Startup Sunday Season 3 Episode 12(Google- Fostering Innovation and Nurturing Startups)

We all talk about start-ups and new businesses that recreate the business models time and again. But the startup that changed the course of this millennium was Google. Today a company with a market capitalization of billion US dollars was once a startup in the year 1996. Two Stanford Ph.D. students, Sergey Brin and Larry Page had the idea of ‘BackRub’, a revolutionary technology that would rank web pages based on how many other web pages linked back to them. A disrupting idea in itself, the two co-founders worked to make their idea a success. And thanks to the world of internet, Google slowly created a buzz that took the entire world by storm.

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The Early Days of Google

After Google.com domain was registered on 5th September 1997, Google started draining too much of bandwidth of Stanford University itself. This led to Larry and Brin relocating to the garage of future Google employee Susan Wojcicki, the current head of YouTube. It was around the same time that Brin and Larry got a seed investment of $100,000 from Sun Microsystems founder Andy Bechtolsheim. After being nearly acquired by Excite, a leading search engine at that time in 1999, Sergey and Larry decided to make Google a business after all. They moved to its first-ever office in 165 University Avenue in Palo Alto- the same office building that housed companies like PayPal and Logitech. Google eventually raised $25 million from Sequoia Capital and it started its operations on a larger scale. Google debuted its Adword products in late 2000, enabling businesses to buy ads on search terms. By then Google had already started establishing itself as a search engine and it survived the dot-com bust that ended up consuming lots of new such start-ups.

Google slowly became the tech rockstar in a world where everyone was failing. And this was due to its commitment to innovation and intention to do good things for the world. It believed that a long vision over seeking short-term gains would serve their purpose, which happened in due course of time. On August 19th,2004, Google had its Initial Public Offering on the stock market priced at $85. Today a share in the Google parent company Alphabet costs about $800. Be it developing new products, the revenue model or the employee experience, Google has always innovated and every time it has come up with something new. But according to Susan Wojcicki, Google’s Senior Vice President in Advertising, innovation is a continuous process and doesn’t happen instantly. She has also mentioned a number of times that the spirit of the company remains the same as it was when she joined it in its early start-up days. Although Google faces the investor’s dilemma on whether to expand in newer products or developing the existing one, Google believes in doing both.

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Google started a revolution with its search engine concept that gave its user links to a number of websites as per his required choice on the same page at a time. The concept was not new but how Google offered it, definitely was. With time Google was developing even newer products to offer to its users. It started expanding beyond the search engine and started gobbling up newer start-ups to offer products like G-Mail, Google Docs, Google Chrome and Google Maps which are still very much relevant today. In 2005 Google bought a tiny startup that was making an operating system for digital cameras. It was called Android and was led by Andy Rubin. In late 2008 when Smartphones hit the market users got a taste of the OS, and today Android has the largest user base around the globe. In 2006 Google acquired YouTube for $1.65 billion from a bunch of ex-PayPal employees and revolutionized the On Demand video viewing industry. Google by that time was getting bigger and bigger. In 2006 it opened up its fully owned and designed data centre in Dallas, Oregon, on the banks of the Columbia river. It has a history of generating maximum efficacy from its data centers. Google is now coming up with driverless cars, or Artificial Intelligence-based IoT which is sure to change the course of the world in the coming future.

Innovation at its Heart

Apart from the number of innovative and easy to use products, Google also keeps innovating and experimenting with its revenue model. The company’s annual report succinctly puts it, “We generate revenue primarily by delivering relevant, cost-effective online advertising.” The company has a unique value proposition in terms of customer payment options. Unlike the traditional advertising media, which doesn’t segregate the actual prospective user from the mass, Google does it in a much better manner as the user with a specific choice will be advertised by the offering of the vendor himself. This allows a better targeting strategy when it comes to marketing products via an online media like Google. Also coupled with it, customers pay for ads on a cost per click basis, meaning that an advertiser can place an ad with zero obligation. If no one clicks on the ad, the customer doesn’t pay a dime. From the perspective of Google’s shareholders, it gets even better. This is all based via auction. Would-be buyers of AdWords bid for the right to use a particular ad, or phrase, overpay, and Google enjoys a high markup. Underbid, and you risk losing the auction to a more motivated seller.

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Google also believes that nurturing new start-ups can help it learn and grow from them. This is the sole reason that Google offers a range of products starting from infrastructure to AI-based tools and software and best practices to grow one’s startup. Google through its featured programmes help prospective start-ups from raising funds, hiring the right team and building new products. It also acts as a potential influencer helping such start-ups grow through digital marketing. All in all, it gives a launch pad for new age start-ups to work and make use of Google’s state of art tools and platforms to come up with even more revolutionary products and business models. The story doesn’t end here. Besides acting as an incubator to start-ups Google also looks at the positive growth of its employees. It offers its 26,000 employees with a variety of campus styles and free meals, which creates a sense of pride among its employees. Googles co-founders have gone on record to mention that they continuously learn from their employees and their organizational structure is such that most of the problems are solved in a lesser amount of time owing to sharing of information and ideas. A problem can be posted by a techie on the reader boards and another set of employees start solving the problems. This, in turn, brings out the problem-solving skills of the employees and creates a sense of entrepreneurship within them.

Business Roles in Google

Business Roles

The bottom line is that Google not only innovates itself but at the same time helps others to innovate creating an environment for new businesses to grow. It acts as an accelerator, an incubator, an advertising medium, and influencer and an organization promoting entrepreneurship. These principles of Google have let it grow exponentially without going irrelevant in today’s age of rapid change.

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