Two Stanford Students Built Google as a Research Project

Google began in 1998 as a search engine written by two Stanford University computer science students: Larry Page and Sergey Brin. They started working on the project in 1995 while pursuing their PhDs, initially calling it "BackRub" because the system analyzed the web's back links to rank pages. The name changed to Google in 1997, a play on the word "googol" — the number 1 followed by 100 zeros — meant to reflect the vast amount of information the search engine could process.

Page and Brin's key insight was that web pages linking to other pages carried meaningful information about quality and relevance. Most search engines at the time ranked results by counting how many times a search term appeared on a page, which often produced poor results. Google's approach, called PageRank, used the link structure of the web itself to determine which pages were most important. This method worked better and faster than competitors like AltaVista and Excite.

Key Takeaways

  • Larry Page and Sergey Brin started Google as a Stanford research project in 1995 and launched it publicly in 1998.
  • The PageRank algorithm, which analyzed how web pages linked to each other, gave Google a major advantage over existing search engines.
  • Google's first funding came from friends, family, and angel investors before venture capital firms Sequoia Capital and Kleiner Perkins invested in 1998.
  • The company moved out of a Stanford dorm into its first real office in Palo Alto in 1999 and hired its first employees.
  • Google went public in 2004 with an initial public offering that valued the company at $23 billion.

The First Office and Early Employees

In the beginning, Page and Brin ran Google from a Stanford dorm room, then from a garage in Menlo Park, California, rented from Susan Wojcicki — who would later become YouTube's CEO. The garage setup became part of Google's origin story, though the operation was never as cramped as the famous Apple garage myth. By 1999, Google had moved to its first real office in Palo Alto and hired its first employees beyond the two founders.

One of the earliest hires was Craig Silverstein, who joined as employee number three and served as director of technology. The small team focused entirely on making the search engine faster and more accurate. Google's early culture emphasized engineering talent and technical problem-solving over sales or marketing. The company's first employees were often friends of Page and Brin or people they recruited directly from Stanford.

Funding and Growth in the Late 1990s

Page and Brin initially funded Google themselves and through loans from friends and family. In 1998, venture capital firms Sequoia Capital and Kleiner Perkins invested $25 million in the company, giving Google the resources to expand beyond the Stanford campus. This funding round valued Google at around $100 million — a significant bet on a search engine that had no clear way to make money yet.

The venture capitalists also pushed Page and Brin to hire a professional CEO to run the day-to-day operations. In 2001, Eric Schmidt, who had previously worked at Novell and Sun Microsystems, joined as CEO. Schmidt brought business experience and helped Google transition from a research project into a real company with revenue models, hiring practices, and corporate structure.

How Google Made Money

In the early years, Google's biggest challenge was figuring out how to turn search into a business. The company initially considered selling the search technology to other companies or charging users directly. Neither approach worked well. The breakthrough came when Google launched AdWords in 2000, a system that let businesses bid to have their ads appear next to search results.

AdWords was revolutionary because ads appeared only when someone searched for relevant terms. A plumber could pay to appear when someone searched "plumber near me," rather than paying to show ads to everyone on the internet. This targeted approach meant advertisers got better results, and Google could charge more per ad. By 2001, advertising had become Google's main source of revenue, and it has remained so ever since.

Going Public in 2004

Google's initial public offering on August 19, 2004, was one of the most anticipated tech events of the decade. The company offered shares at $85 each, raising $1.67 billion and valuing Google at $23 billion. The IPO was unusual because Page and Brin insisted on keeping voting control through a special class of shares, meaning they could make decisions without answering to shareholders in the same way other public companies do.

The IPO made Page and Brin billionaires and provided capital for Google to expand far beyond search. Within a few years, Google had bought YouTube, Android, and dozens of other companies. The public offering transformed Google from a startup into a major technology corporation, though the company's core search business remained its most profitable operation for years.

What Made Google Different From Competitors

Several factors gave Google an edge over search engines that came before it. The PageRank algorithm was genuinely better at finding relevant pages. Google's interface was also famously simple — just a search box and a button — while competitors cluttered their homepages with news, weather, and advertisements. This simplicity made Google faster to load and easier to use.

Google also benefited from timing. By the late 1990s, the web had grown large enough that search quality mattered more than it had before. Existing search engines like AltaVista and Excite had become bloated with features and advertising. Google's focus on search quality and speed appealed to users who just wanted answers. The company's willingness to turn down acquisition offers from larger companies like Yahoo also allowed it to grow independently and maintain its vision.

Frequently Asked Questions

Why did Page and Brin call it Google instead of BackRub?

BackRub described how the algorithm worked — analyzing back links. Google was chosen as a reference to a googol, the number 1 followed by 100 zeros, symbolizing the vast scale of information the search engine could handle. The name was also more memorable and easier to market than BackRub.

Did Google invent the search engine?

No. Search engines existed before Google — AltaVista, Excite, and Yahoo were popular in the 1990s. Google's innovation was the PageRank algorithm, which ranked results by analyzing how web pages linked to each other rather than just counting keyword matches. This approach produced better results than competitors.

How much did Google's first investors make?

Sequoia Capital and Kleiner Perkins invested $25 million in 1998 at a $100 million valuation. When Google went public in 2004 at a $23 billion valuation, their investment had grown roughly 230 times in value. Both firms became some of the most successful venture capital investors in history partly because of this early bet on Google.

Was Google profitable before going public?

Yes. Google became profitable in 2001, three years before its IPO, thanks to AdWords revenue. This was unusual for tech companies at the time — many internet startups burned through cash for years before finding a business model. Google's profitability made it an attractive IPO candidate.

What happened to the other search engines from the 1990s?

AltaVista was bought by Overture Services in 2003 and eventually shut down. Excite filed for bankruptcy in 2001. Yahoo remained independent longer but eventually sold its search business to Microsoft's Bing. Google's superior search results and business model allowed it to dominate the market while competitors faded.