EVERY SPOKEN WORD
150 min read · 30,003 words- 0:00 – 3:50
Introduction
- DRDavid Rosenthal
Are you intentionally wearing a black turtleneck for this one?
- BGBen Gilbert
No. It is actually gonna be one of my carve-outs, though.
- DRDavid Rosenthal
[laughing] Yeah, amazing.
- BGBen Gilbert
[chuckles] What, you think I'd dress up like Steve Jobs-
- DRDavid Rosenthal
[laughing]
- BGBen Gilbert
-for a Google episode?
- DRDavid Rosenthal
Well, I thought 'cause of the, you know, war between Android and [laughing]
- BGBen Gilbert
I, I walk in, and there's this, like, smirk on your face.
- DRDavid Rosenthal
[laughing]
- BGBen Gilbert
All right, let's do it.
- SPSpeaker
Who got the truth? Is it you, is it you, is it you? Who got the truth now? Hm. Is it you, is it you, is it you? Sit me down, say it straight, another story on the way. Who got the truth?
- BGBen Gilbert
Welcome to the summer 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.
- DRDavid Rosenthal
I'm David Rosenthal.
- BGBen Gilbert
And we are your hosts. In the late 1990s, Google built the best search engine for the rapidly growing internet. With a breakthrough search algorithm, low-cost servers based on commodity hardware, and the best business model of all time, search ads, they turned that search engine into a cash-gushing business and took it public in 2004. But then, curiously, they started doing some things that weren't related to search. They launched a breakthrough email service in your browser with Gmail, maps that were far superior to the current state-of-the-art, docs and spreadsheets with real-time collaboration for the first time, of course, YouTube, then Android, and their own web browser with Chrome. Astonishingly, today, Google has 15 products with over half a billion users. Seven of those have over two billion users. David, that is over 25% of humans use seven of Google's products.
- DRDavid Rosenthal
Just unreal. Can't wait to tell all of these stories today.
- BGBen Gilbert
Yes, and they've also launched some colossal failures: Google+ to try to compete with Facebook, Google Wave, Buzz, and about half a dozen messaging apps. I don't know, maybe a dozen messaging apps over the years. Hot air balloons to provide wireless internet, and of course-
- DRDavid Rosenthal
Oh, man, I forgot about the hot air balloons [chuckles]
- BGBen Gilbert
... Google Glass.
- DRDavid Rosenthal
Ah. Can't forget about that one, unfortunately.
- BGBen Gilbert
So why did they do all this? And as a business, Google was, and still is, the company that makes the vast majority of their money from ads on search results on the web. So today, we tell the story of Google as the innovation factory of the 2000s, their reorganization into the parent company, Alphabet, and how all these different products cleverly serve different business purposes, and also how it feeds into Google's original core mission, to organize the world's information. And we'll end this episode story right at the dawn of the AI era.
- DRDavid Rosenthal
Ooh [chuckles] oh, you're giving away the end!
- BGBen Gilbert
Oh, spoilers. Sorry. So is Google a search engine? Is it the platform company of the web era, or is it an incubator that just happens to have struck gold with search and perhaps AI? Today, we dive in.
- DRDavid Rosenthal
Whoop.
- BGBen Gilbert
Listeners, if you wanna know every time an episode drops or get early hints at what the next episode will be, check out our email list. That's also where we share corrections and updates about previous episodes, and we are adding a new bonus. You get to help us vote on future episode topics, so the first poll is going out soon. Sign up now at acquired.fm/email. Join the Slack if you wanna come talk about this with us and the whole Acquired community, acquired.fm/slack. Before we dive in, we wanna briefly thank our presenting partner, J.P. Morgan Payments.
- DRDavid Rosenthal
Yes, just like how we say every company has a story, every company's story is powered by payments, and J.P. Morgan Payments is a part of so many of their journeys from seed to IPO and beyond.
- BGBen Gilbert
So with that, this show is not investment advice. David and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only. David,
- 3:50 – 16:34
Gmail: Revolutionary Web-Based AJAX Email
- BGBen Gilbert
where are we starting-
- DRDavid Rosenthal
[chuckles]
- BGBen Gilbert
... this Alphabet story?
- DRDavid Rosenthal
Ooh, I have a very, very fun beginning for you, Ben. I wanna start with a quote from Russ Hanneman-
- BGBen Gilbert
The fictional character? [laughing]
- DRDavid Rosenthal
... from the Silicon Valley HBO show. [laughing] Oh, yeah, from the TV show.
- BGBen Gilbert
Awesome.
- DRDavid Rosenthal
And the quote is, "If you show revenue, people will ask how much, and it will never be enough. The company that was the hundred Xer, the thousand Xer, is suddenly the two X dog. But if you have no revenue, you can say you're pre-revenue. You're a potential pure play. It's not about how much you earn, it's about what you're worth, and who's worth the most? Companies that lose money." Immortal words of wisdom for the technology world. God, that show was so good. Why do I bring this up? Why do I start here?
- BGBen Gilbert
Why are you talking about this? Google is a cash-gushing machine.
- DRDavid Rosenthal
Revenue is obviously not the problem for Google, but what was the problem in 2004, 2005, 2006, was being viewed as, in Russ's terms, pure play. When Google went public in fall of 2004, the stock shot up, basically doubled in two months. Wall Street loved Google. AdWords, the search business model, everybody had to own shares. Google had cracked the code on monetizing the internet. The more people use the internet, the more they search. The more they search, the more money Google makes. Simple, easy, pure play, you might say. [chuckles]
- BGBen Gilbert
Yep.
- DRDavid Rosenthal
That is, until Google announced fourth quarter 2005 earnings. Full year 2005 revenue, $6.1 billion. That's almost double the 3.1 that it was in 2004, the first year it went public. But earnings are flat. Profitability is down.
- BGBen Gilbert
Hmm.
- DRDavid Rosenthal
Google's now investing in all these new products and services, Gmail, Maps, the forthcoming Google Docs. Later this year, in 2006, it would buy YouTube for $1.6 billion. Wall Street hates this. Hates it!
- BGBen Gilbert
This is a huge amount of their cash they're putting back on the table and betting for the future.
- DRDavid Rosenthal
So this is January 2006. The stock falls 27%.... Wall Street's like, "God, these guys, what are they doing? They're messing it up." Steven Levy writes in, in the Plex that the perception of Google's ventures beyond search at the time was that the company was tossing balls into the air like a drunken juggler. They were a pure play in investors' eyes, and now they're messing it up. They're adding all this other stuff. They don't want the other stuff.
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
So then, Ben, as you teed up in the intro, the question is: why did they do all this? And I think the way to answer it is to start and just tell the stories of all the individual products.
- BGBen Gilbert
Let's do it. Strap in. I will say, David, doing the research took me way back to early acquired grading acquisitions. This is the cornucopia of hits of iconic product launches in tech history.
