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Take for example, Google:

As I understand, the search engine was started as a research project.

(by the way, was it patented or the code is fully open through the contents of the respective thesis work?)

But during all consecutive successes (initial investors, IPO, growth) - how did the founders manage to keep the main technology in their hands?

They hired a lot of new engineers to work on the core technology, while they did a lot of other non-technical stuff themselves (business relations, investments, marketing, etc.).

Taking that into account, there is some probability that now the founders and initial developers of the main Google's technology are:

  • vaguely understand how the current version of the core system works (because they are not just the developers now);

  • have employees that have more control over the core system's technology than the founders have.

Is that true?

If it is true, isn't it dangerous for the founders to give up control in such way?

How can this be fixed?

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3 Answers

The core of Google's search technology is a trade secret and is not patented.

To patent something, you have to tell the world how to do it as your patent is published. In many business situations, such as Google search, you are better off with a trade secret rather than a patent. If the world knew how Google search worked, there would be a lot more gaming of the system, which is not in Google's interest. I'm sure Google has patents relating to its search technology, but not of the core technology itself.

There is a big difference between control and implementation details. I suspect that Larry and Sergey still have a deep understanding of how Google search works and have a lot of control over it even though they are not aware of the implementation details. Search is still the crown jewels of Google. Larry and Sergey are very smart people both in a technical sense and a business sense, and have a strong incentive to make sure Google search keeps performing well.

For less crucial parts of the business, you have to give up control as there is only so much one person can understand. I wouldn't call this dangerous. You just have to hire the right people to work with you.

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While it's true that most of the core Google technology falls into the "trade secret" category, the original PageRank algorithm was developed while Sergey and Larry were still students at Stanford, and the PageRank patent is owned by Stanford. Google licensed that technology back from Stanford in exchange for shares of Google stock... en.wikipedia.org/wiki/PageRank – benjismith May 17 '11 at 21:21
@benjismith: thanks for the clarification. – user6603 May 17 '11 at 21:41

Even if you knew exactly how Google ranked it's searches and could program it, it still wouldn't matter because you would never get a strong userbase to turn your technology into a business.

Google happened across a huge problem (crappy search) and came up with a novel solution at just the right moment. Then, they incrementally built a business around the technology, and managed the infrastructure. Part of the reason why Google is successful now (besides that they have a good search algorithm) is that they rarely go down and have an organization full of the most talented individuals to back up all their product offerings.

There was a search engine spun off by ex-Googlers called Cuil a few years back. They raised $33M (more than Google's initial $25M) and have since shut down the project. The site was prettier and built probably using the same core technology as Google. It never took off though because it just couldn't compete with a giant.

My point is - Technology is an important first step, but in business everything boils down to execution.

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"because it just couldn't compete with a giant" Or the name is not that memorable :) – Ross May 17 '11 at 15:59

It doesn't matter. You could setup a burger stand and worry about losing control to employees stealing cash or eating burgers. Any business has to find and hire trustworthy people. It is a risk of business.

They would not be jetting around the world in private planes or have piles of cash if they decided to stay in the garage and not lose 'control'.

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