Google: How to Build an Empire

How Google Scales and Makes Money

Good artists copy, great artists steal.

Google’s co-founders, Larry Page and Sergey Brin were great artists because they stole a system that they saw works in the academic world. Both being PhD students at Stanford University knew how academic research papers work. It was the simple idea of citation. The importance of a research paper is mainly determined by the number of other papers they cite and the number of other research papers that cite them back. More citation indicates that the paper is influential, trustworthy, credible, and valuable.

This simple idea became the foundation for what would eventually become the PageRank Algorithm—the core of Google’s search technology. But for Google’s co-founders, translating this into the web required a great deal of mathematical ingenuity.

Page and Brin kicked off the project in 1996 to help computer users find information on the internet easily, quickly, and effectively by organizing and presenting relevant web pages based on the number of links and backlinks they contain. Surprisingly, they quickly found out that the system was working way better than the other existing search engines like Yahoo! and AltaVista. The co-founders named their new search engine, BackRub.

However, the name BackRub didn’t last long as the co-founders recognized the potential of the approach. As the project grew and the system improved, their mission changed—To help people find vast amounts of information available online at their fingertips. To reflect this, they rebranded and named the company: Google. The name came from a similar word Googol, which represents the number 10 raised to the power of 100.

This was the genesis of Google in 1998.

Flash forward to today Google is Earth’s most efficient, powerful, search engine that processes 8.5 billion searches per day. The number is bigger than the world’s total population of 8 billion, which also means we can metaphorically say that each person on Earth searches roughly one query on Google every single day! On top of that, the name Google has now even become a verb that we use in our daily lives. When someone says “Oh, I just Googled it” we know exactly what the person is talking about, right?

But Google isn’t just a Search Engine company anymore, it has become a conglomerate of hundreds of different products under the belt of Google’s parent company Alphabet Inc. The company makes self-driving cars, manufactures smartphones, provides cloud computing services, and sells smart home devices. The story of Google—from being known as a Search Engine to becoming the world’s 5th largest company with a total market cap of $2.4 trillion is pretty remarkable, at the same time inspiring.

So how did Google do this all and become the tech giant?

Google has a pretty unique approach to building and scaling the company. The company thinks different, takes bold steps and risks, isn't afraid of failures, and taps into the market most tech companies wouldn’t dare to give a shot at. So this week’s deep dive is about how Google creates its ecosystem, how it builds products, and how it generates money from them using a freemium model. Founder, builder, leader, and investor, you’re going to learn a lot today, Google promises!

Get your popcorn ready, and let’s dive in!

1. The Ecosystem

As Google grew, so did its ecosystem.

It’s fascinating how Google has built its ecosystem. The company offers a wide array of products and services that seemingly work together. This not just makes our—users' lives easier and more efficient but that’s also how Google keeps us addicted to its products and services. It’s also amazing how one product overlaps with the other Google products and benefits each other altogether. For example, you can book and schedule a meeting on Google Calendar, hop on the meeting via Google Meet, and save or share files via Google Drive.

Not many tech companies have the ability or advantage to do what Google does. But doing so isn’t an easy process because it requires a unique approach and simplicity, which Google has been following for more than two decades since its founding. To understand Google’s ecosystem, we need to understand the following points:

The Entry Point: Google Account

A Google account is your digital identity to use Google’s products and services.

The Google ecosystem starts from a Google account. To use all of Google’s products and services, one just needs a Google account. This one account helps the user search on Google, watch videos on YouTube, send emails to anyone, book meetings on Google Meet, explore the world using Google Maps, get rides on Waymo, download apps from the Play Store, save files and media on Google Drive, and use work tools like Google Docs, Google Forms, Google Sheets, etc.

It’s so fascinating how one Google account smoothly works with different Google products.

Humans want easy things that don’t take so much mental bandwidth to use and manage. So by doing this, Google doesn’t just make its customers' lives easier and efficient, but also improves its products and services and enhances the user experience by showing relevant, targeted ads and information across the platform.

