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College of Business and Accountancy

La Salle University – Ozamiz City

Prelim Requirement in

Venture Capital

Submitted by:

Mutia, Ace John T.


Otero, JR R.
Yungod, Beverly P.

Submitted to:

Ms. Jennifer M. Aguanta

February 2018
GOOGLE BACKGROUND STORY

The Google story begins in 1995 at Stanford University.


Larry Page was considering Stanford for grad school and Sergey
Brin, a student there, was assigned to show him around. By some
accounts, they disagreed about nearly everything during that first
meeting, but by the following year they struck a partnership.
Working from their dorm rooms, they built a search engine that
used links to determine the importance of individual pages on the
World Wide Web. They called this search engine Backrub.

Soon after, Backrub was renamed Google. Google is


an American multinational technology company that
specializes in Internet-related services and products, which
include online advertising technologies, search engine, cloud
computing, software, and hardware. The name was a play on
the mathematical expression for the number 1 followed by
100 zeros and aptly reflected Larry and Sergey's mission “to
organize the world’s information and make it universally
accessible and useful.”
Over the next few years, Google caught the attention
of not only the academic community, but Silicon Valley
investors as well. In August 1998, Sun co-founder Andy
Bechtolsheim wrote Larry and Sergey a check for $100,000,
and Google Inc. was officially born. With this investment, the newly incorporated team made the
upgrade from the dorms to their first office: a garage in suburban Menlo Park, California, owned
by Susan Wojcicki (employee #16 and now CEO of YouTube). Clunky desktop computers, a
ping pong table, and bright blue carpet set the scene for those early days and late nights.

GOOGLE SUCCESS STORY

Perhaps there is no greater testament to Google’s success than the fact that it has become
a verb. We google for information in the same sense as we drink water. However, Google as a
company has grown far beyond search. In this article, we’ll look at the story behind Google’s
success.

Taming the Sea of Information


Google’s original business was creating algorithms to help people sort quickly through
the rapidly growing amount of content being put online. Rather than employ editors and
researchers to curate links for specific queries, Google began building algorithms that scored the
content it was indexing against specific criteria. These included novel concepts like inbound
links from trusted sources as well as standard measures like keyword frequency and page titles.
All of these pieces came together in a pagerank that decided where a site would display on a
specific query.
Using this scoring approach, Google was able to serve up more accurate results than
many of the existing search engines that preceded it in the market. The algorithm was — and still
is — being constantly tweaked and updated to give users the most relevant results. Because it
started strong and just kept getting better and better, Google became the go-to search engine for
the internet in the space of a few years.

Becoming a Digital Powerhouse


With the ad piece in place to compliment search, Google began to innovate in earnest.
Some moves were obvious, such as Google publishing and acquiring digital assets that would
deliver more ad-driven revenue as traffic grew and more ad space as content increased. These
included YouTube (acquired 2006), Google Maps (2005), Blogger (2003), and Google Finance
(2006). However, Google also created a number of sites and web apps that weren’t initially built
to be monetized through ads. Google Books falls into this latter category as it is a repository of
books online with ads playing a very small role. Similarly, ads are hard to find on Google News,
a real time collection of current content from thousands of news sources. Gmail (2004) started
out ad free and cost free, but newer iterations give the user the choice between free with ads or
paid without ads. The first versions of all these sites were far from perfection. Google put up the
beta versions and then allowed users to find and prioritize the improvements to be included in the
next version.

Innovation on the Internet and Beyond


Google continues to grow its ad revenue and improve the sites and services that generate
even more ad revenue. For many of us, it is difficult to remember what searching was like before
autocomplete and instant results, and it is a rare address that isn’t easily pinpointed in Google
Maps. Constantly improving flagship products is a basic business practice, of course. The more
interesting factor in Google’s ongoing success story is the dedication to continuous innovation.
Google sees innovation as part of the mission of the company and empowers its employees to get
creative. This is how an internet company started building wearable tech, mobile operating
systems, driverless cars, and renewable energy. Money is no longer Google’s primary concern as
it has enough to make the capital investment needed to create a beta version seem small in
comparison. The company culture is focused on innovating first, getting the real user data second
and worrying about monetizing afterwards. With Google’s ability to generate revenue through
Adwords, the monetizing of a product is fairly straightforward as long as enough people want to
use it. (For more, see: Google Building For A Bigger Future.)

