"And they want to avoid competing with other search engines to be the browser of choice for existing portals. In fact, Page said Google doesn't have any real competitors at all, which may be why they don't intend to do much marketing."
Interesting to think about in light of Peter Thiel's lecture for "how to start a startup" at Stanford. He is correct that the narrative has changed. Contrast the above quote with the one Thiel used in his lecture from Schmidt, which basically said "Google is not a search company, it's an ad company," or some variation thereof.
I'm becoming less a fan of Thiel as time goes on, his ideas seem to be superficial and often harmful.
Saying that google is an ad company is a mistake. Just because that's where the revenue, the sustenance comes from as a primary source. But that revenue exists because of google's market domination in search and other services. If google stopped being a search company their ad revenue would dry up overnight. Saying that google is an ad company is like saying that a particular software dev. is not a "software person" but a "burrito person", because they happen to eat burritos a lot.
At the end of the day google's revenue comes about because they provide something of value to their users, and advertisments are a way to monetize that value effectively. No different than broadcast tv or radio. But it's the value which is the foundation of the company, the revenue is merely a consequence of that value. Thinking that the revenue stream is an intrinsic part of the company is a mistake that has doomed many companies before. Think about newspapers, I'm sure many of them thought of themselves as advertising companies to a substantial degree, and when that revenue dried up because the value of the newspaper changed, many of them were left wondering what to do, many of them have already gone out of business, many more still will. Hopefully google won't make the same mistake and alienate its users more than it has already or ignore competition before it's too late.
What you are saying is exactly the point of Peter Thiel. Basically he is saying that Google is a search company, with a monopoly in search, and they try to pass as a an advertising company (the Ericschmidt quote). According to Peter thiel that is SOP for companies that have a monopoly in a market. they do this for many reasons, including evading regulatory oversight. So it seems to me you are agreeing with him.
I see Google as an automation company based on data and monetized by advertising.
Does it make Google an advertising company? Yes by the bottom line, no by this strategy. It just happens it's the best way to monetize what they have so far.
Analogy: would you define 1905 Einstein as a patent clerk or a scientist?
It's just hard to boil down the dynamic to a statement like that, Google is an X company. Google invented a search engine where everyone found stuff on the web easier than other methods. They then built an advertising platform that complimented it. The two are highly interlinked. They invented and got good at both.
You can look at things from a distant POV with too few details just like you can look at it from a perspective that's too close, to many details. There is no method apart from using your faculties that can replace having good faculties and the ability to apply perspective.
Ok lets see it's mission is to organize the world's information and make it universally accessible and useful.
Therefore Google is an information organization company. More than search, it's also monetizing the effort of getting all the information into proprietary databases and keeping them up to date.
Google Maps, Google Places, Google Search, etc.
Then they monetize it by advertising, as well as running their own commerce - app stores and the like. And they also give businesses Analytics, Email, Docs and other Apps that they have now unified with Google+ as well as Google Checkout for payment processing.
Now Apple, Google and Amazon compete in phone OSes, payment processing platforms etc.
You're really arguing against a straw man here. Thiel was talking about the motivations monopolistic companies have to obfuscate how people view their market.
If Google is a search company, it holds 2/3 of the market. If it's an ad company, its revenues are equal to ~1/10 of global ad spending. Therefore, if Google doesn't want to be seen as a monopoly, it is in its interest to have the public face of an ad company, even if it views itself internally as a search company.
> google's revenue comes about because they provide something of value to their users
Their revenue comes about because they provide something of value to advertisers: users.
Yes, search results are valuable, but not valuable enough to charge for them - unlike ads. It's chicken-egg, but their value is not simply in providing search results.
Depends how you see it. No user would come to Google if it wasn't good enough in search, and consequently no company would want to advertize with it if no one visited Google. The "inherent" value of Google is due to its Search Engine - they just found a way to monetize it heavily. It's a win-win game for both advertizers and users.
The timeline is relevant here. The article is dated June 1999.
Google's first stab at selling advertising began in July 1999. When Jeff Dean arrived from DEC [...] Brin and Page told him that they needed an ad system. But they had no idea what a Google ad should be. Some at Google - including the director of technology, Craig Silverstein - thought that the whole effort was a distraction and that Google should outsource its ad system to some company more accustomed to waddling in the much of Mammon. "I was like, 'We're not an advertising company, we're a search company - let someone else worry about the advertising,'"says Silverstein. "It was good they did not take my advice."
-- 'In The Plex' by Steven Levy
Google started selling advertising in December 1999. At that time, "Google expected to make most of its money from licensing" its search technology, although it was hoped that "advertising might one day account for 10 to 15 per cent of its revenue." (In 2013, advertising accounted for 91% of Google's revenues.)
AdWords was launched in October 2000. Schmidt joined as chairman in March 2001, and became CEO five months later.
If I understand the quotes correctly, Page is talking about marketing Google to users, while Thiel is referencing Google's sales of search ads. Two totally different topics.
I'm not in the valley, so I guess I don't understand the recent obsession with Peter Thiel. It seems like lately his name has popped up in HN comments over and over again.
I wonder how Google's success as a search engine could have unfolded differently.