The Connective Tissue: Data and Usage

Data is the most valuable asset for Google.

The more data Google collects, the better its products and services become. Every query searched on the search engine, every YouTube video’s watch time, every email sent, every Earth explored on Google Maps, and every question asked to Gemini—helps Google improve its products and services to make the user experience better, more valuable, and appealing.

Have you ever wondered how when you search “Top 10 best shoes under $500” on Google, after a few hours or days you unexpectedly see shoe ads while watching videos on YouTube? Relatable? It has happened to me countless times and will happen as long as I’m using Google's products and services. When you use one Google product for something, it benefits other Google's products. This connective tissue “Data” helps Google show you relevant information and ads based on your search history and interest.

Data collection is the backbone of Google.

The Hardware: Android OS

Google’s ecosystem isn’t just limited to the software side, but it also has hardware that helps Google attract more users in its radar. In 2005, Google acquired Android for $50 million to make its own Operating System. However, this was not the era of mobile devices but Google knew that in the future there might be demand for smartphone devices.

A big breakthrough moment came when Google started making its own smartphone Nexus One with the Android Operating System in 2010. After a few iterations, the company then rebranded and started making Google Pixel smartphones in 2016 that were purely designed for Android user experience. Google focused heavily on integrating its products and services into its Android operating system for better usability and performance.

Fast forward to today, the Android Operating System now has a 70% market share, which massively increased the use of Google’s products and services. Today, every single new Android device that comes to the market—has Google Chrome, Play Store, YouTube, Google Drive, Google Photo, Google Calendar, and Gmail pre-installed. This truly skyrocketed the use of Google’s products and services worldwide—making Google’s ecosystem even stronger and bigger.

2. The Product Line and Acquisitions

How does a tech company grow and scale?

I’ve found that most tech companies introduce new products and acquire other businesses to scale and grow the company. And Google is no different. As Google got older, it got new products to its name. Over the years and decades, Google has launched hundreds of products and acquired many businesses. Each new successful product and acquisition marked a pivotal moment not just for Google but also for the customers as well.

However, I’m not going to list down all of Google’s products because that’d make this deep dive into a long research paper with tens of thousands of words. Instead, I’m only going to list down the products and services that helped the company reach more people, increase revenue potential, dominate a new industry, and transform Google's business model.

Here are the following breakthrough products of Google:

The Search Engine

When two PhD students of Stanford University, Larry Page and Sergey Brin founded BackRub, which eventually became Google, knew that the information online wasn’t widely accessible. It was truly a hassle to find the right information at the right time. And the guys knew they could do better—to make the information online easily accessible at anyone’s fingertips for free.

The guys founded BackRub in 1996 but officially changed the name to Google in 1998. For Google, it was not hard. It grew very smoothly and got popular very quickly because it had the potential to change the world. The co-founders got their early funding from their friends, family, and other investors. People had never seen any search engine like Google before that helps find accurate, valuable information in no more than three clicks.

This is one of the early versions of Google:

Google Ads

The company was non-monetizable until 2000. This was the year when the co-founder finally decided to monetize it through search ads. They introduced Google AdWords (Now called Google Ads) in a fascinating way. However, Google wasn’t the first company that wanted to run ads on its platform, but it was the first company that conceptualized the idea of showing ads based on interest and keyword relevance.

Before this, when you see ads on the internet, they happened to be irrelevant, spammy, and non-targeted, which not only would make the user's experience “Really” bad, but also the advertisers who’d run ads online wouldn’t get a decent ROI from their ad campaign.

But Google’s concept of running ads was powerful. The company decided to show search ads based on the keyword, quality score, and relevancy. This worked because users got relevant ads, advertisers got high ROI, and Google’s revenue skyrocketed. When Google first introduced the ad model, running ads on Google was also cheap—starting from $0.05 per click.

The early ad somewhat looked like this:

Gmail

When Google introduced its new product, Gmail on April 1st, 2004, people thought it was an April fool. But Google couldn’t be more serious. Google knew the challenges of sending emails and messages to employees, co-workers, friends, and family. They always looked for a better solution. So grew frustrated, they built their own.

