Google began in January 1996 as a research project by Larry Page and Sergey Brin when they were both PhD students at Stanford University in Stanford, California.[11]
While conventional search engines ranked results by counting how many times the search terms appeared on the page, the two theorized about a better system that analyzed the relationships among websites.[12] They called this new technology PageRank; it determined a website's relevance by the number of pages, and the importance of those pages that linked back to the original site.[13][14]
Page and Brin originally nicknamed their new search engine "BackRub", because the system checked backlinks to estimate the importance of a site.[15][16][17] Eventually, they changed the name to Google; the name of the search engine originated from a misspelling of the word "googol",[18][19] the number 1 followed by 100 zeros, which was picked to signify that the search engine was intended to provide large quantities of information.[20] Originally, Google ran under Stanford University's website, with the domains google.stanford.edu[21] and z.stanford.edu.[22]
The domain name for Google was registered on September 15, 1997,[23] and the company was incorporated on September 4, 1998. It was based in the garage of a friend (Susan Wojcicki[11]) in Menlo Park, California. Craig Silverstein, a fellow PhD student at Stanford, was hired as the first employee.[11][24][25]
Financing (1998) and initial public offering (2004)
Google's first production server.[26]
Google was initially funded by an August 1998 contribution of $100,000 from Andy Bechtolsheim, co-founder of Sun Microsystems; the money was given before Google was incorporated.[27] Google received money from three other angel investors in 1998: Amazon.com founder Jeff Bezos, Stanford University computer science professor David Cheriton, and entrepreneur Ram Shriram.[28]
After some additional, small investments through the end of 1998 to early 1999,[28] a new $25 million round of funding was announced on June 7, 1999,[29] with major investors including the venture capital firms Kleiner Perkins Caufield & Byers and Sequoia Capital.[27]
Early in 1999, Brin and Page decided they wanted to sell Google to Excite. They went to Excite CEO George Bell and offered to sell it to him for $1 million. He rejected the offer. Vinod Khosla, one of Excite's venture capitalists, talked the duo down to $750,000, but Bell still rejected it.[30]
Google's initial public offering (IPO) took place five years later, on August 19, 2004. At that time Larry Page, Sergey Brin, and Eric Schmidtagreed to work together at Google for 20 years, until the year 2024.[31]
At IPO, the company offered 19,605,052 shares at a price of $85 per share.[32][33]Shares were sold in an online auction format using a system built by Morgan Stanley and Credit Suisse, underwriters for the deal.[34][35]The sale of $1.67 bn (billion) gave Google a market capitalization of more than $23bn.[36]By January 2014, its market capitalization had grown to $397bn.[37] The vast majority of the 271 million shares remained under the control of Google, and many Google employees became instant paper millionaires. Yahoo!, a competitor of Google, also benefitted because it owned 8.4 million shares of Google before the IPO took place.[38]
There were concerns that Google's IPO would lead to changes in company culture. Reasons ranged from shareholder pressure for employee benefit reductions to the fact that many company executives would become instant paper millionaires.[39] As a reply to this concern, co-founders Brin and Page promised in a report to potential investors that the IPO would not change the company's culture.[40] In 2005, articles in The New York Times[41] and other sources began suggesting that Google had lost its anti-corporate, no evil philosophy.[42][43][44] In an effort to maintain the company's unique culture, Google designated a Chief Culture Officer, who also serves as the Director of Human Resources. The purpose of the Chief Culture Officer is to develop and maintain the culture and work on ways to keep true to the core values that the company was founded on: a flat organization with a collaborative environment.[45] Google has also faced allegations of sexism and ageism from former employees.[46][47] In 2013, a class action against several Silicon Valleycompanies, including Google, was filed for alleged "no cold call" agreements which restrained the recruitment of high-tech employees.[48]
The stock performed well after the IPO, with shares hitting $350 for the first time on October 31, 2007,[49] primarily because of strong sales and earnings in the online advertising market.[50] The surge in stock price was fueled mainly by individual investors, as opposed to large institutional investors and mutual funds.[50] GOOG shares split into GOOG class C shares and GOOGL class A shares.[51] The company is listed on the NASDAQ stock exchange under the ticker symbols GOOGL and GOOG, and on the Frankfurt Stock Exchange under the ticker symbol GGQ1. These ticker symbols now refer to Alphabet Inc., Google's holding company, since the fourth quarter of 2015.[52]
Growth
In March 1999, the company moved its offices to Palo Alto, California,[53] which is home to several prominent Silicon Valley technology start-ups.[54] The next year, Google began selling advertisements associated with search keywords against Page and Brin's initial opposition toward an advertising-funded search engine.[55][11] In order to maintain an uncluttered page design, advertisements were solely text-based.[56]
This model of selling keyword advertising was first pioneered by Goto.com, an Idealab spin-off created by Bill Gross.[57][58] When the company changed names to Overture Services, it sued Google over alleged infringements of the company's pay-per-click and bidding patents. Overture Services would later be bought by Yahoo! and renamed Yahoo! Search Marketing. The case was then settled out of court; Google agreed to issue shares of common stock to Yahoo! in exchange for a perpetual license.[59]
In 2001, Google received a patent for its PageRank mechanism.[60] The patent was officially assigned to Stanford University and lists Lawrence Page as the inventor. In 2003, after outgrowing two other locations, the company leased an office complex from Silicon Graphics, at 1600 Amphitheatre Parkway in Mountain View, California.[61] The complex became known as the Googleplex, a play on the word googolplex, the number one followed by a googol zeroes. The Googleplexinteriors were designed by Clive WilkinsonArchitects. Three years later, Google bought the property from SGI for $319 million.[62] By that time, the name "Google" had found its way into everyday language, causing the verb "google" to be added to the Merriam-WebsterCollegiate Dictionary and the Oxford English Dictionary, denoted as: "to use the Google search engine to obtain information on the Internet".[63][64] The first use of "Google" as a verb in pop culture happened on the TV series Buffy the Vampire Slayer, in 2002.[65]
In 2005, The Washington Post reported on a 700 percent increase in third-quarter profit for Google, largely thanks to large companies shifting their advertising strategies from newspapers, magazines, and television to the Internet.[66] In January 2008, all the data that passed through Google's MapReduce software component had an aggregated size of 20 petabytes per day.[67][68][69] In 2009, a CNN report about top political searches of 2009 noted that "more than a billion searches" are being typed into Google on a daily basis.[70] In May 2011, the number of monthly unique visitors to Google surpassed one billion for the first time, an 8.4 percent increase from May 2010 (931 million).[71]
The year 2012 was the first time that Google generated $50 billion in annual revenue, generating $38 billion the previous year. In January 2013, then-CEO Larry Page commented, "We ended 2012 with a strong quarter ... Revenues were up 36% year-on-year, and 8% quarter-on-quarter. And we hit $50 billion in revenues for the first time last year – not a bad achievement in just a decade and a half."[72]
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