The Google Guys: Inside the Brilliant Minds of Google Founders Larry Page and Sergey Brin
Chapter 2 Accidental Entrepreneurs
Eighty percent of success is showing up.
When Ptolemy created his library, he encountered problems nobody had faced before. The biggest was that no one had ever tried to organize such a massive collection of scrolls so that people could find what they wanted. It’s difficult to locate the text you want among half a million papyrus scrolls stacked randomly on shelves. The Republic by any other name just ain’t the same as Plato’s.
That’s where the great librarians of Alexandria stepped in. The first librarian of the Alexandria library was a man named Zenodotus. He struck upon the most enduring classification system ever dreamed up by humankind. He alphabetized the scrolls of Alexandria. In short, a simple concept that we now take for granted was not dreamed up until the Library of Alexandria made it necessary, five hundred years after the Greeks developed their alphabet. As the library grew, even that system was not sufficient. Callimachus, a poet and scholar believed to be the second or third librarian, created the first bibliography. He divided the documents into several classes—rhetoric, law, epic, tragedy, comedy, lyric poetry, history, medicine, mathematics, natural science, and miscellanea—in a document called the Pinakes ton en pase paideia dialampsanton kai hon synegrapsan (“List of those who distinguished themselves in all branches of learning, and their writings”). The Pinakes alone was said to have taken up some 120 scrolls. It was probably never completed, and did not survive to modern times. But for generations it was the major source of research for scholars, and it became the model for bibliographies in the millennia since.
And the innovations just kept coming. A poet named Philotas wrote the first comprehensive dictionary at the library, which Zenodotus improved by alphabetizing it. Didymus wrote commentaries and glossaries of the works. Dionysius Thrax created the first book on grammar, which became the standard text on Greek grammar for a thousand years and influenced the Roman creation of Latin grammars. The concepts dreamed up two millennia ago in Alexandria are still used today.
In their early days at Stanford, Larry and Sergey did not plan to make their search engine the core of whatever company they started. They viewed it as a scholarly research project, new technology that could find just the right documents in the giant library of the Internet.
In 1997, while still graduate students working on Ph.D.s in computer science at Stanford, they showed great enthusiasm when discussing their creation. One person they enjoyed chatting with was Andrei Broder, a corporate researcher at a Silicon Valley company called Systems Research Center, where he led the team that created the hottest search engine of the time, AltaVista. Broder, a Stanford alumnus, used to visit the campus to see what interesting projects were in the works. Two of the bright graduate students he would occasionally chat with over coffee were Larry and Sergey.
Broder found them to be “obviously very intelligent, and out to reinvent the world.” But when the discussion turned to the topic of making money from the technology, Broder found that Page had a profound difference of philosophy on the subject. “It was a very funny thing about Larry,” Broder recalls. “He was very adamant about search engines not being owned by commercial entities. He said it should all be done by a nonprofit. I guess Larry has changed his mind about that.”
Brian Lent agrees with that view. He worked with Larry and Sergey on their search engine project for a while, until deciding to head off and join a start-up. (He’s now CEO of Medio Systems Inc., which sells search and advertising systems for mobile phone makers.) The problem with the Google search engine at the time, Lent recalls, is that Larry and Sergey didn’t want to commercialize it, and Lent was anxious to become an entrepreneur. Their mantra at the time was more socialistic than entrepreneurial. “Originally, ‘Don’t be evil’ was ‘Don’t go commercial,’ ” says Lent.
That view was more Larry’s than Sergey’s. While at Stanford, Sergey wrote a scholarly paper about their creation, titled “The Anatomy of a Large-Scale Hypertextual Web Search Engine.” Still, in that paper, he argued against an ad-supported service as a corrupting influence. “Advertising-funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers,” he wrote.
But contrary to many reports, the two weren’t against corporations per se. Any graduate student who applies to Stanford, the genesis of Silicon Valley, is keenly aware that it’s a great place from which to launch a company. Larry and Sergey just didn’t expect Google to be the fountain that would quench their thirst to be entrepreneurs. They felt that a search engine was too important to be corrupted by financial interests.
Craig Silverstein, another computer science Ph.D. candidate at Stanford, helped get the company started as employee number one. He was the one who didn’t really want to start a company. But, he recalls, Larry and Sergey did. “Larry always wanted to be an entrepreneur,” says Silverstein. “He always thought big about what the company would be. Sergey was a good partner for that. He thought the same way.” Silverstein ended up putting his academic career on hold in order to join Google, where he still works.
