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Sunday, August 22, 2004 - Page updated at 12:00 A.M.
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IPO thrusts Google into new direction

By Matt Marshall
Knight Ridder Newspapers

Google co-founders Sergey Brin, left, and Larry Page argued all weekend when they first met in 1995 but discovered similarities — such as big egos and dreams.
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SAN JOSE, Calif. — There's the multibillion-dollar auction that snubs Wall Street's powerful investment banks. There's the IPO manifesto with the pledge to change the world. There's the exclusive interview with Playboy, better known for bunnies than business.

Everything about Google's IPO, launched last week, reflects just how far the Mountain View, Calif., company is prepared to push the boundaries. The all-but-spoken declaration is: "We're different — and we're better." But if you look at the history of the company and its founders, the style of its IPO should come as no surprise.

All along, Larry Page and Sergey Brin have shared a remarkably clear vision for a search-engine company that would be both good and great. They have also shown a strong belief that they are right, even — and perhaps especially — if it means everyone else is wrong. Call it the Larry Ellison factor, or maybe the Bill Gates factor, but whatever it is, the Google boys have it, too.

That sureness helped Brin, 30, and Page, 31, navigate through the competitive world of search start-ups and venture capitalists to their IPO. But now, some say, it could become a liability.

In fact, some of the founders' decisions made the road to the IPO rockier, including the Playboy interview at a time when the company was supposed to be quiet, and the millions of shares it didn't register to avoid a legal requirement of financial disclosure to the public.

"It's a cultural risk," says Joe Kraus, co-founder of Excite, a search engine that was eventually beaten by Google. "The risk is if they believe the hallmark of a good idea is when people tell them it's a dumb idea."

Hotshot student

The confidence was clear from the moment Brin walked onto the Stanford campus in 1993.

Brin was two years younger than everyone else in the computer science masters program, one of the most competitive in the country. Brin had immigrated to the United States from Moscow with his family at 5 and went on to study math and computer science at the University of Maryland. At Stanford, Brin — then 19 — was at the top of his class.

It showed.

"When people are that smart, they know it, and they're in your face," says Venky Harinarayan, who shared an office with Brin and remembers thinking he was one of the smartest guys at Stanford. "And if you're so smart, you can get away with things."
Brin incessantly challenged the status quo.

Anand Rajaraman's cubicle in the common study area, known as the "Zoo," was next to Brin's. In 1994, Rajaraman proudly told Brin he'd acquired a new computer with the latest version of Microsoft Windows. Brin said Microsoft was "lame," went to Rajaraman's apartment and installed Linux — a free open-source operating system then almost unheard of.

"He had this kind of cocky self-confidence. He knew it all," says Rajaraman, now a venture capitalist.

Even Brin's initial foray into browsing was brash. He crafted a software application that would routinely visit Playboy's Web site, pull up its latest images and download them on to his computer as a screensaver.

"It was late 1993, and it was the first program I'm aware of that browsed the Web," Rajaraman says.

A female student later complained, and Brin was forced to remove the screensaver.

He was "sort of a wild man," says Professor Jeff Ullman. "He doesn't like to follow the rules."

A prickly start

In the summer of 1995, Brin was assigned to show Page, a new graduate student, around campus for the weekend. According to company lore, the two argued over everything.

Yet they had marked similarities, including big dreams and big egos. And both were science undergraduates at the same universities where their fathers taught.

Page's dreams started at age 6, which is when he fell in love with computers. While at the University of Michigan, he built a programmable plotter and inkjet printer out of Legos.

When he arrived at Stanford, Page surprised his colleagues with his wacky suggestions and grand ideas. Once, in 1997, he confided to a friend, Jon Kleinberg: "The real exciting thing is wireless communications using laser beams. There's all this clear sky over the bay. You can put all these laser beams on roof-tops and communicate ... ."

Page's ambition surprised Hector Garcia-Molina, his Stanford adviser at the time. Page kept asking for more disk-drives for his search prototype to crawl ever more parts of the Web. Page persuaded Molina to let him go to Fry's to buy cheaper parts, put the disks together himself and so get more disks.

Molina, taken aback, said: "But Larry, you've crawled all of Stanford and then some. How much more do you want to crawl?"

"We want to do everything," Page vowed.

It was Page who first tinkered with the search-engine idea. He registered his "Pagerank" technology at Stanford's Office of Technology Licensing and led the pitches of the Google idea to bigger companies. No one took him as seriously as he thought they should, and soon he was devising a way to build his own company, along with Brin.

Their fierce belief in their idea — and themselves — came across as so cocksure that it turned off some potential investors. Brian Pinkerton, an executive at Excite, and the four founders of early Internet company Junglee, decided the Google guys were too headstrong to fit into their companies.

"They were arrogant," said Pinkerton. "[The] 100 percent feeling you'd get after talking with these guys: Your stuff sucks, our stuff rocks."

By the following year, in 1999, had bought Junglee. The Junglee founders flew down to Palo Alto to make an offer to Google anyway. This time, Brin told them to get lost, saying he wouldn't talk with them unless it was a billion dollars or more.

Pushing investors

Instead, the two founders turned to venture capitalists. They scored $25 million from the two most prestigious venture-capital firms in the valley, Kleiner Perkins and Sequoia Capital.

Even then, they challenged the venture capitalists on several big moves. At one point, they sent the terms of the deal back, saying the venture capitalists had made a mistake in calculating the pool for employee stock options. Sequoia's Michael Moritz reportedly took off his glasses and said: "I'm dealing with mathemagicians!"

In an interview with the San Jose Mercury News last year, Page said: "I guess we're used to breaking the rules."

The ambition is still evident. Brin and Page claimed last year that the company could one day be worth $100 billion. And in Switzerland in January, Brin joked that after Google he'd like to develop a scanner for airports to prevent unhip people from boarding airplanes.

This ambition is what helps fire up Google's rank and file, according to insiders.

"Part of our secret sauce is having this soul burning within Google, which is the founders," said Omid Kordestani, the first business executive hired at Google in 1999.

The moral high road

Google's "Do No Evil" motto is typical of the founders. It's an earnest expression of their desire to be "good" — through philanthropy, through an IPO that tries to reach small investors, through their acceptance of ads for wine but not hard liquor. But some say it also implies that they know, possibly more than others, what is good or not. As CEO Eric Schmidt has said, evil is what Brin says it is.

"If it's not the Google way, it must be evil," said Danny Sullivan, editor of Search Engine Watch. "They're putting themselves up on a higher pedestal."

Now that it's publicly traded, Google's founders will face the biggest test yet to their vision and their confidence. So far, they have only known success. But it's one thing to reward employees with free gourmet food and massages when you're relatively small and private. It's another to do it without the cushion of venture capitalists' money, out in the glare of the public markets.

"They bring lots of clarity, lots of vision and lots of focus," said Louis Monier, founder of the once-dominant search engine Alta Vista, of the Google founders.

"[But] the skeleton in Google's closet is that you can't own search forever. What happens when the next pair of kids comes along and breaks the model? What if they have their own egos and want to make a billion?"

Copyright © 2004 The Seattle Times Company

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