Before Gmail, the email marketing industry was dominated by Hotmail and Yahoo. But their service wasn’t quite satisfying—only offering 2 to 4 MB free storage, which would result in frequently deleting old emails and sending low-quality media and files. When Gmail came, it offered 1GB (now 15 GB) free storage facilities that totally transformed the email game. Because people now no longer had to worry about deleting old emails or sending low-quality files and media.

Not only that, Gmail was also designed in the most user-friendly manner, allowing people to chat in a thread format, and enabling people to search chats and conversations. On top of that, instead of asking people to pay money for the service, Google went with the ad-supported model, which perfectly suited its existing Google AdWords approach.

Today Gmail has 1.8 billion active users—making it one of the most-used tools in the world. But this is how the early version of Gmail looked like when it first came out in the market in beta:

Google Maps

When Google launched Google Maps, the space was dominated by MapQuest, but it wasn’t good at all. Seeing this, Google bet and built the best tool for mapping anything—streets, terrain, businesses, restaurants, traffic patterns, etc.

So Google launched Google Maps in 2005, and since then the product’s user growth has only been in the upward movements. Today, it’s hard to imagine a trip or going to a new city, country, or place without relying on Google Maps. It’s the most accurate, best mapping tool out there in the market for free to use.

Google Maps is one of the most successful Google’s products. Businesses use Google Maps to locate their business location, websites and platforms like Airbnb, Uber, Lyft, and Booking.com use it to integrate the service into their own platform, and users like us use Google Maps to find the best places, restaurants, hotels, streets, etc.

Here’s how Google Maps looked like when it first came out in Beta (US-only):

Acquired Android

Google acquired Android for $50 million in 2005. But the company had to figure out how it was going to make a profit from an unprofitable product. However, Google's goal was simple and it goes like this: The more people will use the Android OS, the more people will use Google’s products and services, which turned out to be a true hypothesis.

The challenge was though, it was 2005, so the mobile era hadn’t quite arrived yet in the market. On top of that, Google didn’t have its smartphone brand. Thus all it could do was to partner with other smartphone manufacturers like Samsung, Nokia, HTC, etc, and ask them to use the “Open source” operating system, Android.

But things took a U-turn when Google introduced the Play Store. Now this was the time when developers could sell their app to Android Operating devices on Google Play Store. Seeing this, soon companies like Samsung, HTC, and other brands started using Android OS in their smartphones, which helped Google products and services reach more customers worldwide.

In 2010, Google started making its own smartphone named Nexus One. Though, they rebranded and changed the name to Google Pixel Phones in 2016. Today, Google’s smartphones are heavily designed and optimized for Google’s products and services. All the Google products and services—Gmail, Google Drive, Google Photo, or Google Meet—perform better on Google Pixel phones because Google gives its users more customization options and unique features.

20 years ago, Microsoft and Blackberry were the dominant players in the mobile industry because they had the working operating system. But Today? The dominant player is Google. 70% of smartphones are powered by the Android operating system.

Acquired YouTube

YouTube was founded by Chad Hurley, Steve Chen, and Jawed Karim in 2005. It was less than two years old when Google acquired YouTube for $1.6 billion in 2006. This was also the biggest acquisition of Google in the early days. Buying YouTube, the video-sharing platform, was really a breakthrough moment for Google because it completely transformed the company’s growth.

YouTube now is the center of the internet—from 5-year-old kids to 85-year-old men and women use YouTube to watch entertainment videos, educational videos, and videos to solve their daily problems and queries.

YouTube also has a huge influence on any events like elections, war, or any social events. For example, last year, Trump went to Joe Rogan podcast and the video brought 50+ million views alone, which massively benefited Trump, and of course, helped him win the election. There are channels called MrBeast with 300+ million subscribers, T-Series with 280+ million subscribers, and PewDiePie with over 100 million subscribers. It’s the most powerful platform that ever exists.

