Larry Page said in the early day, a guiding principle is Do No Evil. I wonder if we can say that today or is it just business as usual?

Dave Young:

Welcome to the Empire Builders Podcast, teaching business owners the not-so secret techniques that took famous businesses from mom-and-pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So, here’s one of those.

[Out of this World Plumbing Ad]

Dave Young:

This is the Empire Builders Podcast, by the way. Dave Young here, Steve Semple there. I wonder, Stephen, if we could do this whole episode without mentioning the name of the company that we’re going to be talking about. I ask that for the simple reason of they already know. They already know what we’re talking about. They already know we’re talking about them. They probably knew we were going to talk about them.

Stephen Semple:

Because of all the research I’ve done on my computer.

Dave Young:

No, because they’re listening to everything. They probably already know the date that this is going to come out and how long it’s… I don’t know, right? When they first started, and I don’t think we felt that way about them, and I can remember back in the early 2000s, just after the turn-

Stephen Semple:

In the early days, they had a statement. Larry Page was very famous.

Dave Young:

Yeah, “Do no evil.”

Stephen Semple:

“Do know evil. Do no evil,” and that was a very, very big part. In fact, in the early stages, they made a bunch of decisions that challenged the company financially because they were like, “This is not good experience for the person on the other end.” I wonder if anybody’s guessed yet what we’re going to be talking about.

Dave Young:

Well, then you go public, and it’s all about shareholders, right? It’s like the shareholders are like, “Well, we don’t care if you do evil or not. We want you to make money.” That’s what it’s about because you have [inaudible 00:03:01].

Stephen Semple:

All those things happen.

Dave Young:

Yeah.

Stephen Semple:

This company that we’re talking about, we’ll go a little while before we’ll let the name out, was founded… On September 4th in 1998 was when it was actually founded.

Dave Young:

Oh, ’98. It goes back before the turn of the century [inaudible 00:03:14].

Stephen Semple:

Yeah. It was founded by Larry Page and Sergey Brin, who met at Stanford. Interesting note, the Stanford grads also created Yahoo.

Dave Young:

Okay, yeah.

Stephen Semple:

That’s giving you another little clue about the company that we might be talking about.

Dave Young:

In the same geek club.

Stephen Semple:

Yeah, so 1998. I was thinking back, one year after I graduated from university, Windows 98 is launched and, believe it or not, the last Seinfeld episode aired.

Dave Young:

Are you kidding me?

Stephen Semple:

No, isn’t that crazy?

Dave Young:

’98.

Stephen Semple:

Yeah.

Dave Young:

I mean, I was busy raising four daughters in ’98.

Stephen Semple:

Yeah. Today, this company, as you said, because you didn’t want me to name the company, has more net income than any other business in US history. It has, now, I got to let the cat out of the bag, eight and a half billion searches a day happen. And yes, we’re talking about the birth of Google, which is also now known as part of the Alphabet group.

Dave Young:

Alphabet, yeah. It’s funny how they got to get a name that means everything. Did they have a name before Google? I know Google was like… Oh, it’s a number really, right? It’s a gazillion, bazillion Googleplex.

Stephen Semple:

As we’ll go into a little bit later, they actually spelled it wrong when they registered the site. That’s not actually the way that the word is spelled. I’ll have to go… But yeah, the first iteration was a product called BackRub was the name of it.

Dave Young:

Backrub, okay.

Stephen Semple:

Alphabet also owns the second largest search engine, which is YouTube. Together, basically, it’s a $2 trillion business, which is larger than the economy of Canada. It’s this amazing thing. Going back to 1998, there are dozens of search engines all using different business models. Now, today Alphabet’s like 90% in the market. Up until this point, it’s been unassailable, and it’s going to be really interesting to see what the future of AI and whatnot brings to that business. But we’re not talking about the future, we’re talking about the past here, so back to the start.

Larry Page was born in Lansing, Michigan. His dad is a professor of computer science. His mom is also a computer academic. This is in the ’70s. Between 1979 and ’80, his dad does a stint at Stanford and then also goes to work at Microsoft. Now, Larry and Sergey meet at Stanford, and they’re very ambitious, they’re equal co-founders, but Larry had this thing he also talked about where he said, “You need to do more than just invent things.” It wasn’t about inventing things, it was about creating things that people would use.

Here’s what’s going on in the world of the web at this time to understand what’s going on. Here’s some web stats. In 1993, there’s 130 websites in the world. In 1996, three years later, there’s 600,000 websites. That’s a 723% growth year over year. The world has never seen growth like that before.

Dave Young:

Right, yeah. It was amazing to experience it. People that are younger than us don’t realize what it was. Josh Johnson, the comedian, has a great routine on trying to explain to people what it was like before Google. You needed to know something-

Stephen Semple:

What it was like for the internet.

Dave Young:

Yeah. You had to ask somebody who knew. If you needed the answer to a question, you had to ask somebody. And if they didn’t know, then you had to find somebody else, or you had to go to the library and ask a librarian and they would help you find the answer-

Stephen Semple:

Well, I don’t think it’s like a-

Dave Young:

… maybe by giving you a book that may or may not have the answer.

Stephen Semple:

Here’s an important point. I want you to put a pin in that research. We’re going to come back to it. I was about to go down a rabbit hole, but let’s come back to this in just a moment, because this is a very, very important point here about the birth of Google.

Larry and Sergey first worked on systems to allow people to make annotations and notes directly on websites with no human involved, but the problem is that that could just overrun a site because there was no systems for ranking or order or anything along that lines. The other question they started to ask is, “Which annotations should someone look at? What are the ones that have authority?” This then created the idea of page rankings. All of this became messy, and this led to them to asking the question, “What if we just focused on ranking webpages?” which led to ranking search.

Now, whole idea was ranking was based upon authority and credibility, and they drew this idea from academia. So when we would do research, David, and you’d find that one book, what did you do to figure out who the authority was on the topic? You went and you saw what book did that cite, what research did this book cite. The further you went back in those citations, the closer you got to the true authority, right? Do you remember doing that type of research?

Dave Young:

Yeah, sure.

Stephen Semple:

Right. They looked at that and they went, “Well, that’s how you establish credibility and authority is who’s citing who.” Okay. They decided that what they were going to do was do that for the web, and the way the web did that was links, especially in the early days where a lot of it was research.

Dave Young:

Yeah. If a whole bunch of people linked to you, then that gives you authority over the words that they used to link on and-

Stephen Semple:

Well, and also in the early days, those links carried a lot of metadata around what the author thought, like, “Why was the link there?” In the early days, backlinks were incredibly important. Now, SEO weasels are still today talking about backlinks, which is complete. Dude, backlinks, yeah, they kind of matter, but they’re… Anyway, I could go down a rabbit hole.

Dave Young:

Yeah. It’s like anything, the grifters figure out a way to hack the system and make something that’s not authoritative seem like it is.

Stephen Semple:

Yeah. It’s harder that you can’t hack the system today. Anyway, but the technology challenge, how do you figure out who&...