What is Foolsaurus?

It's a glossary of investing terms edited and maintained by our analysts, writers and YOU, our Foolish community. Get Started Now!


Google

Google (Nasdaq: GOOG) is an online business whose mission is to organize the world's information. It is headquartered in Mountain View, Calif.

Company Description

See if you can imagine this scenario: Two young, innovative lads get together and build a thriving business that helps people around the globe -- and it’s not even David and Tom Gardner!

Rather, we’re talking about Larry Page and Sergey Brin. The two originally met at Stanford, where, as grad students, they built a search engine for the university and awarded it the illustrious name “BackRub.” But when the engine started to gobble up too much bandwidth, they had to pull it down -- and named it Google in 1997.

The name comes from the term "googol," the number that starts with a 1 followed by 100 zeros -- and although the duo’s first paycheck wasn’t quite that big, it did have six zeroes: Andy Bechtolsheim, a founder of Sun Microsystems, recognized Google’s potential and wrote a check in 1998 for $100,000 to help Brin and Page get it off the ground. The only problem was, the check was made out to “Google, Inc.” The boys saw this as a pretty good reason to incorporate the business. A few weeks later, the incorporation paperwork was in, and the check found a safe home in the bank.

''PC Magazine'' praised Google’s efficiency that year and deemed it the search engine of choice in the Top 100 Web Sites for 1998. It wasn’t long before others started to take notice. Venture capital firm Sequoia Capital furnished the company with $25 million in 1999, and by September 2000, Google had emerged as the world’s largest search engine and supported 15 different languages (a number that expanded to 72 -- Klingon included -- by 2002). In addition, Yahoo!, Google’s biggest competitor, signed an agreement that year that made Google its default search results provider. In May 2002, Google announced an important partnership with AOL, which offered Google search and sponsored links to 34 million customers using Netscape, CompuServe, and AOL.com.

Although Brin and Page are the frontmen for the company, a handful of other folks have helped move it along over the years. Some notable names in Google’s past and present are Susan Wojcicki, whose garage served as the company’s headquarters in 1998 (she is currently vice president of product management at Google) and Eric Schmidt, who in August 2001, became CEO. A seasoned executive, Schmidt brought more than 20 years of software development, management, and marketing experience to Google -- which is ironic when you consider that, at the time, Brin and Page were just 27 and 28 years old, respectively.

Business Owners Gaga for Google

2000 marked the launch of Google’s AdWords program. With this system, companies (or anyone, for that matter) could pay Google, and in exchange, their ads would appear alongside related Google search results. (Own a wine store? Your ad could appear each time someone searches for “cork, wine, drink, party, Merlot, bottle, or cheese,” for example.) Effective 2002, businesses now pay only when someone clicks on their ads; otherwise, the ads appear for no cost. Of course, plenty of businesses use AdWords -- so for example, yours might not be the only wine store ad that appears when people type in those key words. An ad’s ranking in the list depends on its click-through rate and the amount the advertiser has agreed to pay Google per click.

On the other side of the advertising fence, we have Google’s AdSense program: Businesses add special Google code to their websites, and the code automatically displays Google ads that are related to the content on their websites. (So in this case, cheese ads, corkscrew ads, or vineyard tour ads might suddenly appear on your website.) The owner of the website collects money whenever visitors click on these ads. In addition, there’s an option that allows businesses to collect on every one thousand impressions. (For those of you who aren’t tech geeks: When someone opens a web page and looks at it, that’s an “impression.”)

Another handy tool for online business owners is Google Analytics. As the company puts it, this system helps you “Learn more about where your visitors come from and how they interact with your site. You'll get the information you need to write better ads, strengthen your marketing initiatives, and create higher-converting websites.”

Enhancements to Google's Services

The grass has never grown green under Google’s feet, and over the years, it has expanded its still-simple-looking website to include a number of special features and services. These include Google Toolbar (December 2000), which enables people to conduct Google searches without having to visit Google.com; Google Image Search (July 2001), which enables users to enter key words and summon up a list of online images that match those words (1.1 billion images had been indexed by February 2005); Google News (September 2002), which launched with 4,000 news sources; Google Print (December 2003), later known as Google Book Search, which enables people to track down excerpts from books in their search results; Google Local (March 2004), which provides neighborhood business listings, maps, and directions and was eventually integrated into Google Maps; free webmail service Gmail (launched in April 2004 as an invitation-only service and made available to the public on February 2007), Google Desktop Search (October 2004), which simplifies the task of hunting down files and documents on the hard drive of your computer; Google Scholar (October 2004), which helps the academics among us to dig through peer-reviewed papers, abstracts, and other scholarly literature online; Google Earth (June 2005), which enables users to see maps, photo-realistic buildings, and out-of-this world (literally) images from the Hubble Space Telescope; photo-sharing website Picasa.com (Jan. 2006); and Google Calendar (April 2006), which is an online calendar that users can personalize to keep on top of their schedules and organize their lives.

The company’s ever-expanding business and innovative products have enabled it to stave off competitors Yahoo! and Microsoft as it continues to dominate the online search market. And besides, Google is the only one of these companies whose name has become an official verb in the English dictionary.

Google Millionaires

Google went public on Aug. 18, 2004 for $85 per share and, by some estimates, instantly created more than 900 millionaires thanks to stock options. Several news stories have been published about how these employees have since used their newfound fortunes; one of the more interesting accounts is that of Bonnie Brown, Google’s part-time masseuse, whose stock options made her millions just five years after she began her employment there. She retired, cashed in a pile of her shares, and, among other things, started a charitable foundation with her option winnings. In November 2007, The New York Times reported, “it is estimated that 1,000 people each have more than $5 million worth of Google shares from stock grants and stock options.”

YouTube

In October 2006, Google made one of its most-talked-about transactions when it acquired popular online video business YouTube for a jaw-dropping $1.65 billion in stock. The deal brought an outcry of criticism -- YouTube wasn’t profitable when Google bought it; it was expensive to run (Forbes noted in April 2006 that the website’s bandwidth costs “may be approaching $1 million a month”), and considering the amount of copyrighted material that kept surfacing in YouTube’s video collection, the danger of lawsuits was imminent. Blog maverick Mark Cuban warned that the company would be “sued to oblivion.” Google doesn't break out the revenue it generates from YouTube, but analysts estimate that the business will make $200 million to $250 million for Google in 2008.

The Importance of Being Foolish ... or Googly

As Fools, we appreciate Google’s slogan: “Don’t Be Evil.” Also, the company has posted its fair share of bizarre announcements on our favorite day of the year, April Fool’s Day. One year, it declared that pigeons power Google search results. In another instance, it launched a faux “custom time” feature that allowed users to send emails into the past. This cleverly silly behavior seems to reflect the overall atmosphere of Google’s workplace. From the lap pool to the lava lamps to the complimentary laundry facilities, the company has garnered a reputation for its casual work environment. It was ranked the No. 1 workplace in 2008 by Fortune’s "100 Best Companies to Work For" list.

Related Companies

Recent Mentions on Fool.com

Failed to load RSS feed from http://www.fool.com/feeds/tickerfeed.aspx?s=GOOG&count=5!
Advertisement