Team Project Research about Google
Evelyn Munoz
Rich Taholo
Sang Cho
Maria Moreno
4-25-2011
Professor: Thomas Keyes
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I. Social and economic history
Larry Page and Sergey Brin who were PhD students at Stanford University began Google
as a research project. They made a new search engine “BackRub” in 1996 (Google, Google
history). The domain name of Google was registered in 1997, and the company stated in 1998.
The first funding was from Sun co-founder Andy Bechtolsheim, $100,000, in August
1998. Initial public offering (IPO) was performed in 2003. A market capitalization was more
than $23 billion. In 2010, Google’s revenue is $29.321 billion, and profit is $ 8,505 billion.
II. Marketing and production
1. Marketing
Because Google is the Internet search company, the main revenue is from its
advertisement business. Google’s advertising program is ‘AdWords.’ Advertisers who use
AdWords can check their advertisements by displaying them in the Google network. Bright
(2008) noted that website owners can track the place and number that people use their websites
with clicking by ‘Google Analytics’ program .
2. Production
The primary product is Google Search which is a web search engine. The market research
company whose name was comScore reported that Google Search has 65.6 % share in the search
engine market of the United States in 2009 (Lipsman, 2009). The New York Times claimed the
Google’s infringing on its copyright. However, Google won the some suits about these kinds
complaints. It added numerous products such as an image search engine, the Google News
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search engine, Google Maps, Google Video, Google Desktop, and so on. In the case of Google
Books, revision was settled because of the suit by the Authors Guild which has 8,000 American
authors. Its scan was limited to books of America, England, Australia, and Canada (Pettersson,
2009). According to Rich (2009), Google planned to sell digital books.
Google started Gmail in 2004. At first, it was invitation-only program which became
available to general in 2007. The number of its users was “146 million” monthly in 2009 (Zibreg,
2010). It provides over free 7400 MB, and up to16 TB is possible if payed (Lee, 2009).
Additionally there are more products such as Google Docs, Google Translate, Google
News service, Android, Google Wave, Google Chrome OS and so on (“More Google Product,”
2011).
III. Accounting and finance
2003 - 2007
filed its 10-K with the Securities and Exchange Commission and dished out the usual
batch of figures, Google recently but the charting the growth tells the tale.
Here’s a look at Google’s annual report by the charts and some of the more interesting items.
First up, the revenue growth is stunning. But we knew that already.
Here’s a look at Google’s annual report by the charts and some of the more interesting
items.
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But this growth has its costs. The R&D spending ramp is just as stunning.
Total costs are also ramping up. As percentage of revenue though there’s nothing too
worrisome, but the numbers are big–real big.
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Another nugget worth highlighting is Google’s doubtful accounts balance at the end of
the last three years. It’s up sharply in 2007, but so is revenue. However, it’s always good to
monitor whether customers can pay their bills. This chart highlights the
jump.
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First Quarter 2011 Highlights
* Revenue growth of 27% Y/Y and 2% Q/Q

-
Goggle properties revenue increased 32% Y/Y and 4% Q/Q
-
Network revenues increased 19% Y/Y and decreased 3% Q/Q
-
International revenues were $ 4.6 billion
Operational Highlights
-
Strong financial metrics: revenue growth, profitability and cash flow
-
Continuing to invest heavily in our growth agenda

Investing in people- to attract, retain, and reward the best talent

Investing in sales & marketing – for both new products + adviser acquisition

Investing in ling-term infrastructure – including both facilities + our core
computing network.
By the numbers:

Google’s owned and operated sites generated $5.88 billion in first quarter revenue, or 69
percent of total sales. AdSense delivered first quarter sales of $2.43 billion, or 28 percent
of revenue.

International revenue was 53 percent of the total sales pie in line with the year ago
percentage.

Paid clicks were up 18 percent in the first quarter compared to a year ago. Cost per click
was up 8 percent.

