How did Google succeed in building a worldwide
brand from nothing, in just a handful of years?
Which is the secret of Google unconventional
How was Google able to reach a capitalization
of over $350 billion,
with such limited results in terms of revenues
How was Google able to win out all its competitors
- Yahoo, Lycos, Altavista, Excite, Infoseek
- in the years between 1998-2001,
when Google was a young, small company with
just 20 employees?
Was it just thanks to an algorithm?
Or did Google succeed due to the essential user
a completely different choice from the cluttered
interfaces of its competitors?
or something else?
Google Inc. was founded by Larry Page and Sergey
Brin in 1998.
In 2001 was the #1 Search Engines.
In just 3 years, from scratch, as a start-up,
Google attained the world leadership in the
Search Engines market, and in the following
years - from 2002 to 2013 - Google strenghtened
its leadership position,
becoming - as a matter of fact - the undiscussed
world dominator in Search Engines.
Search Engine is the key asset in the online
But Google today is not just the #1 search engine.
In 2013 Google Inc. is the 3rd biggest US corporation,
considering stock market capitalization, with
By comparison, in December 2013:
Yahoo stock market capitalization was $40 billion,
Microsoft $320 billion, and, to give some reference
outside of the information technology world:
General Electric stock market capitalization
was $270 billion,
JP Morgan Chase $210 billion,
Citigroup $150 billion,
Goldman Sachs, the Wall St. powerhouse, $75
Boeing $100 billion,
Lockheed Martin, the biggest military contractor
of the Pentagon, $44 billion,
Exxon, the biggest oil company in the world,
In terms of stock market capitalization, Google
is 5 times Goldman Sachs, and 8 times Lockheed
Inc. Stock Value.
At the IPO in August 2004 Google share price
was set at $85.
Most financial analysts criticized the choice,
as they judged the stock price seemed eccessive
and unreasonable. As the markets opened, the
Google Inc. stock immediately jumped to $120.
In 2005 the Google Inc. stock were above the
In 2013 Google Inc. topped $1000 at the NASDAQ.
A tenfold increase in less than 10 years. An
excellent return for Google shareholders. Numbers
speak for themselves.
The key question is:
How was Google capable to
achieve such extraordinary results, and in such
a short time?
The answer is a complex one, and involves multiple
It's a combination of smart decisions, a highly
innovative and risky business model, great products,
excellent marketing strategy, financial backing,
We need to start by analyzing the search engines
at the time Google Inc. was founded, back in
The top players at that time were Yahoo, Lycos,
Altavista, Excite, Infoseek. We need to point
out that in 1998 internet connections were terribly
slow, compared with today's standard, and waiting
times for the pages to load were unnerving.
Most users were having dial-up connections,
with effective speeds typically in the 10kbps
- 40kbps range.
Today, in 2016, we enjoy ADSL connections one
thousand times faster, 6Mbps to 100Mbps are
typical, not to mention high speed optical cable
In 1998, Yahoo, Lycos, Altavista, Excite, Infoseek
were all having heavy and cluttered home pages,
which, with the slow internet connection of
the time, were causing waiting times of 20 to
60 seconds for the page to load.
Today, 5 seconds waiting time is considered
At Google, the founders Larry Page and Sergey
Brin were well aware of the issue.
Moreover, it needs to be reamarked that search
engines were not making any money, in terms
of revenues and profits.
They were all typically operating in deep red,
and their primitive business model was based
just on the wishful thinking that perhaps one
day the profits would come.
Most revenues were coming just by banners and
advertising on their online pages. (which, by
the way, were causing the loading time to slow
down even further).
It has to be remarked also that the search results,
from Yahoo, Lycos, Altavista, Excite, Infoseek,
were not always the most relevant or interesting
for the user, who was forced to hours of patient
and relentless screening among the search engines
Unsatisfaction, about search engines users,
And search engines users were already in the
hundreds of millions, worlwide.
Larry Page and Sergey Brin, at Google, started
with a totally different concept.
One more clue that, if you are smart, a problem
can be transformed in an opportunity. A lucrative
First, Larry Page and Sergey Brin developed
a totally new algorithm, capable of filtering
down the deceiving SEO webmasters tricks, and
giving more relevant and interesting results
to the user.
They called it "PageRank", and while
its general working is known,
the exact formulas are still secret today.
Second, they decided to have a simple, clear,
minimalist, essential home page - user interface,
if you prefer: Just the Google logo, and the
Thus, the Google home page, even at very low
connection speeds, was much quicker to load
than any competitor's.
These two were the winning ingredients to Google
lighting fast growth and overwhelming success.
Thus, when Google started and entered the market,
the situation was the following:
Google had a clean, clear, essential user interface.
no frills, no annoying banners, just the logo
and the search box - and was easy to use and
fast to load.
All main Google competitors - Yahoo, Lycos,
Altavista, Excite, Infoseek - were more like
generalistic portals, full of confusion, full
of useless features and useless links, full
of annoying banner ads, heavy and slow to load,
and confusing and annoying to the eye..
Google had a clear understanding on psychology
of perception, and how the interaction eye/brain
works, while the bigger competitors didn't.
Bottom line is: If the user goes to a search
engine, what he/she wants to get is simply that:
just a search engine.
A search engine which is fast and reliable.
If the user wants a generalistic portal, he/she
goes to a portal, not to a search engine.
Larry Page and Sergey Brin, the Google Executives,
understood this, and this was what they delivered.
And made their users happy.
And the other key point - in the years from
1998 to 2001 - Google had reliable search results
(not always, but most of the time). Page and
Brin's PageRank algorithm worked well.
As part of the winning mix, it has to be pointed
out also that the Google Inc. start-up was well
financed and well advised by their Venture Capital
companies, Kleiner Perkins Caufield & Byers
and Sequoia Capital, especially by John Doerr,
VC Partner of Kleiner Perkins, and his advisors,
and assisted by Wilson Sonsini Goodrich &
Rosati, the leading law firm of Silicon Valley.
But this was just the start, the first, crucial
years, from 1998 - when Larry Page and Sergey
Brin founded Google - and 2001, when Google
won the search engines fiery war.
The following years - from 2002 to today - have
been exciting and successful as well for Google.
Google Inc., infact, developed a unique, highly
innovative, unconventional and very risky business
model, that proved to be successful.
in the following page we analyze in depth the