How Google got its first fundingMay 25, 2009
On a sunny California morning in late August 1998, Larry Page and Sergey Brin (Founders of Google) sat on the front porch of a Palo Alto house eagerly awaiting the arrival of a Silicon Valley angel (Investor). One of their graduate school professors, David Cheriton, suggested that it would be a good idea for them to meet his friend Andy Bechtolsheim, a computer whiz and legendary investor in a string of successful start-ups.
Cheriton had piqued Bechtolsheim’s interest in Brin and Page by telling him that the students had a “great idea” to show him: they had invented a better way to find revelant information fast on the internet. He seemed interested. He wanted to know more. How far could the guys run with the idea? Page confidently told Bechtolsheim that they could download, index, and rapidly search the entire internet using a network of low cost computers. The only problem was that they didn’t have the money to buy the machines.
After Brin and Page displayed the demo and chatted with him, Bechtolsheim appreciated and understood the breakthroughs that enabled Google to produce superior search results. He also admired something else about Brin and Page. Instead of wasting lots of money on advertising or high-end equipment, they wanted to buy motherboards and other components to inexpensively build computers themselves. They also wanted to develop a fully searchable database before going out to talk to venture capital firms about possible funding. And they wanted to let their search engine speak for itself. Satisfied that he had seen and understood a demonstration of a better technology that had the potential to address a real problem, Bechtolsheim wasted no time asking about the bottom line.
“The key question about any internet start up is, ‘how are you going to make money’ he said. I never get sucked into deals with no economic merit”. He reviewed the various possibilities: build an audience of computer users by giving away the Google search engine for free, and then profit from ads or by selling something. They also talked with Bechtolsheim about licensing search technology to companies that would pay to use it. And there was always the possibility that a large company might buy the technology and include it in its mix of products.
“This is the single best idea I have heard in years”, Bechtolsheim said. “I want to be part of this”. He proposed immediately writing a cheque so they could build their computers and he could be on his way to his next appointment. No negotiations. No discussions of stock or valuation. Bechtolsheim didn’t even know that Brin and Page had not formally created a company. But details like that didn’t bother him. Instead of discussing all the details, Brin recalled, Bechtolsheim wrote a cheque made out to “Google Inc” for $100,000, a figure he picked because it was a nice, round number.
Page put the cheque in his desk drawer for safe keeping, where it remained for two weeks until the pair incorporated Google and opened the first bank account in the newly established company’s name, so they had somewhere to deposit it.
What do you think of that? Of course, considering the attention span of the internet readers, I have not included some more content and analysis that came in between in the book, to keep it short.
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