In Search Of The Real Google

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What's intriguing is that this slightly goofy, self-indulgent culture has proved so adept at nuts-and-bolts business. Schmidt says he intentionally propagated the perception of Google as a wacky place to allow the company to build up its business under the radar. "With the lava lamps and scooters, everybody thought we were idiots, the last vestiges of the dotcoms," he says. "It worked until it leaked out how well we were doing." Many details didn't become known until Google had to file its financials just before going public in 2004.

Google owes much of its success to the brilliance of Brin and Page, but also to a series of fortunate events. It was Page who, at Stanford in 1996, initiated the academic project that eventually became Google's search engine. Brin, who had met Page at student orientation a year earlier, joined the project early on. Their breakthrough, simply put, was that when their search engine crawled the Web, it did more than just look for word matches; it also tallied and ranked a host of other critical factors like how websites link to one another. That delivered far better results than anything else. Brin and Page meant to name their creation Googol (the mathematical term for the number 1 followed by 100 zeroes), but someone misspelled the word so it stuck as Google. They raised money from prescient professors and venture capitalists, and moved off campus to turn Google into a business. Perhaps their biggest stroke of luck came early on when they tried to license their technology to other search engines, but no one met their price, and they built it up on their own.

The next breakthrough came in 2000, when Google figured out how to make money with its invention. It had lots of users, but almost no one was paying. The holy grail turned out to be advertising, and it's not an exaggeration to say that Google is now essentially an advertising company, given that that's the source of nearly all its revenue. What Google did was master the automation of online advertising, perfecting a model developed by GoTo.com (later renamed Overture and eventually sold to Yahoo!). Here's how the system works. If you're a company selling sneakers, you can bid to have a link to your website appear in the sponsored area whenever someone does a Google search for, say, tennis or Michael Jordan or sneakers or all of those and more. How prominently your ad will be displayed depends on how much you bid and how many people click on your ad. That means you can't just buy your way to the top; your link also has to appeal to users. You pay Google for every click you receive.

Google then had another brainstorm: extend the ad-link idea beyond search queries so that any content site could automatically run ads linked to its text. Google's technology, known as AdSense, can instantly analyze the text of any site and deliver relevant ads to it. Your sneaker company could place ads on tennis-information sites that participate in the Google network. Brin and Page signed up thousands and thousands of clients before their competitors knew what was happening. Now Google plans to apply the model in other media, and it just bought dMarc Broadcasting, whose automated systems connect advertisers with radio stations.