- DRDavid Rosenthal
So the first, and probably the most important here, because it sets the stage for everything else, the first major non-search product was on April 1st, April Fools' Day, 2004, Gmail, [chuckles] the most famous, infamous, non-joke April Fools' Day announcement of all time.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
But it sure sounded like a joke. Here's the announcement in 2004: entirely web-based email in your browser. You can log in and access it anywhere, on any device. Google Search is built in. You don't need to spend all this time sorting your mail into folders anymore, and one gigabyte of storage, free. No need to delete your mail, no need to clean up your inbox, no need to do anything, ever. And the whole thing is free.
- BGBen Gilbert
Yep.
- DRDavid Rosenthal
Of course, this sounds like a joke. This is too good to be true.
- BGBen Gilbert
The universe at the time is Microsoft sells sort of enterprise-grade mail for a lot of money, or there's all these free web-based services popping up, like Hotmail, that Microsoft would end up buying, and Yahoo! Mail and AOL. You get, like, five megabytes of storage.
- DRDavid Rosenthal
Yeah, not even. At the time, Hotmail, which, as you said, Microsoft owns, had two megabytes- [laughing]
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
... of free storage, and Yahoo! Mail had four megabytes. There's another great story from in the Plex that Steven Levy has. He's interviewing Bill Gates at the Newsweek headquarters office in New York shortly after Gmail comes out, and they, they started talking about Gmail, and Bill can't believe it. He's, like, offended by Gmail because he thinks that giving people all this storage is just wasteful. "You're doing email wrong. It's morally repugnant to leave all of this [chuckles] email sitting-
- BGBen Gilbert
Right
- DRDavid Rosenthal
... on the servers." I was thinking about it. Until Gmail, the paradigm for email, people treated it like regular physical mail. You sort it, you file away the important stuff, you throw out the pieces you don't need anymore. I mean, even freaking Bill Gates operates this way. [chuckles]
- 16:34 – 32:10
The Web: Google's Strategic Weapon Against Microsoft
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
So, I mean, when Paul discovers this, this is almost like Google Search all over again, when people realize what you can do to create something that looks and feels and has all the functionality of a application that heretofore would've been a program that you installed on your personal computer.
- BGBen Gilbert
A .exe or a .app on your Mac.
- DRDavid Rosenthal
That maybe you downloaded from the internet, but more likely you went to a retail shop, like Comp USA or something, installed on your computer. You can now just do this in a web browser? This is incredible!
- BGBen Gilbert
The web is the platform of the future.
- DRDavid Rosenthal
Yep, so Paul builds the prototype, shows it to Larry and Sergey. They're super jazzed. So supposedly, Larry and Sergey become the first beta users of Gmail. They are the seed-
- BGBen Gilbert
Ah
- DRDavid Rosenthal
... Gmail [chuckles] users, and they start using it exclusively as their mail service within Google. And then by the time it launches publicly, all of Google is on Gmail and using it, addicted to it. And it wasn't called this at the time, but it's in the cloud. You don't have to have your mail stored on your machine or a specific server. You can log in, access it anywhere, on any network, any device.
- BGBen Gilbert
All this stuff sounds so boring, but it was completely breakthrough.
- DRDavid Rosenthal
So obviously, Larry and Sergey are jazzed, first 'cause of just the incredible nature of this product. And Larry especially, he is a product person, and his view is, "If we can build a better product and it's on the web, then it's good for Google, and we should do it." And that is a huge part of the motivation underlying Gmail and everything we're gonna talk about.... but there's also another reason, and that's Microsoft. 'Cause Google was doing great, printing money, AdWords, Search, greatest product, greatest business of all time, but they've got a big risk, which is that everything about Google, everything about the web right now, flows through Microsoft, flows through Internet Explorer. [chuckles]
- BGBen Gilbert
Yeah, Google's entire money-printing machine was built on top of Microsoft's, and at two layers. So to this point, over 90% of Google Search queries were done on Windows PCs, and 90% were done in Internet Explorer running on those PCs. So Google's got the killer app for the web in Search, and the thing under them is a browser owned by Microsoft, and the thing under that is an operating system owned by Microsoft.
- DRDavid Rosenthal
Yes.
- BGBen Gilbert
They exist at the pleasure of Microsoft at this point in history.
- DRDavid Rosenthal
And Microsoft has a different business model. So Google's business model, the greatest of all time, is people use Google Search, they discover more of the web, they spend more time online on these new sites and services that they're discovering. As they're spending more time online, they search more. Searching more leads them to discover even more new sites and services. The cycle repeats itself, and Google just monetizes the whole thing.
- BGBen Gilbert
Yes, and web usage isn't bad for Microsoft, but if the platform of the next generation becomes the web and people are writing web applications instead of Windows applications, that makes Microsoft's platform a lot less valuable versus other operating systems like, say, Mac or, say, a future where we change away from desktop computers altogether.
- DRDavid Rosenthal
Yes. At a minimum, Microsoft doesn't business model-wise care about the web, 'cause they don't monetize the web. Microsoft makes money by OEMs selling PCs that have Windows on them, and then Microsoft sells software that goes on those PCs. So at a minimum, they don't care, and at a maximum, like you're saying, web apps are at existential risk to Microsoft.
- BGBen Gilbert
Oh, my God, there's a future application platform that just doesn't really require our participation, other than the fact that we control IE, and at least for now, that's really important.
- DRDavid Rosenthal
And most of Microsoft hasn't realized this yet. Thank God for Google. Microsoft's distracted with the albatross that was Longhorn, that would become Windows Vista.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
A few people in Microsoft realize this, but Google for sure realizes this, though. [chuckles] Eric Schmidt for double sure realizes it because he was the CEO of Novell before coming to Google, and who was Novell's competitor? Microsoft, [chuckles] and Microsoft crushed them. So why Google's so jazzed about Gmail, they need to build up leverage with consumers, with users, that they're gonna demand rich web applications, so that if Microsoft ever tries to disadvantage Google or disadvantage web apps and things moving to the web, really the only defense against that is if consumers have already adopted this stuff and love it and would revolt. And so this is what Gmail is.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
So Gmail development's trucking along through 2001, 2002, 2003. This is hard to remember now. It took three years to develop Gmail-
- BGBen Gilbert
Long development cycle, yeah.
- DRDavid Rosenthal
-to be ready to release publicly, and then it was in beta for, like, ten years. [laughing]
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
But I think the reason it took so long was this was all new. There wasn't a lot of depth of knowledge out there about JavaScript, certainly not about AJAX and XML dynamic refreshing.
- BGBen Gilbert
It was really hard to program. Today, you've got all these nice abstraction layers, these frameworks that people have built to do web development. That really didn't exist to make AJAX applications.
