Google's Larry Page: Good Ideas Still Get Funded
Some dot-com Don Quixotes may be tilting at windmills. Not Google. The popular search engine accommodates 70 million queries a day and expects to become profitable in the third quarter of 2001. And Larry Page, Google's co-founder and CEO, believes hot Internet ideas and products can still get funding, despite the dot-com meltdown.
Page recently sat down with BusinessWeek Online technology reporter Olga Kharif. Along with lessons from his own success story, Page also had some advice for entrepreneurs who are just starting out. Here are edited excerpts of their conversation:
Q: Were you ever afraid that Google wouldn't take off? A:
Q: Were you ever afraid that Google wouldn't take off?
A:Sure. All the time.
Q: What were your first steps in insuring the success of Google? A:
Q: What were your first steps in insuring the success of Google?
A:Well, actually, I think part of the reason we're successful so far is that originally we didn't really want to start a business. We were doing research at Stanford University. Google sort of came out of that. And we didn't even intend to build a search engine originally. We were just interested in the Web and interested in data mining. And then we ended up with search technology that we realized was really good. And we built the search engine. Then we told our friends about it and our professors. Pretty soon, about 10,000 people a day were using it.
Q: At what point did you decide to make a business out of it? A:
Q: At what point did you decide to make a business out of it?
A:We realized by talking to all the CEOs of search companies -- which were really turning into portals -- that commercially, no one was going to develop search engines. They said, "Oh, we don't really care about our search engine." And we realized there was a huge business opportunity and that nobody else was going to work on it.
And the other thing was, all these people were using Google, and we didn't have enough computers or enough resources to really provide a great service to people. So we needed capital to do that. We wanted to get everyone in the world to use it.
We realized we needed a lot of disk space, a lot of hard drives, and so we went out and we -- basically I -- found this really good deal on hard drives. And we bought, like, 120 hard drives. And we had to use all of our credit cards and our friends' credit cards and our parents' credit cards.
Q: And how did you manage to pay off the credit-card debt? A:
Q: And how did you manage to pay off the credit-card debt?
A:Pretty soon afterwards, we got some private investments through Stanford. At the time, actually, Google was growing very, very fast. We've grown in traffic about 20% per month throughout our whole history. So it was obvious people really liked it. The site experienced a kind of viral growth. People would tell their friends, and their friends would tell their friends.
Q: Did you put a lot of effort into creating your business plan? A:
Q: Did you put a lot of effort into creating your business plan?
A:Well, it took a long time -- I mean, the whole process of raising money. The first time we did it with our angel investors, and the second time we did it with our venture capitalists. It takes months. You have to talk to a lot of people, you have to find the right people who are interested. I mean, everyone we talked to actually wanted to invest. That was a nice thing. But that's because it's a great product and everyone was using it. People could understand why it was better. That's not true for every startup. So I think it had a lot to do with our product and maybe lots to do with the climate. We can still raise money very easily, if we need it.
I think there's still a lot of capital available. There are a lot of people who have money. They're just a little bit more selective about it. But that's a good thing. That means that any ideas, products, that are more likely to be successful will get funded.
The way I judge these things is, if you have a product that's really gaining a lot of usage, then it's probably a good idea, and it's probably going to be significant. And that tends to be a metric that investors use as well. Because if it's growing naturally, it'll often continue to grow for a long time.
Q: What are your goals for the next couple of years? A:
Q: What are your goals for the next couple of years?
A:Basically, our goal is to organize the world's information and to make it universally accessible and useful. That's our mission. When we started, we had about 30 million Web pages, which was quite large for the time -- that was two years ago. Now, we have well over a billion Web pages. So that gives you some idea of how we've grown in content. So we try to make more and more stuff available to people, we try to, when you come to Google, fulfill that need that you have as quickly as possible.
We try to make it better and better every day. We have about 40 PhDs in computer science who make Google better, and a whole bunch of other technical people. So we're really investing to improve the search engine, and that has really paid off. We're serving over 70 million searches every day. About half of that is on Google.com and half is through about 100 customers spread in 30 different countries. That's customers like Yahoo! and Netscape and so on.
Q: Have you been affected by the dot-com slowdown of the past year? A:
Q: Have you been affected by the dot-com slowdown of the past year?
A:Sure. Everyone is affected by it -- I mean the changing conditions. I think in a lot of ways it has been good for us, because it makes us stand out more from our competitors and from other companies. So actually...we say that we're going to be profitable in Q3 of this year. And that's quite conservative. We were definitely trying to be profitable before it was fashionable.
And we're able to rent office space now and things like that. Before, it was actually probably three times as expensive as it is now. We can also hire people from all these companies, whereas before it was harder to get people.
Q: What would be your advice to entrepreneurs who think they have a great idea right now but are struggling getting funded? A:
Q: What would be your advice to entrepreneurs who think they have a great idea right now but are struggling getting funded?
A:Especially on the Web, you have this tremendous opportunity to develop the product first. Most of the great Web companies we know were developed by a few people, and everybody started using those things, right? Yahoo! is a great example, Google is a great example. My brother is one of the founders of eGroups, which is a mailing-list company which actually ran for over a year as just one computer and one part-time person. And I actually bought them their first computer. It sat under somebody's desk at another Internet company, and it just got more and more traffic, more and more people using it. And then eventually they were, like, "Oh man, we should quit our day jobs and work on this!"
Q: Did your brother go into this business following your example? A:
Q: Did your brother go into this business following your example?
A:Actually, I encouraged him to start eGroups, and he encouraged me to start Google. So we both owe each other a lot. But anyway, there was a company, there was a product that a lot of people were using. And on the Web, that's really easy to do. I mean, this computer that I bought for them processed over 1 billion e-mail messages. They had a party for the computer recently.
But you don't need a huge company, just a computer and a part-time person. So you don't need to have a 100-person company to develop that idea. You can do it in your spare time, you can really work on ideas and see if they take off -- rather than trying to raise tons of money, millions of dollars for an idea that may or may not work. And once you have the product and people are using it, it's very easy to raise investment.
Edited by Douglas Harbrecht