How Google Works – The Larry Page and Sergey Brin Story (Part 1) – Hour 1

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Audio Transcription

Do you use Google? Do you know how it works? During today’s broadcast of the Thrive Time Business Coach Radio Show, Clay Clark breaks down the Google story and the life and times of Larry and Sergey (the Google founders).
Alphabet Inc. is currently the world’s 2nd most valuable brand ($141.7 billion), trailing only behind Apple ($184 billion). The conglomerate of businesses was established by Google on October 2, 2015 Google LLC as a way to better organize their ever-growing list of companies, technologies, services and tools. Google was officially founded in 1998 by Sergey Brin and Larry Page while they were both Ph.D. students at Stanford University.

Currently the partners own roughly 14% of the company’s shares, yet they control approximately 56% of the stockholder voting power as a result of the supervoting stock system that they set up.

FUN FACT: 10 Most Valuable Brands of 2017 according to CBS MoneyWatch – https://www.cbsnews.com/news/brands-most-valuable-in-the-world-interbrand/

Apple ($184 billion)
Google ($141.7 billion)
Microsoft ($80 billion)
Coca-Cola ($69.7 billion)
Amazon ($64.8 billion)
Samsung ($56.2 billion)
Toyota ($50.3 billion)
Facebook ($48.2 billion)
Mercedes-Benz ($47.8 billion)
IBM ($46.8 billion)

Some of Alphabet’s Current Products Include:
Daydream Virtual Reality Headset
GMail
Google Chat
Google Calendar
Google Drive
Google Docs
Google Earth
Google Fiber – It provides fiber-to-the-premises service in the United States, providing broadband Internet and IPTV to a small and slowly increasing number of locations.
Google Glass
Google Hangouts
Google Maps
Google Pixel Smart Phone
Google Photos
Google Sheets
Google Slides
Google Streets
Waymo – The Google self-driving car project
Youtube

FUN FACT: As of 2017, Forbes reports that Google is worth approximately $101.8 billion dollars.

FUN FACT: As of 2017, Forbes reports that Sergey Brin is worth $43.7 billion and Larry Page is worth $44.8 billion.

1973 – Sergey Brin was born in the Soviet Union in 1973. His parents were super demanding and wanted him to dominate in school. He is currently the President of Google’s parent company Alphabet Inc and is estimated to be the 13th wealthiest human on the planet with an estimated net worth of $46 billion.

1973 – Born in 1973, Larry Page grew up in Ann Arbor, Michigan and is currently the CEO of Alphabet Inc. and is the world’s 12 richest person with an estimated net worth of just over $47 billion. He is also the inventor of PageRank, Google’s search engine ranking algorithm.

1989 – Larry and Sergey are both 16 – The English by the name of Tim Berners-Lee invents the internet.

1990 – Larry and Sergey are both 17 – While still employed at a company named CERN in Switzerland, Tim Berners-Lee wrote the first web browser computer program. CERN is the European Organization for Nuclear Research. It was founded back in 1954.

1991 – Larry and Sergey are both 18 – The world wide web browser was first released to the world outside of CERN. The web was released first only to other top level research institutions and then to the general public on August 6th, 1991.

FUN FACT:
What is the world wide web?
The World Wide Web is usually abbreviated with the WWW symbol. However, it is really a massive information space where information, documents and resources can be stored and organized for fast retrieval using Uniform Resource Locators known as URLs.

The internet is all linked together using hypertext links, which are simply links that the user can click on to connect them to another item on the internet. When text is highlighted and a link is embedded on this text, it is called anchor text.

1995 – Larry and Sergey are both 22 years old – When They First Met, It Did Not Start off Well
In the summer of 1995, Larry Page, then 22, visited Stanford as a prospective PhD student in computer science. His tour guide was Sergey Brin, a 21-year-old mathematical whiz who was already pursuing his PhD in that department. Despite their common interests, Brin and Page didn’t immediately hit it off—in fact, their first day together was spent arguing.

Page later told Wired magazine, “I thought [Sergey] was pretty obnoxious. He had really strong opinions about things, and I guess I did, too.”