- DRDavid Rosenthal
Yes. Okay, so Google's finally getting ready to launch it. We're in 2004. There's a couple questions. One, the service, for all the reasons we just described, Google, Larry, Sergey, Eric, they want it to be so compelling that consumers demand it. It takes off like wildfire. It builds this strategic moat against Microsoft, but it will cost money.
- BGBen Gilbert
There's a reason other people don't do this.
- DRDavid Rosenthal
Yeah, there's a reason that a gigabyte of free storage seems a little crazy. Even if you assume, and I think this is probably directionally correct, that because of Google's commodity infrastructure advantage, they could launch Gmail at, like, one-tenth of the cost that anybody else could. Also, remember, there's no public cloud at this point in time.
- 32:10 – 51:52
Google Maps and Docs: Expanding the Web Platform
- BGBen Gilbert
All right, David, so Gmail, we've got our existence proof of a AJAX-based web app. It's going viral. People love it. We can really build web applications now. Let's go nuts.
- DRDavid Rosenthal
Yes. So the next big web apps following Gmail were Maps, Docs, and Spreadsheets, all absolutely incredible.
- BGBen Gilbert
And it was not clear that these things were possible with web technologies.
- DRDavid Rosenthal
These required incredible technical and product vision. So first, Maps. We actually did a whole Acquired episode back in the day just about Google Maps.
- BGBen Gilbert
The three companies they acquired.
- DRDavid Rosenthal
Yeah. It starts in two thousand and three, so even before the Gmail launch, when a young associate product manager, a PM, at Google named Bret Taylor, that Bret Taylor-
- BGBen Gilbert
Of course, of ACQ2 fame, Bret Taylor. [laughing]
- DRDavid Rosenthal
Yes, recent ACQ2 guest, [chuckles] Bret Taylor. [chuckles] Oh, yeah, also FriendFeed founder, Facebook CTO, co-CEO of Salesforce, chairman of OpenAI.
- BGBen Gilbert
Former chairman of Twitter.
- DRDavid Rosenthal
Yeah, yeah, that Bret Taylor. Starts his career out of Stanford in two thousand and three as an associate product manager at Google. He ends up going to Larry and is like: "We're missing out here. AOL has MapQuest, which they've just bought for a billion dollars, and I'm hearing through the grapevine that Yahoo! is about to make a big push and launch Yahoo- Maps." And so, as you would expect, Larry's like: "Oh, yeah, okay, is this a web product?" "Yes, of course." "Go do this."
- BGBen Gilbert
For all these things we're studying here, there's a business rationale, which might be extremely indirect, but it's there. This idea of increasing web use increases Google search, which increases the money printer. But then there's also an abstract rationale, which is our mission is to organize the world's information and make it universally accessible and useful, and Maps is squarely in the middle of that.
- DRDavid Rosenthal
Yeah. Now, the thing was, as big as MapQuest and Yahoo! Maps were about to become at the time, and they were big, I remember using them. My parents used them. Everybody on the internet used these services. They weren't what you think of as Google Maps today. They were static web pages.
- BGBen Gilbert
Yep.
- DRDavid Rosenthal
They didn't use AJAX, and the whole point was to get driving directions.
- BGBen Gilbert
That you could print out.
- DRDavid Rosenthal
Exactly, and the business model for these services was on the printed piece of paper that people would print out, you would put ads on there. [chuckles]
- BGBen Gilbert
Yep.
- DRDavid Rosenthal
[laughing] It's like a, uh, Trojan horse newspaper business.
- BGBen Gilbert
Right.
- DRDavid Rosenthal
So Bret, and Larry, and Marissa are looking at this like: "I think we can do better than this." So they go out, and they buy a little company in Australia called Where 2 Technologies, which was started by these two brothers, Lars and Jens Rasmussen-
- BGBen Gilbert
Yep
- DRDavid Rosenthal
... who were incredible engineers, and they had built a real-time interactive maps application, except it was a installed desktop app. [chuckles] And so they're meeting with them, and Larry's like: "Okay, this is what we want, but we need it on the web." I think actually the quote was, "We like the web at Google." [chuckles]
- BGBen Gilbert
[chuckles]
- DRDavid Rosenthal
And this is how good of engineers the Rasmussens were. They go off, and in, I think, three weeks, they rewrite and re-architect the entire application to run as a web app, and they basically independently discover and implement a lot of the JavaScript and AJAX features that Google was working on internally for Gmail. Gmail still hadn't launched yet.
- BGBen Gilbert
Amazing.
- DRDavid Rosenthal
So Google ends up buying Where 2. That becomes the core of Google Maps. Around the same time, they also acquired two other companies, Ziptrash, that did traffic data, and Keyhole-
- BGBen Gilbert
Keyhole
- DRDavid Rosenthal
... which would become Google Earth. Now, Google Earth was an installed desktop application. Ultimately, everything that Google Earth was building would get folded back into Maps later.
- BGBen Gilbert
It's actually not true. I thought that, and just last night I realized you can still go to earth.google.com and get a completely different three D experience than Google Maps.
- DRDavid Rosenthal
Oh, no way!
- 51:52 – 1:09:40
YouTube: The Early Days of User-Generated Video
- DRDavid Rosenthal
Yeah, and ultimately, today, Microsoft is fine with this arrangement, too. The ultimate fun coda, though, is Sam Schillace, founder of Writely, he would go on to manage, you know, all of Docs and Sheets, and I think he actually managed Maps at some point, too. He is now the deputy CTO of Microsoft. [chuckles]
- BGBen Gilbert
Careers are long.
- DRDavid Rosenthal
Amazing.
- BGBen Gilbert
The interesting thing, reflecting on Google's actual business here and comparing it against all the things that we're talking about, Google essentially won search by the mid, late two thousands. I mean, I know Bing hasn't even launched yet, and we'll get to that, but search was going to continue becoming a more and more giant market, and so all this stuff they're doing, it's like, "Oh, we've won, and this market is naturally going to become large. I guess let's just fuel it getting larger and try to do a bunch of stuff under the umbrella of our mission, but what do we really need to do?" And the slightly more altruistic answer, I suspect if Larry Page was sitting next to us, he would say, "What is the goal of a company? The goal of a company isn't build the largest business necessarily, it's to fulfill its mission. And, yeah, we got a money-printing machine from search, and we're investing a lot of money still in search and making that better, but all these things fulfill our mission, too."
- DRDavid Rosenthal
Yep, and I think these things are all true.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
So on the back of the success of Maps, Docs, Spreadsheets, really starts to inform Google's strategy here, and specifically, they've seen, "Hey, we can acquire these web app, Web 2.0 companies, bring them into Google, turbocharge them, offer these magical experiences to consumers. We get all this strategic value out of them, both on the offensive and defensive front. We can operate these things at a fraction of the expense that it would cost anyone else to do so, standalone company or part of other big companies."
- BGBen Gilbert
"And some of the things we could buy actually fit into our core ads business quite well."
- DRDavid Rosenthal
Yeah. What if we went big with this? Like, really big.