This was the first version of YouTube:

YouTube also is one of the biggest revenue drivers for Google—making billions per quarter through advertising and subscription revenue. Last year in 2024, YouTube did something around $50 billion in advertising and subscription revenue alone. But when Google first bought it—it wasn’t making any money because it had no monetization model.

Aside from that, do you know who was the person who first published a video on YouTube? It was YouTube co-founder Jawed Karim. He made a short video of him visiting the zoo and published it on YouTube. The video now has well over 350 million views, watch it here:

Google Chrome

10 years after founding the company, Google finally launched its web browser, Chrome in 2008. Before Chrome, Firefox and Internet Explorer were the dominant web browsers, followed by Safari and Opera browsers. But as Chrome arrived in the market, people quickly started using it, and for good reason, Google Chrome solved and fulfilled the shortcomings of existing browsers. For example, Chrome had high-speed search ability, better storage capability, and different customizations, which made the users’ work easier and more efficient.

Introducing Chrome was one step closer to Google’s mission: “To organize the world’s information and make it universally accessible and useful.” It allowed users to give the best possible web surfing experience by consistently making the browser efficient and better. Today it has features like extensions and themes, which couldn’t be more avoidable to use.

When Chrome first came out, it looked like this:

Google Drive

Where have all the pen drives gone?

When Google launched its next breakthrough product, Google Drive in 2012, it really took the internet by storm, I mean for real. Because people now had no longer to worry about forgetting their physical pen drives and losing data and files here and there. It also completely changed the way people thought data could be stored. Before Google Drive, people believed that the only way to secure and store data & files was to have a physical pen drive and carry them around. But Google's idea to allow people to store their files, media, and documents online without carrying any pen drives in their pockets was truly revolutionary.

This online storage facility didn’t just allow to store data online, but also now people could collaborate, and send files and media to each other, which speeded up the work process and efficiency. Today, Google Drive plays a most important role in personal and professional life—businesses use tools like Google Workspace to organize and collaborate, send files, and exchange information online. Individuals use Google Docs, Google Photos, and other Google products. All thanks to Google Drive which helps store and save data with ease and convenience.

Google AI (Gemini and NoteBookLM)

Gemini is good, but NotebookLM is even better.

Seeing the AI boom, how can Google not compete with its competitors OpenAI’s ChatGPT, Anthropic’s Claude AI, Meta’s Llama, xAI’s Grok, and Perplexity AI, Though I do think Google needs to ramp up its AI game and dominate the niche by making and improving its AI tool, Google Gemini. It sucks right now.

The company introduced Gemini in mid-2023. In the beginning, it faced many backslashes from users saying Google is anti-american, anti-nation, racist, etc. Aside from that, I do believe Google is doing a pretty good job building NotebookLM. I’ve used it a few times and the results were just so amazing. It's a tool that gives you summaries, short notes, takeaways, key points, and generates podcast-form audio of the link, video, or article you provide.

I think Notebooklm has the potential to disrupt the AI industry. Here’s what Reddit users are saying about it here and here. I’ve also seen many creators and writers on Substack use Notebooklm audio summaries, and use them as content material.

Other Products

Google isn’t just a software company anymore.

The company makes self-driving cars, manufactures smartphones, and builds smart home devices. And Google consistently looks for new ways and industries to tap and build new, revolutionary products and services that’d improve and change people’s lives. Here are a few other companies (products) of Google that mostly happen to be a combination of software and hardware (Vertical Integration.)

#1: Waymo: Google makes self-driving car that they call Waymo. And no, it’s not like Tesla that manufactures and sells cars. Instead of selling cars, Waymo provides ride-hailing services just like Uber and Lyft do. But the difference is that, with an Uber and Lyft ride, you get a driver. With Waymo rides? There is no driver, you get a ride, a Waymo car pops up, drops you off, and just runs for the next ride. Google founded the company in 2009, with the hope of making transportation services better, easier, and convenient. However, the service right now is only available in a few cities in the US.