Finding Hidden Meaning
Larry stumbled his way into creating a search engine almost by chance, pushed by two different forces—a government-funded research project and the rise of the Internet. Their work was funded by a project called the Digital Library Initiative, which started as an attempt by the Department of Defense to make it easier to find computer research papers electronically.
DLI originally had nothing to do with the Internet, which in 1994 was not yet a major force in the digital world. Stanford’s original grant proposal to DLI that year didn’t even mention the Internet.
But in 1994, Netscape Communications released its graphical Web browser, and the following year, the world suddenly had a system to archive and share anything, making DLI redundant. It was also the year that Yahoo Inc. was started. “The Internet completely changed things underneath us,” said Professor Hector Garcia-Molina, chair of Stanford’s Computer Science Department at the time.1
Whenever a new technology comes along, few people really figure out how to exploit it properly. Generally, it’s the second generation of companies that makes the real advances. That was true for search engines. Throughout the 1990s, search engines primarily retrieved pages according to how many times given key words were found on a site. These engines didn’t take advantage of the interconnected properties of the Internet other than that they could find sites and archive their information. The new technology that the Internet demanded did not yet exist. Larry created it.
When Google’s search engine was officially launched in December 1998, it was distinguished by one big unique attribute: it worked.
At its core is the PageRank system, invented by Larry (and named after him) while he was working on his Ph.D. It takes advantage of the unique properties of the Web—the network of links that makes its name so apt.
Garcia-Molina recalls how it all started. He was Page’s adviser, and one day in 1995 his student came into his office to show him a neat trick he had discovered. The AltaVista search engine not only collected key words from sites, but could also show what other sites linked to them. AltaVista did not exploit this link information in the way Google would, but that day in Garcia-Molina’s office, Page suggested it would be a good way to rank the importance of sites.
At first, it was just a game. “We had lots of fun that day seeing which computer science pages were most popular among the different universities,” recalls Garcia-Molina. They were pleased to find that Stanford’s database group, for example, drew more links than a similar department at rival University of Wisconsin.
Larry had his own idea about links. He told Garcia-Molina, “If this is so important to us, why not make it part of the search process?”
Larry’s idea was inspired by his scientific background. It was well known in the scientific community that when a researcher cites your paper in his own, it lends yours more credibility. The more citations you get, the more important your paper is perceived by the research community. This idea was codified in the “Science Citation Index” created in 1960 by Eugene Garfield, founder of the Institute for Scientific Information. Larry reasoned that Web links were analogous to scientific citations, and those with the most links probably were the most popular and would prove most useful to searchers. Those were the sites that should be listed first in the search results. He then began creating his own software for analyzing links between sites.
This required some tricky programming. Not only did the system count links to a particular site, it went a step further by determining the importance of the sites doing the linking. This was done by counting the links to the sites one link back. This increased the complexity of the analysis enormously; in order to calculate relevance, PageRank also had to track the links two steps back and correlate that data with the key words. Larry first called the system BackRub, because of its property of tracing links backward. But he later settled on the more sophisticated PageRank, a double entendre with his surname.
Sergey also fell into search engine research by chance. As a math and computer science major in the doctoral program at Stanford, he was working on a research project within the database group. In 1995, he and Brian Lent decided to try their minds on another computer science discipline called “associative data mining.” This is the process of finding pieces of information that commonly occur together. Retailers use it to search through their sales records and determine whether different items are frequently bought together by customers. Data mining was, however, a new field for computer science. It required archiving masses of Web data, so Sergey had to write a “crawler” program—software that visits Web sites, summarizes their content, and stores the data in a central location accessible to graduate students and search companies. Other search engines already had their own crawlers.
Sergey is a terrific programmer and engineer. His data mining work, using the Internet, involved parsing through huge amounts of data. “He did it on a scale that others would not have even contemplated,” says Jeffrey Ullman, Sergey’s adviser. (Sergey’s paper outlining the Google search engine was itself cited in another scientific paper, “Quality of Service and the Electronic Newspaper: The Etel Solution.”)2
Sergey is also a clever hardware engineer. He needed disk drives to store the data he collected, but had very little money, so he bought the cheapest drives he could find. But when he tried them out, they weren’t fast enough. Instead of throwing them out, he figured out a way to make them work anyway, by doubling the number of terminals on the drive connections. “I had never thought of doing that,” says Ullman. “This was engineering of the first order.”