- BGBen Gilbert
Like, something super expensive to run that requires storage of massive videos and bandwidth for streaming these massive videos and lawsuit protection.
- DRDavid Rosenthal
Yep, probably also costs a lot to buy it 'cause it's well-funded from Sequoia. That leads us to YouTube.
- BGBen Gilbert
But before we do that, now is a great time to thank friend of the show, Anthropic, and their AI assistant, Claude.
- DRDavid Rosenthal
So as we were researching Google's expansion here from just search into being a real platform company here in the two thousands with Gmail and Chrome, Android, Workspace, everything we're gonna get to later in the episode, the complexity just skyrocketed with all these interconnected systems that needed to scale to billions of users and keep information flowing between all the various products and services that Google was launching. The funny thing is, how quaint that problem seems today compared to the scale, speed, and interconnectedness that you need in the AI era. If you're an enterprise building today in AI, you need to deal with all of this-... times ten.
- BGBen Gilbert
Yes, so enter Claude. What makes Claude different for the enterprise is sustained performance on complex tasks. We're talking about the kind of work that would typically take your senior engineers weeks, like refactoring entire code bases or synthesizing thousands of regulatory documents. I wouldn't know anything about that. Claude can handle these multi-hour projects while maintaining context and fewer hallucinations throughout. Claude is actually the most adopted AI within enterprises when it comes to their API.
- DRDavid Rosenthal
Yep, that's because Claude integrates seamlessly with existing workflows through their MCP connector system. They have pre-built integrations with tools like Jira, GitHub, HubSpot, and Square, plus custom integrations for any internal system, making Claude your central knowledge resource.
- BGBen Gilbert
So companies like GitLab are already using Claude for coding, and research teams use it to process documents that would normally take weeks to analyze manually.
- DRDavid Rosenthal
If you're building the next generation of intelligent applications, check out Anthropic's enterprise offerings to see how teams are transforming their workflows with Claude.
- BGBen Gilbert
And we've got a special offer for Acquired listeners to try out Claude before making the enterprise commitment: half-price Claude Pro for three months. Go to claude.ai/acquired to get started.
- DRDavid Rosenthal
And just tell him that Ben and David sent you.
- BGBen Gilbert
All right, David, the YouTube story.
- DRDavid Rosenthal
Ooh, the big kahuna!
- BGBen Gilbert
The big kahuna.
- DRDavid Rosenthal
Ah. The most embarrassing thing in Acquired history was our early episode on YouTube.
- BGBen Gilbert
All right, I have got a proposal for you.
- DRDavid Rosenthal
Okay, I'm ready for it. You wanna take it out of the feed, delete it?
- BGBen Gilbert
Today, we're setting the record straight. When we finish this section, we are re-grading YouTube. We are updating the Acquired canon. It's happening.
- DRDavid Rosenthal
Oh, let's do it! We're bringing grading back, baby. [laughing]
- BGBen Gilbert
Great, I'm glad you're into it.
- DRDavid Rosenthal
I love it. I love it.
- BGBen Gilbert
Awesome.
- 1:09:40 – 1:30:13
YouTube: From Risky Acquisition to Giant Business
- DRDavid Rosenthal
yeah, pretty quickly, within a little over a year of launching, YouTube is in way over its head. The content issues, the copyright issues, the infrastructure scaling issues.
- BGBen Gilbert
It's all exactly what they wanted. It's going as well as they could have hoped, and it is in way over its head.
- DRDavid Rosenthal
Yes, and if this had happened today, you could probably raise enough capital from the private markets to address this and scale up as a company fast enough, especially with public cloud, that you could probably build this as a standalone company.
- BGBen Gilbert
Yeah. I mean, today you can go raise billions of dollars as a Series A startup if you're in the right space, doing the most interesting things with the big market.
- DRDavid Rosenthal
Two thousand and five, two thousand and six, not the same kind of private capital available, and of course, there's no way the company could go public with all these issues or anything. [chuckles]
- BGBen Gilbert
Right. In particular, there was a giant suit from Viacom.
- DRDavid Rosenthal
Yes. So because of these things, YouTube ends up basically putting itself up for sale. I mean, they have no leverage in content negotiations with rights holders, and infrastructure is killing them. So in November 2006, which is less than eighteen months after the product launched, Google buys YouTube for one point six five billion dollars in stock.
- BGBen Gilbert
In stock.
- DRDavid Rosenthal
All-
- BGBen Gilbert
I'm glad you caught that, too
- DRDavid Rosenthal
... Google stock. Yes, we heard in the research that after this deal, Patrick Pichette, I think, was the CFO of Google at the time-
- BGBen Gilbert
He said, "Never again," right? "This was our biggest mistake."
- DRDavid Rosenthal
Said, "Never again. This is the last stock deal that we ever do." [chuckles]
- BGBen Gilbert
Google's market cap has twenty X'd since the day that this deal closed. If they had paid in cash, they would have made an extra twenty times multiple on whatever you already think the multiple is on their purchase of YouTube.
- DRDavid Rosenthal
Yep. The thing is, though, this is... We will correct the Acquired record at the end of this section. Either way, even if Google paid-
- BGBen Gilbert
[chuckles]
- DRDavid Rosenthal
... twenty times one point six billion dollars for this, they got a screaming deal. YouTube is so valuable.
- BGBen Gilbert
All right, I have some of the numbers from the first few years that I was able to cobble together, and then I wanna talk about some of the product evolution over the years.
- DRDavid Rosenthal
Yes, great.
- BGBen Gilbert
All right, so Google buys it for one point six five billion dollars, and interestingly, Shishir Mehrotra, this week, went on the Grit podcast, the Kleiner Perkins podcast, and laid out a bunch of data on this, and I actually didn't have a chance to reach out to Shishir yet 'cause it just came out, but a lot of this is from that conversation. So after the acquisition, he said, and Shishir was the head of product and basically the CPO, CTO at YouTube, not right after the acquisition, but within a year, kind of came in for four or five years. So after the acquisition, he said it was doing about thirty million in revenue.
- DRDavid Rosenthal
Okay.
- BGBen Gilbert
So they did have revenue. I believe, just to foreshadow our next chapter, that was in the form of programmatic advertising that was on the DoubleClick ad exchange that they were using to make money. They were losing about a billion dollars a year, [chuckles] run rate, on thirty million in revenue. The amount of money they lost was almost exactly equal to a penny per view. So just imagine, every time [chuckles] you loaded YouTube in those years, Google would just flush a penny down the drain. They gotta figure out something to do about this. So for the first couple of years, the CFO at the time was terrified of it scaling, like, "Please don't scale in its current state," but of course, there's nothing they can do. The cat's out of the bag, it's scaling, and the CFO was exploring, "Hey, can we sell this to one of the other companies who was bidding on it?"
- DRDavid Rosenthal
[chuckles] That's right, because Yahoo and the media companies also wanted to buy YouTube.