#2: Pixel Phone: Google also manufactures smartphones that they call Google Pixel phones. The smartphones are specially designed for the better user of Google’s products and services. Said differently, Google products work better in Google Pixel phones because they are highly integrated with the software and hardware. Google started making smartphones in 2010 starting with Nexus phones, and finally rebranded the company and started manufacturing Pixel phones in 2016.

#3: Nest Hardware: Google also makes smart home devices that they call Nest Hardware. Whether you want a smart doorbell, CCTV camera, smoke alarm, speaker, thermostat, wifi or streaming remote, Google has got you back. Google acquired Nest Lab in 2014, which was founded by two Apple engineers in 2010.

3. The Business Model

Google has countless revenue streams coming from different products and services—from YouTube ads to Google Drive subscriptions to Google Cloud services. Though Google's business model is pretty simple and straight, it makes the majority of its revenue from advertising and subscription revenue. Last year Google did $339.5 billion in total revenue combined from all income streams, with a 3-year CAGR of 10%.

Broadly speaking, Google has five main income sources that make the money: Advertising, Subscription, Service and Platform fee, licensing and Partnership, and One-Time Purchase. In 2024, Google Search advertising brought the most revenue for the company—a whopping 56.93% of total revenue. Google Cloud, which will come under subscription was 10.75%, and the rest as you can see below:

Now let’s break down how Google actually makes and generates revenue, even from its free products. Yup, most people assume that Google doesn’t make money from its free products, which couldn’t be further from the truth. The reality is, Google even makes money from its free products, and here’s how it does it:

Advertising

Advertising is the backbone of Google’s business model. Every video you watch, every search query you make, every email you send—helps Google learn about your interest and potential products you may buy online in the future. Doesn’t really matter which Google’s products you’re using, you’re in the ecosystem of Google. They can show you YouTube ads based on your Google search queries. They can show you Gmail ads based on your Google Maps exploration. And they can show you Display ads based on apps you install from the Play Store. You see what I mean? Google’s products overlap and benefit each other.

But this is also good news for someone who doesn’t have a big upfront marketing budget. Having a billboard at Time Square in New York costs fortunes, but anyone can start running their Google ad campaign for as low as $100. This massively benefits small businesses that don't have a large sum of capital to market their products.

Here are the places where Google runs ads and makes money:

• Google Search ads: The same ads you see when you search for something on Google via Chrome or other web browsers.

• YouTube ads: The same skippable and non-skippable ads you see when you watch videos on YouTube.

• Display ads: The same ads you see when you visit websites online and banner and footer ads pop up.

• Play Store in-App: the same ads you see when you download an app from Play Store and the app shows you ads.

• Email Ads: The same ads you see either in your promotion folder or primary inbox when you open emails via Gmail.

• Google Maps Ads: The same ads you see when you explore the world on Google Maps and it shows ads when you search a location.

Google reached $273. 37 billion in total global advertising revenue in 2024, and is expected to cross $340 billion by 2027—making it one of the key revenue drivers for Google. Now one thing you don’t want to get confused about is, the total revenue above is combined of all—YouTube ads, Google Search ads, Play Store apps, etc.

Subscription

When you use Google products, especially products like YouTube and Google Drive, you have to make trade-offs. For example, if you don’t want to buy a YouTube premium, you have to allow ads when you watch videos. But when you buy a YouTube premium, you don’t see ads. Same with Google Drive, you can use 15 GB of storage for free, but if you want more storage, you have to pay Google Drive a certain amount each month or year.

Here’s how Google makes money through subscriptions:

• Google One: This is an all-in-one solution for people who want to use the paid version of Google Drive, Google Photos, and Gmail. When you have a Google One premium, you don’t need to buy the premium of those individual products. Said differently, Google makes it easier and more convenient for users who want to use those three products combined, but instead of buying those three individually, which would also cost more, they can simply get a Google One premium.

• YouTube Premium: As of January 2025, YouTube has well over 100 million Premium users, who are paying YouTube monthly or annually to avoid seeing ads and unlock other features. This number single-handedly makes YouTube subscriptions one of the most lucrative income streams for Google.