Their separate projects brought Larry and Sergey together in late 1995. “I was chatting with Larry a lot,” recalls Sergey. “He and I got along pretty well.”3 If Larry wanted to search the Web, he also needed a crawler. So he recruited Sergey to the Digital Libraries project, combining his search technology with Sergey’s Web crawler.
They made a great combination. “Sergey likes math things,” says Stanford professor Andreas Paepcke, who headed the Digital Libraries project. “Larry just wanted to build. It just kind of grew.”
Scott Hassan, another Stanford grad student who worked with Larry and Sergey, recalls that it was mainly Larry’s project. “For Larry, it was his primary thing. Sergey was just doing it because it was interesting to him.” They generally worked late into the night on indexing and parsing Web pages at a Fresh Choice restaurant in Palo Alto, which offered a “Student’s Special” buffet for five dollars. They often toiled until 5:00 A.M.
There Will Never Be Another Yahoo
At Stanford, Larry and Sergey’s search engine could analyze thirty to fifty pages a second. Two years later, that rose to about a thousand a second. Today, it’s millions. It took a lot of research and programming to make it work. “We developed a lot of math to solve that problem,” Sergey told an interviewer in 2000. “We convert the entire Web into a big equation with several hundred million variables.”4
They played around with different names for their search engine. One of them was the “What Box.” “But then we decided that sounded like wet box, which sounded like some kind of porn site,” Sergey recalled.5 Looking for a big number, they intended to call the crawler Googol—a word coined by the nine-year-old nephew of mathematician Edward Kasner for the number 10100. Kasner simply wanted to name the biggest number anyone had ever given a name. He then also coined another name, the Googolplex, which is ten to the power of googol. (Larry and Sergey later adopted the name GooglePlex for their corporate campus.)
Nobody thought this would be the basis of a new company. Most people thought that Yahoo had already won the search engine wars, although Yahoo was really a classification system akin to the Dewey decimal system (without the decimals). It was a portal and did not even have its own search engine, licensing one from Akamai instead. The other search company executives didn’t think that search technology could or needed to be improved. Larry knew differently. If the Internet was to reach its potential, it needed new inventions to make it easier to find the right stuff. Without Google, the Internet might still be in the pre-Hellenistic Age. Nevertheless, Lent says, “In early 1996, we all said, ‘There will never be another Yahoo.’ ”
Just because this was an academic exercise, it didn’t mean Larry wasn’t ambitious. In order to build a system to test their theory, he and Sergey were repeatedly borrowing money from other students and faculty, and “borrowing” equipment that arrived at the loading dock at Gates Hall before its owners could claim it. “We had stolen all these computers from all over the [computer science] department,” recalled Sergey.6 Finally, Professor Garcia-Molina asked Larry exactly how much of the Internet he wanted to search. Larry’s response: “All of it.” Garcia-Molina managed to get them some money from the Digital Libraries project so they could buy more computers.
The Google search engine, first set up to troll through Stanford’s own Web pages, was an immediate hit with students and faculty, and Page and Brin became convinced of its commercial potential. By late 1996, Sergey recalled in an interview, “We had something we thought was quite nice.”7
Who Wants a Search Engine?
But they still didn’t think this would be the basis for a company. They planned to finish their Ph.D.s, so they tried to sell their technology to other search engines.
Fortunately, they found no takers. Had they succeeded, Google would not exist. For one thing, Larry and Sergey were pricing their technology very high, at about $1 million.
Most companies turned them down flat. Around 1997, for example, Larry called Louis Monier, one of the creators of the AltaVista search engine at Digital Equipment Corp. (DEC). AltaVista was then considered the best search engine in existence. “He tried to explain to me who he was and what he was doing,” Monier recalls. “He sounded interesting. He didn’t sound like a crackpot or anything. I said, ‘Yeah, we should meet.’ ”
But DEC management showed no interest. The company was not really interested in a search business; AltaVista had been created mainly to demonstrate how its computer server “was bigger and beefier” than other hardware, says Monier.
Before Monier could talk to Larry and Sergey, he needed permission from DEC headquarters in Massachusetts. But now that Google had commercial potential, Larry’s obsession with secrecy emerged. He insisted that Monier sign a nondisclosure agreement first, and DEC management wouldn’t go for that. “This went nowhere, which was too bad,” says Monier.
