Before I began Kellogg, my former colleagues jokingly shared, “enjoy learning about Walmart and Google.” To my surprise, reading In The Plex by Steven Levy was the first time I had “studied” Google. Throughout the book, Levy provided insight into what makes Google a multi-billion dollar business designed on the premise of “doing things better.” Undoubtedly, Page and Brin are visionaries and Schmidt’s business prowess helped Google gain its untenable (to date) scale. While much of Google’s success may be attributed to each and their decisions, I contend that much of Google’s success may also be attributed to luck and timing.
In Google’s early days, Yahoo, Excite, and Altavista dominated the search market. Page and Brin knew that in order to compete, it would need to differentiate itself on (1) providing more accurate/relevant search results; (2) providing results at faster speeds; or (3) doing both. Google changed search when it developed its complex algorithms that made results more accurate/relevant to users and established data centers all over the world to increase the speed with which we receive our search results. Since their early days, timing was on Page and Brin’s side; they entered the internet search market when the barriers to entry were relatively low. They seized their golden opportunity to set search standards for what users expect and how quickly we expect search results, which raised the barriers to entry/lessened the threat of new competitors.
In addition to setting search standards, Google further revolutionized the internet search market by monetizing searches, and beating others to it. Google did so with AdWords and AdSense. In order to succeed in the market, you need people who are searching (buyers) and providing what is being searched (suppliers). Based on search revenue, Google has nearly 65% share of the search market, followed by Yahoo at 16% and Microsoft at 15%. Thus, suppliers and buyers have low bargaining power because Google has such a stronghold on the market.
Its market position combined with its decision to be more than a search engine through its suite of services, including Gmail, GoogleDocs, and GoogleMaps, has lowered switching costs for users. Again, they seized opportune timing to further differentiate itself from competitors. These services arose from Google’s 20% time initiative, which recognizes the importance of (1) innovation which will give Google sustainable competitive advantages and (2) motivation for employees to work on projects/initiatives that drive them. While the threat of substitution exists, it is less likely that users will switch to other search engines as search becomes finely integrated with complementary services. As Google continues to give their engineers 20% time, we are likely to see improvements to the services we already use and new services that we won’t believe we’ve lived without.
So, how are timing and luck ingredients to Google’s success? Page and Brin masterfully used time to their advantage and beat others to optimizing and monetizing search results. Additionally, they were lucky that the products and services they rolled out were successful. While strategists may argue that Page, Brin, and Schmidt had a strong business strategy underlying their decisions, Levy provides numerous examples to suggest that luck played a considerable role in Google’s success. For example, Google retained its business strategy/unwaivering belief that if Google had a superior product, people would use it. It worked with search, but it flopped with mobile phones. My takeaway: luck and timing are as critical to success as a strong and thoughtful business strategy.
Overall, I appreciated how Levy showed Page and Brin’s naiveté and unharnessed vision for what Google can achieve (e.g., wanting to etch “Google” on the moon and self driving cars), which contrasted mature decisions such as pulling out of the Chinese market. I also appreciated mentions of Google’s gaffes including holding off on Orkut. One area I wish Levy would have explored is Google’s non-profit arm. Given the number of times Page expressed his desire to change the world, I nearly raced to the end of the book to learn about what revolutionary things Google was doing with its non-profit. Although Page and I have differing views on how to change the world, I appreciate how he’s changed the internet search world for me.