Inside Google

Fast Company writes about Google and how it keeps growing:

It is a joint founded by geeks and run by geeks. It is a collection of 650 really smart people who are almost frighteningly single-minded. “These are people who think they are creating something that’s the best in the world,” says Peter Norvig, a Google engineering director. “And that product is changing people’s lives.”

At Google, building and then following the traffic makes perfect sense. It’s central to the company’s culture and its operating logic. Consider this: For the first 18 months of its existence, Google didn’t make a penny from its basic Web-search service. Only then did it make the transition from great technology to great technology with a critical mass of users.

And Google was able to package that traffic in ways that seem both ingenious and completely synchronous. The search service itself remained free. But Google has, for example, sold untold numbers of ads pegged to specific search keywords.

Advertisers don’t just pay a set rate, or even a cost per thousand viewers. They bid on the search term. The more an advertiser is willing to pay, the higher its ad will be positioned. But if the ad doesn’t get clicks, its rank will decline over time, regardless of how much has been bid. If an ad is persistently irrelevant, Google will remove it: It’s not working for the advertiser, it’s not serving users, and it’s taking up server capacity.

A recent article in Business Week on the search engines estimated Google’s revenues to be about USD 375 million, with EBIDTA of about USD 150 million. Quite remarkable, compared with Yahoo’s revenues of just over USD 1 billion.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.