ShareThisBy SIMON AVERY
Toronto Globe and Mail
Monday, June 11, 2007
Don't let the sandals and T-shirts fool you, nor the scooters and lava lamps in the lobby, nor the relaxed security guards lounging in deckchairs under a sun umbrella.
The youthful group at the head office known as the Googleplex is shaking up the world of media and technology, and it is operating off a well-conceived plan drawn up by the two founders in Google's first days as a garage startup.
From day one, Stanford University students Sergey Brin and Larry Page set out to create a company that would organize the world's information and make it universally accessible. At first, the online world came to know this idea through Google's unmatched search engine, revolutionary for the way it used algorithms to mathematically calculate the relevancy of a page.
For the entrepreneurial pair, ads were always just another form of information to be organized and delivered to consumers with the same efficiency as other search results. The company, however, was always more preoccupied building a user base. Lately, that's all changed as it started pulling the trigger on all kinds of deals to bulk up in the ad space, culminating with a $3.1-billion takeover of DoubleClick.
Susan Wojcicki, vice-president of product management at Google, has a unique take on the company's meteoric rise. Shortly before her friend Brin founded Google with Page in 1999, she bought a house in Silicon Valley's red-hot real estate market.
The Google founders had neither the time nor the money to find an office for their venture, so they set up in her garage and started paying her rent.
"It was good for them because when you are starting a company you want a lot of the conveniences of a house, such as bathrooms and showers," she says. "There was a washing machine there and a refrigerator, and they were working long hours."
The path from the garage to one of the world's biggest media and tech players was one of risky business decisions and a stubborn adherence to the founders' vision, she says, not some fortuitous story of a group of very smart people in the right place at the right time.
A key moment in the early days was the decision by Google to develop its own advertising system even though its staff of 40 was already stretched thin working on building the search engine.
"We wanted to control the whole process," she said. "The early vision was we could target that ad to search (results)."
It proved a critical decision on the road to Google becoming a tech and media titan with a market value of $160-billion today.
As online advertising skyrockets, Google is scooping up a bigger share of the proceeds than any other company. Recently, it announced it would expand its reach in Internet advertising with its purchase of DoubleClick.
At the same time, it revealed that it had jumped into the realm of traditional media, signing deals to organize radio and TV ads.
"We want to be a one-stop shop for our advertisers," Wojcicki says of the deal.
By expanding into off-line media, Google can bring smaller advertisers and publishers together in the same way its automated processes have allowed on the Web, she added.
News of the DoubleClick deal, which still needs regulatory approval to close, set off a frenzy among large players in the tech and advertising space. In the past few weeks, Microsoft Corp. announced the largest acquisition in its history in an effort to keep pace, a $6-billion offer for the online marketing firm aQuantive Inc. in Seattle. WPP Group PLC, the international advertising and marketing giant, offered $649-million for 24/7 Real Media Inc., and Yahoo Inc. bid $680-million for the 80 percent of Right Media Inc. it doesn't already own.
Microsoft even responded publicly to news of Google's DoubleClick deal by suggesting the search giant might need to be reined in by antitrust regulators.
Wojcicki points to several other critical moments in Google's history that have brought it to this moment. In 2002, the company took a leap and decided to syndicate its search technology, securing a deal with Time Warner Inc.'s AOL unit.
A short time later, Google decided it would broaden the reach of the ads it served beyond its own search results pages and onto millions of pages of Web content operated by partners.
One of the first such partners was About.com, now owned by New York Times Co. Google began to use its search technology to automatically extract meaning from its partners' pages and deliver appropriately targeted ads.
The online ad market has become hot today because advertisers have realized that the underlying technology allows for both efficiency and measurability, Wojcicki said, but she scoffs at the idea that Google is becoming anything close to a monopoly in a worldwide market so large that it's estimated to be worth as much as three-quarters of a trillion dollars in annual revenue.
Google is, however, in an enviable position where it is able to reinvest ad profits to build free software features on its properties that keep its traffic growing. Nielsen, the television ratings firm, says Google already attracts 55 per cent of all search requests in the United States.
Rajen Sheth, a project manager at Google, says the only assessment the company makes of its free services -- such as its Picasa photo service or its Orkut social networking site -- is how much new traffic they are attracting. "As long as the people are coming, revenue will follow. We found this was true with search," he says.
Google engineers are constantly working to tweak the technology running their search and advertising platforms.
"There's still a lot to be done in pretty much all the dimensions we are working on," says Louis Monier, a special researcher at the company and co-founder of AltaVista, the search engine that dominated the Internet before Google.
"A large number of queries are not answered well enough and there are other media that need to be searched."
While users are generally well served by search engines today, areas such as video and instantaneous translation remain areas of heavy research. Today's results are statistical. In the future, the goal will be to make them semantic, so that the search engines understand context and meaning. "It's not within reach today and would be a very big step, if possible," Monier said.