Data center expenses—or other cost of revenue—were $897 million, or 10 percent of
sales.
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
Google ended the quarter with $36.7 billion in cash and equivalent
Google’s first quarter earnings fell short of Wall Street expectations as the company
continued to invest heavily in data center infrastructure and headcount
2011 Financial Tables
Full year financial tables with quarterly data.
Google's Income Statement Information
(In millions, except share amounts which are reflected in thousands and per share amounts)
Full Year
2011
(unaudited)
Revenues
2008
2009
2010
Q1
Revenues
21,796
23,651
29,321
8,575
Y/Y Growth Rate
31%
9%
24%
27%
Q/Q Growth Rate
NA
NA
NA
2%
Google Websites
14,414
15,723
19,444
5,879
Y/Y Growth Rate
36%
9%
24%
32%
Q/Q Growth Rate
NA
NA
NA
4%
Google Network Members' Websites
6,715
7,166
8,792
2,427
Y/Y Growth Rate
16%
7%
23%
19%
Q/Q Growth Rate
NA
NA
NA
-3%
Total Advertising Revenues
21,129
22,889
28,236
8,306
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Y/Y Growth Rate
29%
8%
23%
28%
Q/Q Growth Rate
NA
NA
NA
2%
Other Revenues
667
762
1,085
269
Y/Y Growth Rate
268%
14%
42%
-10%
Q/Q Growth Rate
NA
NA
NA
-1%
Google Websites
66%
67%
66%
69%
Google Network Members' Websites
31%
30%
30%
28%
Other Revenues
3%
3%
4%
3%
As % of Revenues
Costs
Full Year
2011
(unaudited)
2008
2009
2010
Q1
Cost of Revenues*
8,622
8,844
10,417
2,936
As % of Revenues
40%
37%
36%
34%
Traffic Acquisition Cost
5,939
6,169
7,317
2,038
As % of Revenues
28%
26%
25%
24%
Other Cost of Revenues*
2,683
2,675
3,100
897
As % of Revenues
12%
11%
11%
10%
Research & Development*
2,793
2,843
3,762
1,226
As % of Revenues
13%
12%
13%
14%
Sales & Marketing*
1,946
1,984
2,799
1,026
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As % of Revenues
9%
8%
10%
12%
General & Administrative*
1,803
1,668
1,962
591
As % of Revenues
8%
7%
7%
7%
Total Costs & Expenses*
15,164
15,339
18,940
5,779
Y/Y Growth Rate
32%
1%
23%
35%
Q/Q Growth Rate
NA
NA
NA
6%
Profitability
Full Year
2011
(unaudited)
2008
2009
2010
Q1
Income from Operations
6,632
8,312
10,381
2,796
As % of Revenues
30%
35%
35%
33%
Impairment of Equity Investments
(1,095)
NA
NA
NA
As % of Revenues
-5%
NA
NA
NA
Net Income
4,227
6,520
8,505
2,298
As % of Revenues
19%
28%
29%
27%
Basic
$13.46
$20.62
$26.69
$7.15
Diluted
$13.31
$20.41
$26.31
$7.04
EPS
Number of Shares
9
Basic
313,959
316,221
318,702
321,527
Diluted
317,514
319,416
323,251
326,383
Balance Sheet & Cash Flow Statement Information
Full Year
2011
(unaudited)
2008
2009
2010
Q1
Cash, Cash Equivalents & Marketable Securities
15,846 24,485 34,975 36,675
Accounts Receivable, Net of Allowance
2,642
3,178
4,252
4,216
DSO (in days, using ending AR)
44
49
53
44
Property and Equipment, Net
5,234
4,845
7,759
8,249
Total Assets
31,768 40,497 57,851 59,960
Cash Flow from Operations
7,853
9,316
11,081 3,172
Capital Expenditures
2,359
810
4,018
10
890
Supplemental Information
Full Year
2011
(unaudited)
2008
2009
2010
Q1
Stock-Based Compensation Expense
1,120
1,164
1,376
432
Int'l Revenues as % of Total Revenues
51%
53%
52%
53%
Ending Permanent Headcount
20,222
19,835
24,400
26,316
Sequential Headcount Growth Rate
20%
-2%
23%
8%
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IV. Management philosophy and practice
Googles success is due has much to do with management philosophy and practices put in
place by their industry leaders such as former CEO, Eric Shmidt. According to a Newsweek
article (2005), “ Google CEO Eric Schmidt says that Google's management philosophy gives
them a competitive advantage over other firms.” (Google’s Rules Of Management, 2005).
Google practices their strong belief in implementing a resilient workforce. The management
provides many services in which most would call luxurious to make it easier for their employees
to concentrate on production. This is an article that describes a few of the perks and practices
provide by Google to management and employees such as their engineers.
Cater to their every need ... The goal is to "strip away everything that gets in their way."