- BGBen Gilbert
Yes. So Shishir says, "We were broadly known as Google's first mistake."
- DRDavid Rosenthal
Well, back to my tee up in the intro, being a pure play, investors-... didn't like this. For a long time, this was a huge knock. I mean, geez, when we did our episode ten years ago about YouTube, we said it was a terrible acquisition.
- BGBen Gilbert
Yes. The thing we haven't talked about, music licensing was really expensive. They were one of the top revenue sources for the music industry for a long time, maybe even still one of the top few to the music industry.
- DRDavid Rosenthal
Yeah, right up there with Spotify.
- BGBen Gilbert
Yep. So kind of on the product side of things, early on, as you were saying, the way that you found YouTube is you would see it embedded on a different site, you would click through, and then you may stick around to watch something after, but then you'd leave, and your entry point to YouTube again was another embed. Most sessions did not start on youtube.com, so you weren't going to YouTube with the idea of that they'll recommend something to me. And then even the people who did go to youtube.com in this sort of four-year, five-year period after the acquisition, ninety percent of that traffic was there to search, and they just ignored anything that you recommended to them. I mean, it takes a long time, A, to build habits, and B, to build out the technology to make any sort of recommendation or browse or anything good.
- DRDavid Rosenthal
Yep, for first with related videos and then ultimately the feed. And just for a sense of scale, there was a report that estimated that YouTube that year, in 2007, consumed as much bandwidth as the entire internet did in the year 2000, so just seven years before. [chuckles]
- BGBen Gilbert
I have an extremely similar stat from Shashir, which is it's a later period, it's 2014, but it's apples to apples, rather than comparing that '07 to 2000. He said in 2014, YouTube was twenty percent of the bits on the internet.
- 1:30:13 – 1:49:29
DoubleClick: Expanding the Ad Business
- DRDavid Rosenthal
we go. We have revised history, corrected the record.
- BGBen Gilbert
Yes. All right, well, for our next chapter, I motion that we go back closer to Google's core business of advertising on the web.
- DRDavid Rosenthal
Hmm, and maybe also [chuckles] stay closer to Acquired's original, uh, raison d'être of discussing the greatest acquisitions of all time.
- BGBen Gilbert
We may as well follow up YouTube with DoubleClick. But before we do that, it is time to talk about one of our favorite companies, Statsig. So on our first Google episode earlier this year, we talked about how great the search business model is, and how once a company takes a lead, it's just hard for anybody else to catch up. But Google did something that kept them in the lead: using data to relentlessly improve the search experience.
- DRDavid Rosenthal
Yep, Google really was a pioneer in the idea of a data-driven product culture. They took this to the extreme with a famous example where they tested fifty different shades of blue for their links on Google Search result pages to find the optimal one. They also famously leveraged user data when people correct their queries to bootstrap the "Did you mean?" autocorrect feature. More recently, they even opted people into AI search via an A/B test.
- BGBen Gilbert
This obsession with testing helped Google find a thousand small product and business wins. It also helped Google scale its unique culture, where its employees can quickly test and ship new products and features because they all have access to great tools.
- DRDavid Rosenthal
But for a long time, smaller companies didn't have access to the same quality of tools that were available at places like Google.... Now that's changed, thanks to Statsig.
- BGBen Gilbert
The smartest new companies like OpenAI, Figma, Atlassian, Brex, Notion, and Anthropic, plus hundreds of startups that you see and use every day, are using Statsig to build a bottoms-up, data-driven product culture. Statsig provides all the tools you need to make data-driven product decisions in one place: advanced experimentation, feature flags, product analytics, session replays, and more, all backed by a single set of product data.
- DRDavid Rosenthal
And using Statsig isn't just about saving engineering time, it's about bringing that Google-level continuous improvement culture into your company. Rather than arguing about metric definitions or troubleshooting broken tools, your team can focus on shipping improvements.
- BGBen Gilbert
And if you already have your own product data, Statsig is warehouse native, so they can plug directly into your existing data in Snowflake or BigQuery, whatever.
- DRDavid Rosenthal
So if you're interested in giving your product team the same continuous improvement capabilities that keep Google Search ahead, go to statsig.com/acquired. That's S-T-A-T-S-I-G.com/acquired. They've got a generous free tier, a fifty thousand dollar startup program, and affordable enterprise plans. Just tell them that Ben and David sent you. So, DoubleClick. Well, if buying YouTube in October two thousand and six for one point six five billion dollars was a lot, Google decided to basically double that, [laughing]
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
... a few months later, in April of two thousand and seven, when they bought DoubleClick for three point one billion dollars, in cash [chuckles] this time, not stock.
- BGBen Gilbert
And this is on the display ad side of the house. So Google's got two advertising businesses at this point. There's AdWords, when you search, and you get the blue links that show up above the blue links. And then there's the off-property, or the Google Network ads, and at this point in time, Google just is operating something called AdSense, which is this ad network that they've started.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
So DoubleClick actually has a fascinating company history before Google that I did not know.
- DRDavid Rosenthal
Yeah. Not a hot, rising startup like YouTube that they bought for, you know, a couple billion dollars.
- BGBen Gilbert
Though it once was.
- DRDavid Rosenthal
Yes.
- BGBen Gilbert
All right, so here's the DoubleClick story, and huge thank you. There's a new book that actually just came out by Ari Paparo. The book is called Yield. DoubleClick was originally founded in nineteen ninety-five.
- DRDavid Rosenthal
So before Google.
- BGBen Gilbert
Before Google. The founders were Kevin O'Connor and Dwight Merriman, and their headquarters were in New York City. The original idea was twofold: one, build software that could let advertisers serve ads across websites, this is called an ad server, and the network of websites and media, the advertisements. When people talk about paid media, it's the advertisements themselves that would run. Over the next five years, they end up building and acquiring their way to being the leading display ad network and ad server.
- DRDavid Rosenthal
And they went public during this time, right?
- BGBen Gilbert
Yep, nineteen ninety-eight, shining success of the dot-com industry. However, dot-com crash happens, seventy percent of DoubleClick's customers not only churn, but go out of business. A huge amount of DoubleClick's advertisers were actually VC-backed startups. Brand dollars hadn't really spread to the web yet. Like we talked about, the digital advertising was so early and so nascent.
- DRDavid Rosenthal
Yeah, it was pets.com that was advertising on other dot-com properties. [chuckles]
- BGBen Gilbert
Exactly, and they're almost levered on the bubble, is probably the right way to think about it. So easy come, easy go. So in two thousand and two, after they're sort of limping along for a while, they sell that ad network division off for under fifteen million dollars, with an M.
- DRDavid Rosenthal
Wow!
