Internet Search
Before Google or any search engines, it was very hard to navigate around the web and easily find what one was searching for. One of the earliest search engines created and used was called “Yahoo”, which was created by two college students. Jerry Yang and David Filo had an idea of creating a search engine, or a webpage, that makes it easier to navigate to websites.
This idea required lots of money, and venture capitalists are the ones who preside over investment funds containing billions of dollars. They are the deciding factor as to which startups are going to live and which don’t. One of the most successful venture capitalists firms is Sequoia capital, and a partner of that firm Michael Moritz decided to have a look over the startup of Yahoo, and decided to invest in them.
Making money on the Internet
At the time, nobody really made money on the internet/ used it for business or commerce. Yahoo decided to use advertisements as a way of income, and put banner ads on their website. The people using Yahoo were increasing which meant more advertising revenue for the company. Yahoo showed that making money on the internet was possible.
The web boom had begun with a lot of challengers to Yahoo, including their biggest rival called Excite. Excite was much more sophisticated and was easier to find websites as it was software based. But on both Yahoo, and Excite it was not as easy to navigate to pages, and required a lot of searching.
n 1997, the idea of Google was created by two college students, and it was much easier to find what one was looking for as compared to other companies. As compared to Yahoo and excite, Google allowed to find more relevant sites and was mostly done from recommending websites on a topic that was visited more. Google was looked at as just another search engine, and there were less sponsors, and every search company in silicon valley turned them down, including Excite, which had a chance to buy google but refused to.
The two college students finally found an investor: Andy Bechtolsheim who was very impressed with google and wrote them a check of $100,000 on the spot. This check was followed by a couple of other investors including John Doerr paying them 12 million.
Google’s advertising technique
Google’s advertising technique was different and not just banner ads, they would display ads/recommend certain companies by figuring out what the user is interested in, which was done by seeing the keywords they entered into the search engine.
Example: whenever someone typed in ‘cars’ into the search engine, it would show ‘BMW’ on the first page/ line, as ‘BMW’ would pay google to do so. This would give the users a good experience of less ads, as well as get money to promote another company’s product. This was known as ‘paying for placement’.
Google made a lot of money and their value increased a lot. In 2004, the company went public.