In his book The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution (Simon & Schuster, Inc., 2014), Walter Isaacson tells the stories of the people who created the computer and the internet. In the following edited excerpt, he recounts how Google's co-founders turned a school project into a company.
By early 1998 Larry Page and Sergey Brin's database contained maps of close to 518 million hyperlinks, out of approximately 3 billion by then on the Web. Page was eager that Google not remain just an academic project but would also become a popular product. "It was like Nikola Tesla's problem," he said. "You make an invention you think is great, and so you want it to be used by many people as soon as possible."
The desire to turn their dissertation topic into a business made Page and Brin reluctant to publish or give formal presentations on what they had done. But their academic advisors kept pushing them to publish something, so in the spring of 1998 they produced a twenty-page paper that managed to explain the academic theories behind PageRank and Google without opening their kimono so wide that it revealed too many secrets to competitors. Titled "The Anatomy of a Large-Scale Hypertextual Web Search Engine," it was delivered at a conference in Australia in April 1998.
"In this paper, we present Google, a prototype of a large-scale search engine which makes heavy use of the structure present in hypertext," they began. By mapping more than a half billion of the Web's 3 billion links, they were able to calculate a PageRank for at least 25 million Web pages, which "corresponds well with people's subjective idea of importance." They detailed the "simple iterative algorithm" that produced PageRanks for every page. "Academic citation literature has been applied to the web, largely by counting citations or backlinks to a given page. This gives some approximation of a page's importance or quality. PageRank extends this idea by not counting links from all pages equally."
The paper included many technical details about ranking, crawling, indexing, and iterating the algorithms. There were also a few paragraphs about useful directions for future research. But by the end, it was clear this was not an academic exercise or purely scholarly pursuit. They were engaged in what would clearly become a commercial enterprise. "Google is designed to be a scalable search engine," they declared in conclusion. "The primary goal is to provide high quality search results."
This may have been a problem at universities where research was supposed to be pursued primarily for scholarly purposes, not commercial applications. But Stanford not only permitted students to work on commercial endeavors, it encouraged and facilitated it. There was even an office to assist with the patenting process and licensing arrangements. "We have an environment at Stanford that promotes entrepreneurship and risk-taking research," President John Hennessy declared. "People really understand here that sometimes the biggest way to deliver an effect to the world is not by writing a paper but by taking technology you believe in and making something of it."
Page and Brin began by trying to license their software to other companies, and they met with the CEOs of Yahoo!, Excite, and Alta-Vista. They asked for a $1 million fee, which was not exorbitant since it would include the rights to their patents as well as the personal services of the two of them. "Those companies were worth hundreds of millions or more at the time," Page later said. "It wasn't that significant of an expense to them. But it was a lack of insight at the leadership level. A lot of them told us, 'Search is not that important.'"
As a result, Page and Brin decided to start a company of their own. It helped that within a few miles of the campus there were successful entrepreneurs to act as angel investors, as well as eager venture capitalists just up Sand Hill Road to provide working capital. David Cheriton, one of their professors at Stanford, had founded an Ethernet product company with one such investor, Andy Bechtolsheim, which they had sold to Cisco Systems. In August 1998 Cheriton suggested to Page and Brin that they meet with Bechtolsheim, who had also cofounded Sun Microsystems. Late one night, Brin sent him an email. He got an instant reply, and early the next morning they all met on Cheriton's Palo Alto porch.
Even at that unholy hour for students, Page and Brin were able to give a compelling demo of their search engine, showing that they could download, index, and page-rank much of the Web on racks of minicomputers. It was a comfortable meeting at the height of the dotcom boom, and Bechtolsheim's questions were encouraging. Unlike the scores of pitches that came to him each week, this was not a PowerPoint presentation of some vaporware that didn't yet exist. He could actually type in queries, and answers popped up instantly that were far better than what AltaVista produced. Plus the two founders were whip smart and intense, the type of entrepreneurs he liked to bet on. Bechtolsheim appreciated that they were not throwing large amounts of money--or any money, for that matter--at marketing. They knew that Google was good enough to spread by word of mouth, so every penny they had went to components for the computers they were assembling themselves. "Other Web sites took a good chunk of venture funding and spent it on advertising," Bechtolsheim said. "This was the opposite approach. Build something of value and deliver a service compelling enough that people would just use it."
Even though Brin and Page were averse to accepting advertising, Bechtolsheim knew that it would be simple--and not corrupting--to put clearly labeled display ads on the search results page. That meant there was an obvious revenue stream waiting to be tapped. "This is the single best idea I have heard in years," he told them. They talked about valuation for a minute, and Bechtolsheim said they were setting their price too low. "Well, I don't want to waste time," he concluded, since he had to get to work. "I'm sure it'll help you guys if I just write a check." He went to the car to get his checkbook and wrote one made out to Google Inc. for $100,000. "We don't have a bank account yet," Brin told him. "Deposit it when you get one," Bechtolsheim replied. Then he rode off in his Porsche.
Brin and Page went to Burger King to celebrate. "We thought we should get something that tasted really good, though it was really unhealthy," Page said. "And it was cheap. It seemed like the right combination of ways to celebrate the funding."
Bechtolsheim's check made out to Google Inc. provided a spur to get themselves incorporated. "We had to quickly get a lawyer," Brin said. Page recalled, "It was like, wow, maybe we really should start a company now." Because of Bechtolsheim's reputation--and because of the impressive nature of Google's product--other funders came in, including Amazon's Jeff Bezos. "I just fell in love with Larry and Sergey," Bezos declared. "They had a vision. It was a customer-focused point of view." The favorable buzz around Google grew so loud that, a few months later, it was able to pull off the rare feat of getting investments from both of the valley's rival top venture capital firms, Sequoia Capital and Kleiner Perkins.
Silicon Valley had one other ingredient, in addition to a helpful university and eager mentors and venture capitalists: a lot of garages, like the ones in which Hewlett and Packard designed their first products and Jobs and Wozniak assembled the first Apple I boards. When Page and Brin realized that it was time to put aside plans for dissertations and leave the Stanford nest, they found a garage--a two-car garage, which came with a hot tub and a couple of spare rooms inside the house--that they could rent for $1,700 a month at the Menlo Park house of a Stanford friend, Susan Wojcicki, who soon joined Google. In September 1998, one month after they met with Bechtolsheim, Page and Brin incorporated their company, opened a bank account, and cashed his check. On the wall of the garage they put up a whiteboard emblazoned "Google Worldwide Headquarters."