- BGBen Gilbert
So now all they've got left is the software, the sort of ad server part of the business. So flash forward to two thousand and four, they're this kind of sleepy, slow-growth company with a shrinking market cap. The ad server, their software was still widely used, but digital marketing on the web just wasn't actually having that much spend flow through it. They decided to put themselves up for sale. Google actually took a meeting to look at it, to see if they wanted to buy it. They decided not to, and eventually, they sold it to private equity. Two different firms, Hellman and Friedman, and JMI Management, bought it in two thousand and five for about a billion dollars. IPO day was double this final price tag that they would sell it to private equity for. And in many stories, this is kind of the end of the story. This is the start.
- DRDavid Rosenthal
Yeah, it's sort of crazy, given the fact pattern that you just told us, that two years later, Google's gonna buy this thing for three billion dollars. [chuckles]
- BGBen Gilbert
Yes. So David Rosenblatt becomes CEO, and he has a very familiar name that all of you will probably recognize, who becomes-
- 1:49:29 – 2:08:57
Chrome: Google's Entry into the Browser Wars
- DRDavid Rosenthal
during these years and why Microsoft finally said, like: "Okay, enough. We gotta enter-
- BGBen Gilbert
[chuckles]
- DRDavid Rosenthal
... this business ourselves."
- BGBen Gilbert
Yeah. So we've been talking about kind of the sideshows, like trying to add wind to the sails of the web, and Search is cranking on improvements to the core product, and revenue is going up right along with it. So here's a little timeline to catch us up, '03 to '08. They start updating the index more often, so the index starts to feel not quite real time, but it used to be that when you would search, you would be getting results that were indexed three months ago. Now, the web is feeling a little bit more, uh-
- DRDavid Rosenthal
Real-timey
- BGBen Gilbert
... recent when you're searching it.... They launch Google Images, Google News, Google Books, Google Scholar. They launch Google Suggest, which is when it starts auto-completing your searches, and later, they would launch something called Google Instant, which was very cool at the time. It's actually kind of gone away now, where it would run a completely new search based on every character you typed and show you the results page updated in real time with each next keystroke, which was pretty amazing.
- DRDavid Rosenthal
I remember that being so cool when it launched.
- BGBen Gilbert
Yeah. In two thousand and five, they incorporate your search history into your results, so this is when they start doing some personalization stuff with logged-in users. They go from, in '04, they had three billion in revenue; '05, they have six billion in revenue, so doubled even at that scale. In two thousand and seven, they launched Universal Search across web, images, video, you know, whatever, maps. They try to deconstruct your query and understand which of these things are you looking for, rather than-- They used to basically build a completely separate search engine for each media type and then leave it up to you to decide which thing to go search. That year, when they launched Universal Search, they do sixteen point five billion in revenue. This two thousand and seven year, this is when they become the largest seller of advertisements in the world. Not just digital ads, ads, and digital ads would not overtake traditional media until twenty eighteen, as we talked about earlier.
- DRDavid Rosenthal
Yeah, I was trying to square this. So I guess that means that the market share that Google has of digital ads is so high-
- BGBen Gilbert
It's massive
- DRDavid Rosenthal
... that it's bigger than even in the traditional space or the TV space, what any one player has?
- BGBen Gilbert
Yes. So every year for the last eighteen years, Google has been the number one seller of advertising of any kind in the world.
- DRDavid Rosenthal
[chuckles] Wow.
- BGBen Gilbert
[chuckles] This, I think, helps you understand a little bit what's at stake in the era of AI. I mean, this is literally the trillion or five or ten trillion dollar question is: Can Google keep being the number one seller of advertising in the world, even through this sea change? We should do a whole episode on that, probably. Maybe we'll [chuckles] save it-
- DRDavid Rosenthal
Maybe next month
- BGBen Gilbert
... for next time.
- DRDavid Rosenthal
Yeah.
- BGBen Gilbert
But actually, there's some great corollaries with the mobile wave that we're about to talk about. And then just to pull forward a few more search improvements that they would do later, in two thousand and nine, that's when they really do some real-time indexing of the web. Twenty twelve, they launched the knowledge graph, so when you search about a, basically a thing with a Wikipedia page, you always get the kind of snapshot view on the right-hand side of that entity. And so all along the way, they're tweaking the algorithm in an attempt to reduce spam. That's effectively the product changes. On the people side of things, they really had solidified themselves as the preeminent computer science research company at this point. I mean, if you were to refer in two thousand and eight to, like, a really smart programmer, you probably said, "Oh, they, you know, they're like a Google-type engineer." They sort of took the mantle from Microsoft and had not yet relinquished it to Facebook or later to the Stripe or OpenAI or Anthropic or any of the sort of companies we would talk about in the future as this, like, dense concentration of the best engineers, and they had pulled in a lot of the people from the big research labs that had been collapsing. So you had Jeff Dean and Sanjay Ghemawat coming from Deck. David, we did Sanjay a total disservice on the last episode. A lot of the stuff that Jeff did, and of course, he became sort of a Google executive, Jeff and Sanjay peer-programmed together.
- DRDavid Rosenthal
Yes, there's an amazing New Yorker article that was published long ago about their friendship and career partnership and everything that they accomplished together.
- BGBen Gilbert
Yeah, we'll link to it in the show notes. And basically, if you look at any big research paper about giant Google infrastructure stuff that was launched from, I don't know, two thousand and two-ish, maybe even earlier, through the twenty-teens, Jeff and Sanjay are either the two authors or two of the five authors. I mean, it's amazing how much stuff these two guys invented. They also got Bill Coran and Rob Pike from Bell Labs. You had Xerox PARC and IBM's labs were sort of losing prominence, and Google's just sucking in all this generational, heavy-hitter, computer science, architecture systems programmers from all of those. And so I think that's sort of how I would describe where a lot of the technical breakthroughs are really coming from, or at least the culture of technical breakthroughs.
- DRDavid Rosenthal
We talked about these incredible products, incredible innovations, development of the whole concept of a web application, but that was coming from these people that were coming into the company who were just, like you say, generational talents. Speaking of, that was very convenient for a couple things that they needed to start doing in two thousand and eight, namely launching their own web browser and then shortly thereafter, launching their own mobile operating system.
- BGBen Gilbert
It's astonishing that they did both of these things.
- DRDavid Rosenthal
In the same year.
- BGBen Gilbert
And this isn't like, "Oh, I'm gonna start a browser," the way that you can start a browser today. I mean, the, all these AI companies are launching browsers.
- DRDavid Rosenthal
Yeah, they're using Chromium. [chuckles]
- BGBen Gilbert
Right. This is a giant engineering undertaking. You need amazing architects, and this is equivalent to Dave Cutler doing Windows NT. I mean, it was earth-shattering when Google launched Chrome.
- DRDavid Rosenthal
Or everything Jeff Dean and Sanjay did in the early days of Google.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
Yeah, and when I say people launching web browsers today are using Chromium, Chromium, of course, is the open source-
- BGBen Gilbert
Version
- 2:08:57 – 2:23:12
Chrome: Google's Browser Achieves Market Dominance
- DRDavid Rosenthal
They launch it in early September of 2008, like a week before Lehman goes down. This is wild.