Imagine they had launched adwords with more basic tools: less granular targeting and such. Imagine that their revenue had gradually climbed to $1bn by now, enough to employ a battalion of the best engineers they could find and focus on search. Investors (those delivering truckloads of cash in the article) would still have called it a big success.
They probably wouldn't have built or bought all the expensive speculative stuff like self driving cars, android, wave & youtube. Would the search engine be worse? Would it be better? Would they have been able to maintain their lead in search?
A decent short overview of how Google's advertising business evolved can be found at http://publishing2.com/2008/05/27/google-adwords-a-brief-his.... While there were some unexpected twists and turns, the timeline suggests that when this article was written, Google was already thinking about the ways it could adopt an ad model.
As a side note, I'm not sure if this was posted as an ironic response to the growing bubble talk of the current boom but unlike in the late 90s, the challenge for most startups today is not finding a business model but rather achieving enough scale to apply one of the many proven business models successfully and sustainably.
Pretty sure that is accurate too, Steven Levy's book 'The Google story' documents their fear of Microsoft in particular realising what a massive deal search was going to be as a business, and how much cash it would generate. The culture of 'no success to see here' continued until they had established significant first mover advantage.
It's pretty nice that ZDNet has stories from 1999 up still although I suspect that is not the story's original URL. (They've improved it for the benefit of Google's search engine since that time.)
Actually the original URL would have been http://zdnet.com/etc. when this (rather silly) article was published in 1999. CNET Networks, which owned com.com, tv.com, radio.com, search.com, and news.com, bought ZDNET a year later in 2000.
A few years afterward CNET began to transition many sites including news.com and zdnet.com over to suffixes ending in .com.com; I vaguely recall being told that it was to enable CNET-network-wide cookies without that era's browsers pitching a fit. (Note the Wayback Machine indexed it as zdnet.com.com only after 2002.)
Eventually I helped (I was not alone but was the most vocal) to make the switch away from news.com.com to news.com, which made more sense and served readers better. Of course I've since left to found http://recent.io/, but thought I'd inject a little history as someone who worked at CNET Networks during part of that .com.com time.
Funny to read that today. Some of the pontificating experts really do look silly. I'm not sure the Google founders had a much clearer grasp of the future, though. Legend has it they had tried to sell the company for $750k a few months before (http://techcrunch.com/2010/09/29/google-excite/). It's a pretty mental jump to go from trying to sell the house for $750k to raising $25 million in a matter of months.
Reading it made me feel silly as I thought much the same way as the expert in the article and as a result failed to buy Google shares when they floated. Ah well.
"We're in an unreal world now where the concept can get you $25 million -- where revenues and business plans, you don't need to have those," said Hagen
I would very much like to see the deck that Larry and Sergey showed Kleiner Perkins in 1999. It would be interesting to match that up to the historical record.
Keep in mind that advertising was very different back then. Untargeted, often not measurable, and (on the internet) often consisted of a fast-moving "punch the monkey" banner.
Much more than just using it as a revenue source, Google more or less invented modern advertising.
They own the most popular video hosting site, the 5th most popular social network, the most popular search engine, the fastest internet service publicly available in the US, and the most popular web browser, and you just said they don't do anything better than advertising.
To make money. YouTube, Google+, Google Search, and Chrome don't make money, other than being vehicles for advertising. (I don't know anything about their internet service.)
While you're not wrong, this is an important statement. Fact is, youtube, google search, and chrome are all best of class products (arguably). Google is an ecosystem that keeps you by offering the best of everything. And it's all monetarily free. But this keeps you looking at advertising. People pay good money to be the first result of google. Youtube ads are generally noninvasive enough to sit through. Would you pay for google search, or youtube? I might, but eventually a free competitor would pop up and shift the momentum. Google is interesting in that other than side ventures, they have tons of great products that all tie into their only real revenue stream - advertising. And for now, weighing the pros vs the cons of this, I'm ok with it.
He was talking about their uninventive business plan. Not their consumer products. They're plan is the same as all other tech companies just they did/do it better.
True, but in terms of how to make money out of a huge mass of users, advertising is usually the best bet.
However, I often think there's room for more directly paid search as opposed to side-funded with advertising. Afterall, companies pay for (re)search all the time. They pay for their own employees to do research and write reports. They pay marketing companies for research, etc...
Do people really need a search result of just web addresses back in 0.1s, when they could get not just the address, but the actual information they need in 30s? I'd pay for a service that could do that.
>> "...'We're in an unreal world now where the concept can get you $25 million -- where revenues and business plans, you don't need to have those," said Hagen. "But that blip's got to end at some point.'"
Now more than ever, Mr. Hagen. Now more than ever.
Oooh Momma, Elliot Zaret! 'It works like this: The entire Web is constantly downloaded onto Google's computers, where it is aggregated, indexed and prepared for searches. When a user types in a search, Google performs a complex computation -- solving an equation that has 500 million variables and 2 billion terms -- to determine the best results on the "most important" sites. That equation takes into account many factors including how close the search terms are to each other, and whether other "important" Web sites point to the site the terms are on.'
Interesting to think about in light of Peter Thiel's lecture for "how to start a startup" at Stanford. He is correct that the narrative has changed. Contrast the above quote with the one Thiel used in his lecture from Schmidt, which basically said "Google is not a search company, it's an ad company," or some variation thereof.