We provide a standard package of fringe benefits, but on top of that are first-class dining
facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning,
commuting buses -- just about anything a hardworking engineer might want. Let's face it:
programmers want to program, they don't want to do their laundry. So we make it easy
for them.
Data drive decisions. At Google, almost every decision is based on quantitative analysis.
We've built systems to manage information, not only on the Internet at large, but also
internally ... We have a raft of online "dashboards" for every business we work in that
provide up-to-the-minute snapshots of where we are.
We adhere to the view that the "many are smarter than the few" ... At Google, the role of
the manager is that of an aggregator of viewpoints, not the dictator of decisions. Building
a consensus ... always produces a more committed team and better decisions.
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Hire by committee. Virtually every person who interviews at Google talks to at least halfa-dozen interviewers ... Everyone's opinion counts, making the hiring process more fair
and pushing standards higher ... If you hire great people and involve them intensively in
the hiring process, you'll get more great people ... [a] positive feedback loop ... [with] a
huge payoff.
A trusted work force is a loyal work force.
Even with announcements, such as former CEO Eric Schmidt, stepping aside so that the
co-founder, Larry Page, can take the leading role for this industry giant is something for all
companies to learn from. In an irrepressible company these are decisions that have to be made to
lead or even survive today’s global markets. According to Nussbaum (2011), he refers to a
common theory of management practice “X” and “Y.” X is referring to generation X and Y
referring to the generation of baby boomers. He discusses the many advantages of integrating the
two generations when it comes to any level of management, but in this specific case the position
of a CEO.
Established corporations should consider a variation on this startup model--create a bigenerational CEO team that integrates Gen Xers younger Gen Y with older Boomer
managers. The benefits could be significant. They include a much deeper understanding
of the values and aspirations of the youngest and largest demographic cohort in the U.S.
(not to mention India, Brazil, etc.); better and quicker shifting of business practices to
social media platforms; and faster evolution of internal corporate compensation, work
organization, and promotion to "fit" Gen Y life. For example, the partner model of
service companies doesn't work for most Gen Yers. The hierarchy that still exists in most
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businesses won't generate their best work. And the closed, centralized technology
systems inside big corporations are anathema to the open source generation.
Bringing Gen Yers into top management teams may provide the knowledge and energy to
speed up the renewal of American business leadership and American business. For
startups, we already bring in "adult supervision" to complement the skills and knowledge
of entrepreneurial "kid techies." For the thousands of big companies lumbering along the
21st century, it's time to bring the "little fockers" into shared power. At the moment, the
world is just too complex for Boomer CEOs. We need B-Y team leadership. We need to
follow Google.
Many large corporations that are established are struggling with these new innovative
developments. Some others have decided to evolve with the complexities in changing business
modules to accommodate new management practices. Google is obviously making changes to
meet these demands. These kinds of practices are not so easy to accept by those who are uneducated on the values of the investments. Google has shown that implementing key measures
that provide growth and retain valuable employees and management are the responsibility of the
employee and employer.
According to Larry Page (2009), here are the list of ten philosophies and practices:

Focus on the user and all else will follow.

It’s best to do one thing really, really well.

Fast is better than slow.

Democracy on the web works.

You don’t need to be at your desk to need an answer.
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
You can make money without doing evil.

There’s always more information out there.

The need for information crosses all borders.

You can be serious without a suit.

Great just isn’t good enough. (Our Philosophy, 2009)
The management philosophy and practices by Google should be an example for all
companies big and small who wish to survive the constant changes and prevail in the world of
business. It is the fear of change, not from those who study the past but those who live in it.
V. Ethical stance and social responsibility
Google started the nonprofit philanthropic Google.org with of $1 billion in 2004.
Additionally Google expressed "project 10100" to help the community in 2008.
The following is the code of conduct of Google.
“Google Code of Conduct: Table of Contents
1. Serve Our Users
1. Integrity
2. Usefulness
3. Privacy and Freedom of Expression
4. Responsiveness
5. Take Action
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2. Respect Each Other
1. Equal Opportunity Employment
2. Positive Environment
3. Drugs and Alcohol
4. Safe Workplace
5. Dog Policy
3. Avoid Conflicts of Interest
1. Personal Investments
2. Outside Employment and Inventions
3. Outside Board Memberships
4. Business Opportunities
5. Friends and Relatives; Co-Worker Relationships
6. Gifts, Entertainment and Payments
7. Reporting
4. Preserve Confidentiality
1. Confidential Information
2. Google Partners
3. Competitors; Former Employers
4. Outside Communications and Research
5. Protect Google's Assets
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1. Intellectual Property
2. Company Equipment
3. The Network
4. Physical Security
5. Use of Google's Equipment and Facilities
6. Employee Data
6. Ensure Financial Integrity and Responsibility
1. Spending Google's Money
2. Signing a Contract
3. Recording Transactions
4. Reporting Financial or Accounting Irregularities
5. Hiring Suppliers
6. Retaining Records
7. Obey the Law
1. Trade Controls
2. Competition Laws
3. Insider Trading Laws
4. Anti-Bribery Laws”
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References
About Google. (n.d.). More Google Product. Retrieved April 22, 2011, from http:
//www.google.com/options/
About the foundation. (n.d.). What is Google.org? Retrieved April 29, 2011, from http:
//www.google.org/about.html
Google investor relations. (n.d.). Code of conduct. Retrieved April 29, 2011, from http:
//investor.google.com/corporate/code-of-conduct.html
Bright, P. (2008). "Surfing on the sly with IE8's new "InPrivate" Internet". Ars Technica.
Retrieved April 18, 2011, from http://arstechnica.com/microsoft/news/2008/08/surfing-on-thesly-ie8s-inprivate-internet.ars
Lee, E. (2009, November 100). Twice the storage for a quarter of the price. Retrieved April 22,
2011, from http://googleblog.blogspot.com/2009/11/twice-storage-for -quarter-of-price.html
Linden, G., (2005). Geeking With Greg. Google’s Rules Of Management. Retrieved from
http://glinden.blogspot.com/2005/12/googles-rules-of-management.html
Lipsman, A. (2009). comScore Releases November 2009 U.S. Search Engine Rankings.
Retrieved April 22, 2011, from http://www.comscore.com/Press_Events/Press_Releases/
2009/12/comScore_Releases_November_2009_U.S._Search_Engine_Rankings
Nussbaum, B., (2011). Fast Company. Google’s Greatest Innovation May Be Its Management
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Practice. Retrieved from http://www.fastcompany.com/1720052/the-b-y-leadership-model-google-google-s-greatest-contribution-to-innovation-may-be-it-s-management
Page, L., (2009). Our Philosophy. Ten Things we know to be true. Retrieved from
http://www.google.com/intl/en/corporate/tenthings.html
Pettersson, E. (2009). Google Wins Preliminary Approval of Online Books
Settlement. Bloomberg. Retrieved April 22, 2011, from http://www.bloomberg.com/
apps/news?pid=newsarchive&sid=ahUxORgasDFs
Rich, M. (2009). Preparing to Sell E-Books, Google Takes on Amazon. The New York Times.
Retrieved April 22, 2011, from http://www.nytimes.com/2009/06/01/technology
/internet/01google.html
Zibreg, C. (2010, February 11). Facebook strikes back at Google, integrates its chat with AOL
Instant Messenger. Retrieved April 22, 2011, from http://www.geek.com/articles
/news/facebook-strikes-back-at-google-integrates-its-chat-with-aol-instant-messenger20100211/
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