- BGBen Gilbert
I remember that because I remember sitting in North Carolina at my Cisco office, and I remember reading the Chrome comic, which I actually just read-
- DRDavid Rosenthal
Right
- BGBen Gilbert
... a couple nights ago-
- DRDavid Rosenthal
Oh, yeah, yeah
- BGBen Gilbert
... for this episode, this, like, amazing-
- DRDavid Rosenthal
About to get to it
- BGBen Gilbert
... web comic, [chuckles] at the same desk where I read the news about the great financial crisis and the world falling apart and Lehman Brothers collapsing.
- DRDavid Rosenthal
Wow! So they launched it early September 2008, with- [chuckles] the way, this is so Google. The way they decide to launch it is they hire the famous comic artist, Scott McCloud, to illustrate a digital comic book as, like, a introduction to Chrome, explaining what it is, and, like, a user manual in a comic book form.
- BGBen Gilbert
And it's written for this weird half user, who's, like, kind of technical, but you don't need to be a programmer necessarily. It's written sort of for the tech enthusiast, who can understand process independence, understand sandboxing, understand V8 and the JavaScript speed up, but it's not written for the general public.
- DRDavid Rosenthal
Yep. But that was exactly the right seed crystal user base to get Chrome-
- BGBen Gilbert
Yeah
- DRDavid Rosenthal
... into.
- BGBen Gilbert
Yeah. It's written for the Slashdot reader.
- DRDavid Rosenthal
The kind of people who are gonna go home for Thanksgiving in a couple months-
- BGBen Gilbert
[chuckles] Yes
- DRDavid Rosenthal
... and install it on all their family's computers and say, "You need to stop using Internet Explorer right now," for all of these reasons, Ben, that you just listed, probably security being number one amongst them. This is, actually was me back in the day. [laughing] Like, I'm gonna go home, I'm gonna install Chrome on my parents' computers so that they don't get hacked and lose their financial information, et cetera.
- BGBen Gilbert
Yep. Within 18 months, they got 40 million users. Then, let's see, they launched it in 2008. By 2010, they had 70 million users. Then 2012, they had 200 million users. Actually, what happened is it destroyed Firefox's market share. I think the launch of Chrome and the peak of Firefox are right around the same time, and then after that, then it really started eating away at Internet Explorer's market share. And today, aside from mostly iPhones, but Apple devices running Safari, it is the browser.
- DRDavid Rosenthal
I mean, to say it worked is, like, the understatement of the century. I mean, it totally liberates Google from Internet Explorer and Microsoft. When Chrome launched in 2008, Internet Explorer had almost seventy percent market share of browsers, and Firefox had most of the rest. Two years later, like you said, Chrome had passed a hundred million users. By 2012, so four years after launch, Chrome and Internet Explorer are now tied for market share with about thirty percent each. So Internet Explorer has gone from seventy percent down to thirty percent, and this is both Chrome on the desktop side, but you're now also well into the rise of mobile. And so Apple's mobile Safari is now becoming huge, and Google's Android, that we're gonna talk about in a sec, is becoming huge. Two years after that, in 2014, Chrome is now the clear leader with forty percent market share. Internet Explorer is down to fifteen percent. So-
- BGBen Gilbert
It's over.
- DRDavid Rosenthal
It's over, and Internet Explorer is basically dead at this point, and today it truly is dead.
- BGBen Gilbert
Twenty thirteen, fourteen.
- DRDavid Rosenthal
Yeah, twenty thirteen, fourteen. Today it's not even close. Chrome has almost seventy percent market share, according to Cloudflare.
- BGBen Gilbert
Including iPhones, which all run Safari, default.
- DRDavid Rosenthal
Right. Safari, in aggregate, across mobile and desktop, of mobile is by far the biggest share of Safari. Market share is about twenty percent. So Chrome has seventy percent, [chuckles] Safari has twenty percent. There's ten percent left. You know, I think Microsoft, I don't know, has a couple single-digit percentage points. Talk about flipping the tables. Chrome was massive.
- BGBen Gilbert
And it was just better. It was so much better, and it really kicked off this amazing era for the web, between Apple needing to then sort of play catch-up and leapfrog, and a lot of years it was actually faster than Chrome, and they would go back and forth. And it really spurred Apple, who was already a steward of WebKit, and they sort of had their own competitive response to Microsoft after Steve Jobs hated the fact that he had to keep shipping IE as his best option on Mac.
- DRDavid Rosenthal
'Cause that was part of the Microsoft-Apple deal, right when Microsoft saved Apple, with the investment, was Internet Explorer will become default-
- BGBen Gilbert
Right
- DRDavid Rosenthal
... on the Mac.
- BGBen Gilbert
So Safari was created for that. But over the years, you know, Apple's incentives, especially post-iPhone, were not to make it so web apps could be great. Apple's incentives were to make it so native, mobile, and desktop applications could be great. And so Google really pushing the envelope in the web's capabilities and what a modern browser could do, forced this, like, good-for-the-world race between Apple and Google to both make better browsers.
- 2:23:12 – 2:39:43
Android: Origins of the Mobile Operating System
- DRDavid Rosenthal
one. [chuckles]
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
Which is actually the biggest operating system in the world.
- BGBen Gilbert
Over three billion active Android devices now.
- DRDavid Rosenthal
Totally freaking wild, that they bought for fifty million dollars. [chuckles]
- BGBen Gilbert
Well, that's a red herring.
- DRDavid Rosenthal
I know.
- BGBen Gilbert
They've invested so much more.
- DRDavid Rosenthal
I, I-
- BGBen Gilbert
But just to make the point, it is hit after hit after hit. These things are not predicated on Google's distribution. If you're a company that launches a new widget, and you can just distribute it with your old widget, it's not that impressive when your new widget gets dominance. But Google Chrome, I mean, they could do a little thing, and they did push it on Google Search pages, but they managed to get a lot of distribution just by being a great product on the market with viral adoption that everyone told their friends to use, and it was the David Rosenthals going home to Thanksgiving that were sort of, like, the seed of it, and then within three or four years, they just ran the table. And it's not just Chrome. Gmail was that way. Google Docs and Spreadsheets were that way. I mean-
- DRDavid Rosenthal
Yep, yeah-
- BGBen Gilbert
Maps was that way
- DRDavid Rosenthal
... yeah, it's every- everything, everything.
- BGBen Gilbert
All these things are independent, great products that became dominant on their own merits, just like Google Search did.
- DRDavid Rosenthal
Yes, I a hundred percent agree, and also helped by the fact that they were all free. [chuckles]
- BGBen Gilbert
Yes. [chuckles] Yes, fair, and massively subsidized, at least in the early years before they were able to be businesses on their own by the, uh, the old money-printing machine in the basement of Google. [chuckles]
- DRDavid Rosenthal
Good old Uncle AdWords.