1996 – Larry and Sergey are both 23 years old – Larry Page and Sergey Brin start a research project while a Stanford to create a large scale way to organize the internet. Because they realize that most of the information on the internet is very hard to retrieve and that it is not organized in a universal way that makes information easy to find for the average user.

FUN FACT: Google Started here – http://infolab.stanford.edu/~backrub/google.html

NOTABLE QUOTABLE – “Basically, our goal is to organize the world’s information and to make it universally accessible and useful.” Larry Page

An overview of how Google works, The Anatomy of a Large-Scale Hypertextual Search Engine – http://infolab.stanford.edu/~backrub/google.html

NOTABLE QUOTABLE – “In this paper, we present Google, a prototype of a large-scale search engine which makes heavy use of the structure present in hypertext. Google is designed to crawl and index the Web efficiently and produce much more satisfying search results than existing systems. The prototype with a full text and hyperlink database of at least 24 million pages is available at http://google.stanford.edu/.”

NOTABLE QUOTABLE – “Human maintained lists cover popular topics effectively but are subjective, expensive to build and maintain, slow to improve, and cannot cover all esoteric topics. Automated search engines that rely on keyword matching usually return too many low quality matches. To make matters worse, some advertisers attempt to gain people’s attention by taking measures meant to mislead automated search engines. We have built a large-scale search engine which addresses many of the problems of existing systems. It makes especially heavy use of the additional structure present in hypertext to provide much higher quality search results. We chose our system name, Google, because it is a common spelling of googol, or 10100 and fits well with our goal of building very large-scale search engines.” – The Anatomy of a Search Engine – Sergey Brin and Lawrence Page

NOTABLE QUOTABLE – “You know what it’s like to wake up in the middle of the night with a vivid dream? And you know how, if you don’t have a pencil and pad by the bed to write it down, it will be completely gone the next morning?
Well, I had one of those dreams when I was 23. When I suddenly woke up, I was thinking: what if we could download the whole web, and just keep the links and… I grabbed a pen and started writing! Sometimes it is important to wake up and stop dreaming. I spent the middle of that night scribbling out the details and convincing myself it would work. Soon after, I told my advisor, Terry Winograd, it would take a couple of weeks to download the web – he nodded knowingly, fully aware it would take much longer but wise enough to not tell me. The optimism of youth is often underrated! Amazingly, I had no thought of building a search engine. The idea wasn’t even on the radar. But, much later we happened upon a better way of ranking webpages to make a really great search engine, and Google was born. When a really great dream shows up, grab it!” – Larry Page
FUN FACT:
Google’s Mission – “To organize the world’s information and make it universally acceptable and useful.”
Slogan – “Don’t be evil.”

The Problem
During the 1990s searching for something using AltaVista, AOL, and other search engines produced many irrelevant results and the process of producing the search results took a long time.

1996 – Larry and Sergey are both 23 years old – They form the domain – google.stanford.edu and it ran under Stanford University’s website. Larry and Sergey stole (borrowed without asking) old computers that were no longer being used to build the massive network of computers they needed to download and index the entire internet. ORIGINALLY THEIR ENTIRE GOAL WAS FOCUSED AROUND DOWNLOADING AND ORGANIZING THE ENTIRE INTERNET…ALL OF IT.

They called this project – “Backrub.”

1996 – Larry and Sergey are both 23 years old – Google was almost called backrub.
As the pair began downloading the entire internet they soon discovered that many of the most credible websites were being linked to from many more websites than the average website. They called this phenomenon, “Backrub” and originally this was a huge factor that they used to determine which sites were the most relevant to a given search query using their search engine.

1997 – Larry and Sergey are both 24 years old – They registered Google.com as a website.
It was not long before the partners began to overload and even crash Stanford’s entire network of computers due to their ambition to download the entire internet.

FUN FACT – The phrase backlink is in reference to when a website links back from one website to another. The links were a very critical component for determining the overall ranking of a website until backlinks became purchasable on a large scale from scam companies.