The Bottom Line


Google has two core components. One is a search engine that is preferred by most people
in the world. The second is a self-serve ad network that generates revenue off that search engine
and the many digital assets Google owns. Google uses that revenue to pay for the rapid
prototyping of new ideas, which often grow into new sources of revenue. This simple model has
allowed Google the freedom to undertake the projects it wants even if the ROI isn’t immediately
clear. That said, Google has had failures. For example, Google Video was washed away with the
acquisition of YouTube, and Google+ — the company’s foray into social media — looks to be
slowly phasing out. Whether it is a spectacular failure or a quiet retreat, the fact of failure hasn’t
changed Google’s model of getting a prototype into beta and then iterating it based on user data.
If a product is not bringing in enough users, it is packed up for another time and the lessons
learned are applied to the next idea. And, for Google, there always seems to be a next idea.

FINANCING AND INITIAL PUBLIC OFFERING


The first funding for Google as a company was secured in August 1998 in the form of a
US$100,000 contribution from Andy Bechtolsheim, co-founder of Sun Microsystems, given to a
corporation which did not yet exist. On June 7, 1999, a round of equity funding totalling
$25 million was announced; the major investors being rival venture capital firms Kleiner Perkins
Caufield & Byers and Sequoia Capital. While Google still needed more funding for their further
expansion, Brin and Page were hesitant to take the company public, despite their financial issues.
They were not ready to give up control over Google. Following the closing of the $25 million
financing round, Sequoia encouraged Brin and Page to hire a CEO. Brin and Page ultimately
acquiesced and hired Eric Schmidt as Google’s first CEO in March 2001.
In October 2003, while discussing a possible initial public offering of shares
(IPO), Microsoft approached the company about a possible partnership or merger. The deal
never materialized. In January 2004, Google announced the hiring of Morgan
Stanley and Goldman Sachs Group to arrange an IPO. The IPO was projected to raise as much as
$4 billion.
Google's initial public offering took place on August 19, 2004. A total of
19,605,052 shares were offered at a price of $85 per share. Of that, 14,142,135 (another
mathematical reference as √2 ≈ 1.4142135) were floated by Google and 5,462,917 by selling
stockholders. The sale raised US$1.67 billion, and gave Google a market capitalization of more
than $23 billion. Many of Google's employees became instant paper millionaires. Yahoo!, a
competitor of Google, also benefited from the IPO because it owns 2.7 million shares of Google.
The company was listed on the NASDAQ stock exchange under the ticker
symbol GOOG. When Alphabet was created as Google's parent company, it retained Google's
stock price history and ticker symbol

VALUATION AT THE POINT OF EXIT


On August 19, 2004, Google went public at $85 a share, and rose 18% on its first day of
trading, to close at $100.34. The 38 million shares that Larry and Sergey each held in the
company were worth approximated $3.8 billion at the close. Google was valued at $27 billion,
behind Yahoo’s $38.7 billion dollar market cap. But that disparity wouldn’t last long. By the
time Google’s first quarterly report as a public company revealed that sales had doubled from the
previous year, Google stock passed $200. It has never since returned to those levels.

It is impossible to overstate how important Google’s IPO was to the Internet, Silicon
Valley and the stock market overall. As the New York Times said on the day after the company
filed to go public, it was “as if the dot-com glory days never ended.” Google’s success was
validation that the Internet as a social, cultural, and (most importantly) a financial phenomenon
was not dead. The revolution had merely been resting… regrouping… gathering steam. But
Google was also proof that not only were some of the original ideas from the dotcom era still
valid, some new ideas might also be out there ready to build on the dotcom era’s faded promise.
Within Google itself, there were whispers of exciting new projects, like, for example, some sort
of a Google “phone” so that searchers could get answers to queries at any moment no matter
where they were. More than anything, Google’s success provided the template to make these
new ideas to be profitable. And so, just as with the Netscape IPO nearly a full decade before, a
generation took notice: There was fire in Silicon Valley again.

NUMBER OF EMPLOYEES

The relentless search for better answers continues to be at the core of everything we do.
Today, with more than 73,992 employees in 50 different countries, Google makes hundreds of
products used by billions of people across the globe, from YouTube and Android to Smartbox
and, of course, Google Search. Although we’ve ditched the Lego servers and added just a few
more company dogs, our passion for building technology for everyone has stayed with us —
from the dorm room, to the garage, and to this very day. As of the most recently reported year,
this 2018, the American multinational internet company, headquartered in Mountain View,
California, had 73, 992 full-time employees. It was never mention how many employees started
in Google way back the founding year but one thing is for sure, Google's first employee was
Craig Silverman.

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