- BGBen Gilbert
Yes.
- DRDavid Rosenthal
But before we tell the Android story-
- BGBen Gilbert
Before the Android story- [chuckles]
- DRDavid Rosenthal
[chuckles]
- BGBen Gilbert
-now is a great time to thank one of our favorite companies, Vercel.
- DRDavid Rosenthal
Yes, we have talked throughout the season about Vercel has become the infrastructure backbone for modern web and AI development, highly relevant to this episode, powering companies like PayPal, Ramp, Under Armour, Notion, Runway, Cursor, and many more. Today, though, we wanna spotlight v0, which is Vercel's AI app builder that goes one step further and programs, designs, iterates, and deploys full-stack web applications entirely for you.
- BGBen Gilbert
v0 is a chatbot that looks like Claude or ChatGPT or Gemini, except that when you give it a prompt, it will go build an entire fully functional website or application entirely for you. No engineering or web design skills are required. You don't need to look at a single line of code or mock up a wireframe. So a marketer can stand up a product landing page, or a small business can generate a homepage and a contact form, or a creator can spin up an independent content hub, anything.
- DRDavid Rosenthal
Vercel loves to paraphrase the famous line from Pixar's Ratatouille that, quote, "Everybody can cook," which is an especially fun Easter egg for us since Pixar was our very first Acquired episode. And the numbers behind v0 are wild. It now has four million users, so PMs, marketers, creators, founders, teachers, students, all building real production-ready applications on this thing.
- BGBen Gilbert
And speaking of production, every single v0 app you generate can be deployed to production instantly with Vercel because v0 itself entirely runs on Vercel's platform. So you go from prompt to full-stack deployment with zero setup using the same secure, scalable, automatic infrastructure that powers sites like Ramp, Notion, and Under Armour.
- DRDavid Rosenthal
It's the perfect example of Vercel being customer zero for their own products. They're using their own AI cloud to power their own AI products.
- BGBen Gilbert
So if you've got an idea that you wanna launch, whether you're a seasoned developer or someone who's never written a line of code, go to vercel.com/acquired. That's V-E-R-C-E-L dot com slash acquired, and try it out. Build something real and just tell them that Ben and David sent you.
- DRDavid Rosenthal
All right, Android.... so Google's office spaces are legendary. The first one, of course, being Susan Wojcicki's garage in Mountain View, company's first office, and then today, the Googleplex, the old SGI, Silicon Graphics campus in Mountain View. In between, Google had another office-
- BGBen Gilbert
Hmm.
- 2:39:43 – 3:01:48
Android: Google's Response to the iPhone Challenge
- DRDavid Rosenthal
Summer of 2006, that next year, Eric Schmidt joins the Apple board. [laughing]
- BGBen Gilbert
Ah. Sees how far along and how good the iPhone is.
- DRDavid Rosenthal
Uh-huh, and then January of 2007, the iPhone is revealed in the greatest corporate presentation keynote of all time.
- BGBen Gilbert
Yeah.
- DRDavid Rosenthal
Eric is in the freaking keynote. Steve Jobs invites Eric Schmidt on stage.
- BGBen Gilbert
And Android hasn't been announced yet, right?
- DRDavid Rosenthal
Nope, nope, nobody knows about Android.
- BGBen Gilbert
This is in January of '07, and then July of '07 is when it shipped?
- DRDavid Rosenthal
July of '07, yes, is when the iPhone shipped. Now, I believe Eric had disclosed to Steve about the Sooner project, 'cause obviously, it was public that Google had acquired Android, and I believe that Steve Jobs knew that Google was working on, like, a BlackBerry-style phone, but he did not know about the Dream prototype. [chuckles] So Eric comes on stage, and you go watch this. We'll link to this in, in this clip in the show notes. It's crazy. It's about a, you know, three-minute long total thing. Eric comes on stage. He makes a joke about merging the companies [chuckles] that, like, Apple and Google are so close they should merge. He says the company should be called Apple Goo, and then he jokes, and he says, "Well, but here's the way, with the iPhone, that we can merge the companies without actually merging."
- BGBen Gilbert
He's making these jokes, and the camera is focused on Steve Jobs, and he just has the ick.
- DRDavid Rosenthal
Yeah. [laughing] Yeah.
- BGBen Gilbert
I mean, that's the best way to describe-
- DRDavid Rosenthal
Yeah, yeah.
- BGBen Gilbert
He's, like, trying to be a good sport and smile and be like, "Yeah," but he has the ick.
- DRDavid Rosenthal
It is unbelievable to watch this, knowing everything that would happen over the next 10, 15 years.
- BGBen Gilbert
This incredibly close collaboration, there are two apps that launch in the very first version of the iPhone. Remember, it didn't have an app store. It was not open to third-party developers. There is a YouTube app and a Maps app, both of which are Google services. Now, the apps are written [chuckles] by Apple. The icons are designed by Apple. They're basically just consuming Google's data as APIs.
- DRDavid Rosenthal
The only icons and apps on the phone are the ones that Apple puts there, and two of the... Yeah, I don't know how many there were 10, 12, 13 apps, are Google apps. It's wild. By the way, the, uh, the YouTube icon with the woodgrain TV, so awesome. [chuckles]
- BGBen Gilbert
So awesome. I heard, uh, the YouTube team absolutely detested it.
- DRDavid Rosenthal
They hated it. Yeah, they hated it. [laughing]
- BGBen Gilbert
[laughing]
- DRDavid Rosenthal
Well, because it wasn't the YouTube logo, and so they, they knew already. I mean, it was obvious this was not gonna work, 'cause the YouTube team was like, "Apple didn't put our logo on there. Of course, they're gonna start bringing in other video content-
- BGBen Gilbert
Right
- DRDavid Rosenthal
... over time."
- BGBen Gilbert
It was a little bit pre-algorithm, but it wa- the thinking was there of, "We have to make YouTube a destination and then control the experience when they're in," and making the app icon reminiscent of an old-school CRT TV was also just, like, deeply antithetical to YouTube inventing the video of tomorrow.
- DRDavid Rosenthal
Yes, yes. It still looked great, though. [chuckles]
- BGBen Gilbert
It fit in with that first iPhone, for sure.
- DRDavid Rosenthal
It totally did. Do you know who was the leader of the Google mobile teams that developed the back ends for these apps?
- BGBen Gilbert
Oh, no.
- DRDavid Rosenthal
Vik Gundotra.
- BGBen Gilbert
Really?
Episode duration: 4:11:32
Install uListen for AI-powered chat & search across the full episode — Get Full Transcript
Transcript of episode QhAftC_zFr8
Get more out of YouTube videos.
High quality summaries for YouTube videos. Accurate transcripts to search & find moments. Powered by ChatGPT & Claude AI.
Add to Chrome