1997 – Larry and Sergey are both 24 years old – Moving Beyond the Name Backrub

Although they were not bringing in any revenue yet, Brin and Page realized that they needed to start their own company and to get off of the Stanford campus. But, they needed money to be able to afford the technology and the hardware needed to download and organize the entire internet every day. They both agreed that they needed to move on to a new name and and that “Backrub” couldn’t be the long-term name. They narrowed it down to “Whatbox” or Googol. Their inspiration for ultimately naming the company Google was that it was a term for a number with a hundred zeros and it was easy to type.

With a slight change in spelling, Google.com—which Page deemed “easy to type and memorable”—was born in 1997.
1997 – Larry and Sergey are both 24 years old – Google Hires Its’ First Employee The domain name for Google was registered on September 15, 1997, and the business was actually incorporated on September 4, 1998.
The company was based in the garage of their friend, Susan Wojcicki in Menlo Park, California. Craig Silverstein, a fellow PhD student at Stanford, was hired as the first employee.
FUN FACT – Craig Silverstein is now worth $800 million.
FUN FACT – Susan is now the CEO of Youtube and she is worth $1.65 billion.

1998 – Larry and Sergey are both 24 years old – Larry and Sergey begin giving demonstrations of how Google works to different Silicon Valley entrepreneurs, venture capitalists and Stanford alumni.

They did a demonstration for the co-founder of Sun Microsystems, Andy Bechtolsheim, and he is wowed. He’s so wowed that after a 10 minute demonstration, he writes the guys a check for $100,000 on the spot. The two had yet to incorporate when they received their first round of funding.
1998 – Larry and Sergey are both 24 years old – Always in need of more cash they pitch their Google business to Jeff Bezos (the founder of Amazon) and Ram Shriram who both decide to invest in the project.

FUN FACT:
Jeff Bezos invested $250,000 in the Google startup in 1998.

FUN FACT:
The $200,000 that Ram Shriram invested into Google is now worth $958.4 million.

Who is Ram Shriram?
Shriram came to Amazon.com in August, 1998, when Jeff Bezos and Amazon.com decided to buy his company called Junglee. Junglee was an online shopping experience that allowed potential buyers to comparison shop between products. At the time of the purchase, Ram Shriram was the President of the company. Before he joined Junglee and Amazon, Shriram was one of the members of the Netscape executive team and had built a name for himself with Silicon Valley.

FUN FACT:
Because of his investment, at one point Shriram owned 2.2% of Google’s shares. He did sell a portion of the stock at the time of their initial public offering, and he brought in $22.6 million because of this. However, today he still owns 5,058,427 million shares, which means that he is still holding close to $958.4 million dollars of shares.

FUN FACT:
When you hear the term “Silicon Valley” you are hearing the nickname for the southern most region of the San Francisco Bay Area and the valley which includes Santa Clara Valley, San Jose and the surrounding cities and towns. The word “silicon” is in reference to the large number of silicon chip makers in the region. Silicon Valley is now home to 39 of the Fortune top 1000 companies and is the home for countless high-tech companies and high-tech focused startups.

A New Way of Organizing the Internet
1998 – Larry and Sergey are both 24 years old – After spending thousands of hours obsessing about the best way to better organize the internet and provide the most relevant search results for users, Larry Page created his new algorithm called PageRank.
At the time most search engines ranked results simply by counting the number of times that a search term or keyword appeared on a page, or they simply ranked websites based upon the number of backlinks that they had. However, Larry and Sergey believed that they could create better and more relevant search engine results by ranking websites based upon the factoring in of many different factors that could all be objectively scored based upon an algorithm and not human judgement. This new technology began to factor in the number of pages that a website has, the amount of HTML text on each website, the overall loading speed of the website, the security of the website, the optimization of the meta content of the website, the name of the domain name, the number of people already organically visiting the website, the average time spent on the website and many other variables all at once.

NOTABLE QUOTABLE – “It’s quite complicated and sounds circular, but we’ve worked out a way of calculating a web site’s importance.” Larry Page
1998 – Larry and Sergey are both 24 years old – Larry and Sergey both almost sold Google so that they could go back to school and get their PhD.
Both Sergey and Larry wanted to finish their PhDs and they event entered into serious talks with Yahoo!, Infoseek, Lycos, AltaVista and Excite about selling the business. actually looked into selling their search innovations to another company.

