
Can Google's search engine find profits? (1999) - grinich
http://www.zdnet.com/news/can-googles-search-engine-find-profits/102541
======
rohunati
"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.

~~~
InclinedPlane
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.

~~~
ethnomusicolog
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.

~~~
netcan
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.

~~~
JetSpiegel
If by "complemented it" you mean ruined it and moots the point of PageRank,
sure.

~~~
netcan
No. That's not what I meant.

------
netcan
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?

------
7Figures2Commas
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...](http://publishing2.com/2008/05/27/google-adwords-a-brief-history-of-
online-advertising-innovation/). 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.

~~~
squiggy22
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.

------
thathonkey
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.)

~~~
jacobolus
Yep, the original URL was
[http://zdnet.com.com/2100-11-514893.html](http://zdnet.com.com/2100-11-514893.html)
which domain (com.com) is now owned by a domain squatter.
[http://zdnet.com/2100-11-514893.html](http://zdnet.com/2100-11-514893.html)
is a 404.

The Wayback Machine has it though:
[http://web.archive.org/web/*/http://zdnet.com.com/2100-11-51...](http://web.archive.org/web/*/http://zdnet.com.com/2100-11-514893.html)

~~~
declan
Actually the original URL would have been
[http://zdnet.com/etc](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/](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.

~~~
bostonpete
> it was to enable CNET-network-wide cookies without that era's browsers
> pitching a fit

I think ABC/ESPN did something in a similar timeframe maybe for the same
reasons. Strangely that choice seems to have persisted to the present.

------
frequentflyeru
"We have other ways of making money," said Page. "You'll see."

------
akassover
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/](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.

~~~
tim333
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.

------
kristofferdk
"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

Nice to be in a world before business model.

~~~
alexjeffrey
we still are - plenty of startups don't even start making money before they're
acquired.

------
javajosh
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.

~~~
topynate
The story is that their deck was a graph of their user growth... and that's
it.

------
umeshunni
>> Amazon CEO Jeff Bezos is widely rumored to be an investor in Google.

I wonder if this is/was true? Bezos seems to have made investments in many
other companies like Uber and Twitter
([http://blogs.wsj.com/digits/2013/08/05/a-stroll-through-
the-...](http://blogs.wsj.com/digits/2013/08/05/a-stroll-through-the-many-
many-many-investments-of-jeff-bezos/))

~~~
mhartl
Yes, it's true:

[http://allthingsd.com/20091005/new-yorker-bezos-initial-
goog...](http://allthingsd.com/20091005/new-yorker-bezos-initial-google-
investment-was-250000-in-1998-because-i-just-fell-in-love-with-larry-and-
sergey/)

~~~
waterlesscloud
So about $3.6 billion worth, if he's held on to it all.

------
dublinben
>"Obviously, we're going to build an interesting business about it"

It's too bad they couldn't come up with anything better than advertising.

~~~
pizzashark
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.

~~~
wtetzner
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.)

~~~
axaxs
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.

~~~
waterlesscloud
Youtube is certainly not best of class, it's 'only' the most popular.

~~~
SamReidHughes
It's where I go to look for videos in category (X) because it's the best.

------
avn2109
>> "...'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.

~~~
nostrademons
It ended twice, and bounced right back again.

Come to think of it, I'm rather glad for those irrational investors back in
'99, without whom Google might not exist.

------
subdane
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.'

------
kylelibra
"Internet companies, which are almost expected to lose gobs of money"

~~~
tim333
Written when the dot com boom was at it's boomiest of course.

------
dminor
Massive Betteridge fail.

~~~
function_seven
I think his law needs to be updated as:

 _Any headline which ends in a question mark can be answered by the word 'no',
but will someday be answered with 'yes'._

------
gjvc
yes

