Dot-com Bust Fueled Google Growth?

The other day I had an interesting conversation with a very astute partner at one of the nation's leading venture capital firms. One of the topics that we discussed was the rise of Google. People attribute the success of Google to many factors. They had the best technology, they had razor-sharp focus on the search market, or they have the brightest minds on Earth building their platform. All of that, of course, has clearly contributed to the phenomenal growth of this Stanford University spin-out. But one thing that has not been broadly addressed by the media is that maybe, just maybe, Google has achieved a great deal of their success because the bubble burst. What? This guy must be crazy. Hold your horses. Give me a chance to explain.

Google was founded during the height of the dot-com boom. At the time, there were a number of extremely large and well-capitalized players with tested and scalable search capabilities. Household names like Yahoo, Excite, and Yahoo dominated the web. There were probably 30+ major search engines. Competition was rampant. When the dot-com axe finally dropped, the web community recoiled and stopped innovating. More importantly, many established and would-be competitors sold out, or burned out, as venture dollars dried up. And, unfortunately for many companies, ad revenue was not sufficiently high to maintain a positive cash flow during the downturn.

After the crash, as the rest of the world withdrew to nurse their wounds, Google kept on trucking. They improved their search engine. The online population kept growing at accelerating rates. Click-through volume became high enough to justify advertising as a serious business model. And all the while Google kept silent, avoiding attention from incumbent players as they built one of the largest computing platforms on the planet. After the dust settled from the fallout, folks started to creep back to the web just in time to watch Google go public and say, "I thought they were just a search engine?"

Not as crazy as you thought, am I? I suppose timing is everything. Many thanks to that friendly VC for spurring thought-provoking discussion. Good stuff. My spidey-sense is tingling. Back to work for this web-slinger.

technorati tags: google, dotcom, bubble, web 2.0