FUN FACT – At the beginning of 1999, both Larry and Sergey decided that it was time to sell Google and so they entered into serious negotiations with the CEO of Excite, George Bell. They offered to sell him Google for $1 million, yet he rejected the offer. Vinod Khosla who was one of Excite’s venture capitalist partners convinced Larry and Sergey to accept $750,000 but George Bell rejected that offer as well.

NOTABLE QUOTABLE – Page noted, “We did get offers, but they weren’t for much money. So we said, ‘Whatever,’ and went back to Stanford to work on it some more.”

NOTABLE QUOTABLE – “Some say Google is God. Others say Google is Satan. But if they think Google is too powerful, remember that with search engines unlike other companies, all it takes is a single click to go to another search engine.” – Sergey Brin

NOTABLE QUOTABLE – “We want Google to be the third half of your brain” — Sergey Brin

NOTABLE QUOTABLE – “We saw that a thousand results weren’t necessarily as useful as 10 good ones” — Sergey Brin

NOTABLE QUOTABLE – “We believed we could build a better search. We had a simple idea that not all pages are created equal. Some are more important” — Sergey Brin
NOTABLE QUOTABLE – “Once you go from 10 people to 100, you already don’t know who everyone is. So at that stage you might as well keep growing, to get the advantages of scale.” — Sergey Brin
1998 – 2 Years Into the Business and No Profits to Speak Of
NOTABLE QUOTABLE – “We wouldn’t survive if people didn’t trust us” — Sergey Brin
1999 – Larry and Sergey are both 24 years old – Larry and Sergey decide to drop out of the Stanford graduate studies program to pursue the growth of Google full time.
1999 – Larry and Sergey are both 24 years old – Google secured a $25 million round of funding, with large investments from Kleiner Perkins Caufield & Byers and Sequoia Capital.
NOTABLE QUOTABLE – “Always deliver more than expected.” Larry Page
1999 – 3 Years In Realizing That It’s Time to Begin Monetizing the Business
3 years into business, Larry and Sergey’s search engine was generating over 18 million people visiting the site per day, yet it was becoming more and more expensive to operate the business every day due to the increased infrastructure needed to host the world’s most visited website. The team was running out of money, and against both Larry and Sergey’s initial wishes, the partners decided to sell pay per click Adwords. To insure that the look of the website remained uncluttered, the advertisements were allowed to be 100% text based only.
FUN FACT – The model of selling advertisements related to keyword searches was not a new one. In fact Goto.com, which was created by Bill Gross claimed that Google was stealing his idea of the Pay Per Click model. When Goto.com became Overture services the company sued Google. Overture was later bought by Yahoo!
2001 – Larry and Sergey are both 26 years old – 5 Years In and Still Grinding
In 2001, Google finally received a patent for the PageRank mechanism and algorithm. When the patent was issued it was officially assigned to Stanford University and Lawrence Page was credited as being the inventor.

2001 – Larry and Sergey are both 26 years old – Larry and Sergey agreed to hire Eric Schmidt to become the company’s CEO so help monetize the company and to help prepare the company to be turned into a publically traded company.

FUN FACT: While just an intern working at Bell Labs, Eric was able to create a complete re-write of the Lex software which was critical for the company. From 1997 to 2001, he was Chief Executive Officer (CEO) of Novell (a massive software and services company based in Provo, Utah.)

2004 – Larry and Sergey are both 29 years old – An 8 Year Overnight Success Story
On August 19, 2004, Larry Page, Sergey Brin, and Eric Schmidt agreed to work together at Google for 20 years, until the year 2024. At the initial public offering, the company offered to sell 19,605,052 shares at the price of $85 per share. Unlike most initial public offerings, the shares were sold in an online auction format using a system that was built by Morgan Stanley. The event made Google’s new market capitalization $23 billion. One of the company’s chief competitors, Yahoo!, also benefited greatly from the sell because it owned over 8.4 million shares of the company before the initial public offering occurred.
NOTABLE QUOTABLE – “I would like to see anyone be able to achieve their dreams, and that’s what this organization does.” – Sergey Brin

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