Google began with a mission: to create the ultimate search engine to help users tame the unruly and exponentially growing repository of information that is the internet. And most would agree that when the word “Google” became a verb, that mission was largely accomplished.
It had been nearly six years since Google’s attention-grabbing initial public offering and, despite overall stock market weakness, Google remained strong. Although the stock moved with the market in general, the company returned significantly higher returns to its shareholders than did the S&P 500 (Exhibit1). Founders Sergey Brin and Larry Page had created a huge empire in which they now faced challenges of continued growth and innovation. These challenges would carry them through the second decade of the new millennium.
Google was founded in a garage in 1998 by Larry and Sergey Brin, two Stanford computer science graduate students, based on ideas generated in 1995. The name Google was chosen as a play on googol, a mathematical term for the number one followed by one hundred zeros. It is thought the term was appealing to the founders as it related to their mission to organize an exponentially growing web. Foundered on $100,000 from Sun Microsystems, Brin and Page were on their way to creating and Internet engine giant. Google immediately gained the attention of the Internet sector for being a better search engine than its competitors, including Yahoo!
Google had thus far thrived in the Internet search engine industry, garnishing a name that, for many, was synonymous with “Internet search.” Up to now, growth had been strong, suggesting a bright future. Google appeared to be poised to take advantage of what the future had to offer in new technology by creating new products. In order to continue doing this, it will need to retain the best and brightest minds. For example, one of Google’s new concepts was artificial intelligence software for use in automobiles that could drive themselves. The company’s stock price had climbed tremendously in the past, but some analysts now felt that Google was maturing as a corporation and that its stock value was leveling off.
As Google continued to grow, it continued purchasing other companies, such as its acquisitions of YouTube, DoubleClick, and Postini. Nevertheless, growth by acquisition may not necessarily lead to increasing growth in revenues or profits. For example, YouTube was an $1.6 billion 2006 acquisition that as of 2010 had not generated significant additional revenue for Google, despite its growth potential.