How the World Got Wired · What Survived

Google, Watching

The third major survivor of the dot-com era is the one I am only going to mention briefly here, because all of Chapter 14 will be about it. But you need to know one strange thing about it now.

The company is called Google. It was founded in 1998 by two PhD students at Stanford named Larry Page and Sergey Brin. (Stanford again, you’ll notice. Public-funded research, again. The pattern keeps repeating.) Their company built a search engine that was dramatically better than anything else available at the time — so much better that, within a few years, almost everyone in the world who used a search engine used theirs.

But Google did something that Amazon, eBay, and the failed dot-coms had all done differently. Google refused to go public during the bubble.

Page and Brin watched the bubble inflate. They watched their friends at less impressive companies become paper billionaires by selling shares to the public. They watched newspapers describe young tech founders who had IPO’d as visionaries. They could have done the same thing. They didn’t.

They didn’t go public until August of 2004, more than four years after the peak of the bubble. By then, the failed dot-coms had been gone for years. Google was already wildly profitable. Its investors had been patient. And the company that emerged from the IPO process was not a hopeful speculation — it was a stable, dominant business with a clear way of making money.

Google had stayed out of the bubble entirely. They survived by simply not playing the game.

The rest of Google’s story will fill the next chapter. For now, I just want you to notice the strategy: when everyone else is rushing, do nothing. Sometimes the most important business decision you can make is to wait.

What the Survivors Had in Common

Let me draw, before we move on, a few lines under what we have seen.

Of all the hundreds of internet companies that existed in 1999, only a handful came out of 2002 in a position to grow into the giants of today. The handful had different stories. Amazon nearly died and was saved by its founder’s stubbornness. eBay was profitable from the start because of a clever business model. Google avoided the whole bubble by refusing to go public during it.

But there were some things the survivors all had in common.

The first thing is that they were all run by founders who thought in decades, not in quarters. Bezos’s long-term letter. Page and Brin’s patience. Omidyar’s quiet attention to whether the actual business worked. None of them was trying to get rich quickly. They had all already passed up easier ways to make a faster fortune. They were trying to build something that would outlast them.

The second thing is that they all had a clear answer to the question: what would a customer pay us for? For Amazon, the answer was an immense selection of products, low prices, and fast delivery. For eBay, it was a place where strangers could trust each other to do business. For Google, it was a search engine that actually gave you the answer you were looking for. None of them was, at heart, the because pets can’t drive kind of company. They were each selling something concrete and useful, to specific people who actually wanted it.

The third thing is something I want you to think about carefully, because it is uncomfortable.

The survivors became more powerful, not just because they had survived, but because almost everyone else had died. The infrastructure built by all those failed companies — the dark fiber under the oceans, the empty data centers, the engineers looking for jobs — was now available, very cheaply, to the few companies still standing. Amazon could rent computing power from cratering server companies for almost nothing. Google could lease the bandwidth it needed to send search results around the world at prices that would have been impossible in 1999. eBay could hire brilliant engineers, fresh from the wreckage of failed dot-coms, who would have been impossibly expensive a year earlier.

The survivors got to grow up in a world that had been emptied out for them.

This is something to hold onto when we get to the very end of the book, and we are looking at the next generation of giant technology companies — the ones that are right now growing up on top of infrastructure that other people built, after other people went broke. It is the same pattern. It will probably repeat.

What’s Next

In the next chapter, we are going to spend our full time with one of these survivors — the one that, more than any other single company, defined the next twenty years of the internet. The company that two PhD students started at Stanford in 1998. The company that turned out to be the single most valuable business idea since the discovery of advertising itself.

That’s Chapter 14.

It begins, again, with a university computer paid for by the public.

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