• Google Workspace: For businesses and professionals, Google offers a workspace where they can collaborate and work together with their teams by sending emails, chat, sharing files, and hoping for meetings—all in one place. It’s called Google Workspace.

• Google Cloud Service: Google offers cloud computing and data storage facilities to businesses of all sizes, just like Amazon’s AWS and Microsoft’s Azure, which comes with monthly and yearly plans.

• Gemini and NotebookLM API: As of now Gemini and NotebookLM don’t have individual paid plans, but Gemini does offer a plan that comes with Google One. However, Google sells APIs of these two products that generate recurring revenue for the company.

• Google Play Pass: When you want to access a curated list of games and apps, you pay Google a monthly or annual fee using the Google Play Store.

• Nest Aware Hardware: As mentioned earlier, Google offers smart home devices, which also come with a subscription that the customer has to buy so that they can use the up-to-date technology integrated into those products.

So how much money does Google make through subscriptions? The data for the last year isn’t publicly available, but it said that in 2023, Google generated over $15 billion in total subscription revenue from all across its products and services, globally.

Service and Platform Fee

Now this revenue stream is mostly tied to creators and developers who use Google’s products to create and sell. These are the revenue usually shared with creators and developers. Let’s see how Google does this through its platforms:

• YouTube Partner Program: Just like Substack takes 10% as a platform and service fee. YouTube has the same approach. YouTube shares 55% of the total revenue to its creators and takes the rest, 45%. So for example, if the creators make $100, of those, $55 goes to the creator and $45 goes to YouTube. These are revenue coming from ads served by Google on creators' videos.

• Google Play Store fee: Google Play Store also comes with a service and platform fee for developers who sell games and apps on the platform. If the developer wants to allow ads on their app, then Google will make money just like it does with YouTube. What’s more…Google also charges 15%, 30%, or lower than 15% on service free depending on the revenue they are making from selling the apps through the Play Store.

Licencing and Partnership

Google partners with other companies to let them use its products and services.

For example, Google has partnered with Samsung and paid it $8 billion in order to install all of its products on Samsung devices. Google also has partnered with Apple and paid roughly $20 billion to have Google as a default search engine on Safari. This big partnership helps Google retain its ownership in the market by letting people use Google’s products regardless of the device they use.

Google also licenses and gives patent rights to mobile manufacturers for using Android OS on Smartphones, tablets, computers, etc. Although the OS is open-source, so anyone could use it. But to gain access to the properties of apps and services, such as Google Play Store and Google mobile services, they have to have a patent right to Google.

One-Time Purchase

And last but not least, Google also makes money selling “One-time purchase” products. These are the products that the customer just has to buy once. The best example of this would be, Google smartphones. When you buy a Google Pixel phone, that's a one-time investment because it doesn’t come with any recurring fee to use the phone.

Google has also got smart home devices that they just sell to customers as “One-time purchases.” However, some of them require a subscription to get the most of the product but many can also work without buying any subscription.

The results?

With all the income sources, Google's revenue keeps on increasing and growing every year. The company first crossed $100 billion in total revenue in 2017, and it did over $339 billion in total revenue last year alone—making it one of the most profitable, growing, powerful companies in the world.

So how to build an empire like Google?

Fail a lot. It sounds cliche, but that’s the reality: fail a lot. It’s easy to look at successful products and say “Wow, Google knows how to make successful products.” But that’s not the reality. The company has more than 290 failed products. Yeah, you heard it right, 290! And it only has a couple of products that make the most revenue for the company.

The only way to make successful products is to not be afraid of failure. Google understands this. The company has more failed products than most companies ever release new products in their entire lifespan. Moreover…even Google’s some of the well-known products have failed, to name a few: Google+ Google Podcasts, Google Chromecast, Google Domains, Google Play Movies and TV, Google Hangouts, Google Play Music, Google Trips, etc.

Great companies are the ones that aren't afraid to fail, just like Google.

Thanks for reading, catch you on the next one.