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Last Updated: Friday, 30 April, 2004, 10:42 GMT 11:42 UK
Float offers insights into Google
By Alfred Hermida
BBC News Online technology editor

An insight into the world's leading search engine has been provided by the documents filed by Google to the US financial authorities.

Larry Page and Sergey Brin, Google founders
Larry and Sergey explain why Google is different
The tone is set in a letter from co-founder Sergey Brin and Larry Page in which they explain how they are different from other businesses.

"Google is not a conventional company," said Mr Brin and Mr Page. "We do not intend to become one."

The two spell out their approach in a section entitled "Don't be evil".

"We believe strongly that in the long term, we will be better served - as shareholders and in all other ways - by a company that does good things for the world even if we forgo some short term gains," said the letter.

"This is an important aspect of our culture and is broadly shared within the company."

This is reflected in how it treats its employees, all of whom hold shares in the company.

"As a result, many employees are highly motivated to make the company more successful," said the filing.

Google now employs 1,907 people, compared to 284 in 2001. Most of them, 961, work in sales and marketing, while a further 350 deal with administrative tasks.

But a substantial proportion, 596, devote their time to research and development and they are encouraged to spend 20% of their time on independent projects.

Technology tools

The S1 filing to the Securities and Exchange Commission spells out the basis of Google's search technology - its PageRank system which calculates the importance of a web page by analysing the number of links to it.

KEY PERSONNEL
Eric Schmidt, CEO: Salary $250,000 - Bonus $301,556
Sergey Brin, president of technology: Salary $150,000 - Bonus $206,556
Larry Page, president of products: Salary $150,000 - Bonus $206,556
Omid Kordestani, president of sales: Salary $175,000 - Bonus $394,456
Wayne Rosing, vice president of engineering: Salary $175,000 - Bonus $151,314
This is combined with text-matching techniques that compare search queries with the content of web pages to help determine relevance.

"By combining query independent measures such as PageRank with our text-matching techniques, we are able to deliver search results that are relevant to what people are trying to find," said the documents.

Interestingly, the filing reveals that Google does not actually own the patent to the PageRank technology.

Instead it is owned by Stanford University, where Google's founders developed the technique.

Mr Brin and Mr Page hold an exclusive license to the patent until 2011, after which Stanford University could conceivably allow other access to the technology.

Money matters

In the document, they spurn the traditional approach of Wall Street which relies on regular earnings reports.

"Many companies are under pressure to keep their earnings in line with analysts' forecasts. Therefore, they often accept smaller, but predictable, earnings rather than larger and more unpredictable returns.

Google staff play roller hockey
A hard day at the office for Google's staff
"Sergey and I feel this is harmful, and we intend to steer in the opposite direction."

Perhaps surprisingly, the pair are not the highest paid executives in the company.

This honours falls to Chief Executive Officer Eric Schmidt, with an annual salary of $250,000 and a bonus for the year of $301,556.

By comparison, Mr Brin and Mr Page get a salary of $150,000 and bonuses of $206,556.

The quirky nature of Google's founders is even reflected in a touch of geek humour.

The exact value of the planned share offering is US$2,718,281,828, which coincidentally also corresponds to the mathematical constant e.

Looming challenges

Google is aware of the growing competition it faces in the search engine market.

Google logo
Google faces growing competition
It recognises that its main competition will come from tech giants Microsoft and Yahoo.

Both companies are developing their own search technology, with Microsoft looking to make search a more integral part of the Windows operating system.

Google appears under no illusions at the potential threat to its leading position.

"We expect that Microsoft will increasingly use its financial and engineering resources to compete with us," said the filing.

"In addition to Microsoft and Yahoo, we face competition from other web search providers, including companies that are not yet known to us."

Faced with an increasingly cut-throat marketplace, Google appears under no illusions about its future prospects.

"We expect our growth rates to decline and anticipate downward pressure on our operating margin in the future," said the documents.

Even Google's own success may work against it in the future. The company admitted that the widespread use of the word Google as a synonym for search could work against it.

"If this happens, we could lose protection for this trademark, which could result in other people using the word "Google" to refer to their own products, thus diminishing our brand."




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