoming the new king of the Internet.
Google’s social networking initiative, Google+, has yet to make a dent in the
social network kingpin’s market share.
In April 2011, Google acquired 6,000 Nortel Networks patents in an
attempt to keep them out of Apple’s hands. In August 2011, Google continued
fighting against Apple by acquiring Motorola Mobility for a staggering $12.5
billion. Many analysts believe that Google is destined to ruin its own pristine
margins by continuing its desperate battle against the iPad and the iPhone;
through Android, Google is claiming market share but is unable to successfully
monetize these devices. However, many of these side businesses – cloud
computing and Android – are merely moats protecting its core revenue source –
search and advertising revenue. If Google can continue to grow this moat as
well as its core revenue, then the company will continue to raise massive
amounts of disposable cash that it can randomly throw at acquisitions in hope that
one will stick and become the “next big thing”. It’s a chaotic approach, far
from the staunch conservatism of Microsoft and the sleek efficiency of Apple,
but it works, and Google’s still one of the most innovative, fastest growing
companies in the market today.
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