It seems today that it was always inevitable that Larry and Sergey would turn their search engine into a company. But that was not the case. “Larry has a million ideas,” says his early partner Craig Silverstein. “If he didn’t make a company out of this, he’d be happy to make it out of something else later. If they had found someone who took their work seriously, and wanted to own it and offered the right price, they would have sold. We didn’t find that, so we said, ‘Okay, we’ll do it ourselves.’ ” In 1998 they began looking for investors to get them started.
They approached David Cheriton, a computer science professor who had started a couple of companies with Silicon Valley entrepreneur Andy Bechtolsheim, for help finding funding. He decided to introduce them to Bechtolsheim. Just taking the step of asking Bechtolsheim for money was a bold and brash move. They had no business plan or formal pitch. Luckily, Bechtolsheim didn’t need either. According to Sergey, he simply said, “Oh, we could discuss a number of issues. Why don’t I just write you a check?”8 He filled out check number 4642 to Google Inc. for $100,000.
In the end, Cheriton matched Bechtolsheim’s investment, and with those two on board, the rest of the start-up money they needed came easily. Technology angels and executives, such as Ron Conway of the Band of Angels and Ram Shriram from Amazon, also put in money.
Those who did invest made fortunes. Stanford, which holds the patent to the PageRank algorithm Larry created, received 1.8 million shares of Google stock in exchange for long-term rights to the patent. Stanford’s profit was $336 million, by far the most money it has ever received from spinning off technology invented on campus. It’s probably the most money any university has ever received from a single invention. Cheriton, already wealthy when he became the second investor in Google, is now a billionaire. One Stanford professor who loaned Larry and Sergey money when they were students joked that the stock he received in return would cover his retirement.
But this initial funding could get them only so far. So in the spring of 1999, Larry and Sergey started seeking $25 million in venture capital. Again, they were incredibly brash. For the money, they were willing to hand over less than one fifth of the company’s equity—thus valuing the company at more than $125 million. Most Silicon Valley companies have a hard time getting that much money, and they give away a much larger percentage of the start-up’s ownership to get it.
But the fact that they had already persuaded Bechtolsheim and other prominent angels to invest impressed enough people to allow Larry and Sergey to get the pick of the litter. They went to the top of the heap, and got interest from two of the most prominent venture capital firms, Kleiner Perkins Caufield and Byers, and Sequoia Capital. These firms are used to setting their own terms, and most entrepreneurs feel lucky if they can even get in the door to make a pitch. But Larry and Sergey did not want to give too much control of their company to any individual firm, and insisted that they split the deal: each venture capital firm could invest $12.5 million in return for 9 percent of the company.
It almost killed the deal. Both firms wanted to do the investment alone. John Doerr from KPCB and Mike Moritz from Sequoia had never come across entrepreneurs refusing to take their money before. Just having one of them on board lent extraordinary credibility to any entrepreneur trying to make a name for himself.
Finally, Larry and Sergey went to two of their angel investors, Ron Conway and Ram Shriram, and said they wanted to drop out of the deal and seek more angel funding instead. They told the angels that they were giving the firms only a couple more days to decide.9 Conway and Shriram had a good relationship with each other and were sometimes coinvestors with Doerr and Moritz, and they passed the threat on. Faced with the prospect of losing any part of the deal, both Doerr and Moritz caved. With this deal, Larry and Sergey showed that they were extraordinary negotiators. They have become accustomed to getting their way.
Kleiner Perkins venture capitalist John Doerr was later quoted as saying, “I have never paid more money for so little a stake in a startup.”10 Sequoia head Mike Moritz said that the pair’s “manic devotion” helped to convince him.11 But he also admitted that he really made the investment because, if the search engine turned out to be good, he could sell the company to Yahoo, another company he had invested in. Sergey just thought they had negotiated a reasonable price in the Silicon Valley game of fund-raising. “I feel we negotiated a good deal at the time. They [the VCs] thought it was a lot, we thought it was too low. Angel investors treat [investing] as a hobby. The VCs do it as a business, or at the very least as a competitive sport,” he said.12
Nevertheless, it turned out to be a spectacular deal for both VCs. After Google went public, each VC firm found itself with stock worth about $3 billion. It’s possibly the biggest return on a VC investment in history. Once again, Larry and Sergey were right. But it would not be the last time they were to do battle with their venture backers.
With money burning a hole in their bank account, the boys from Stanford were on their way.