The title of the research paper, like most scientific research papers, is dry, lacking any pretense of hyperbole, fantasy, or self-promotion, each word picked for a precise meaning, a title designed to convey to fellow scientists that inside are the authors’ attempts to state just the facts, a title that might instantly put a non-scientist to sleep.  “The Anatomy of a Large-Scale Hypertextual Web Search Engine” is today known mostly to computer scientists and interested business historians.  But the name of the company described in the paper and formed to implement the paper’s concepts is now one of the most recognized words on the planet.
 
Right off the bat, in the paper’s opening abstract, Larry Page and Sergey Brin, at the time two computer science doctoral candidates at Stanford University announce: “In this paper, we present Google, a prototype of a large-scale search engine which makes heavy use of the structure present in hypertext. Google is designed to crawl and index the Web efficiently and produce much more satisfying search results than existing systems.”
 
So there it is.  A brief statement of both the problem and the solution.  The problem: existing systems are deficient, lacking, unsatisfying, and inefficient.  And the solution: an industrial-strength search engine that efficiently utilizes existing Internet system design.
 
As Page and Brin identified in 1997, “Human maintained lists cover popular topics effectively but are subjective, expensive to build and maintain, slow to improve, and cannot cover all esoteric topics. Automated search engines that rely on keyword matching usually return too many low quality matches. To make matters worse, some advertisers attempt to gain people's attention by taking measures meant to mislead automated search engines.”  So the task that the two set for themselves was to make an automated search engine that returned high quality matches and could not be easily fooled by people attempting to game the system.
 
Their great innovation, like most great solutions, seems blindingly obvious in hindsight.  They created a results ranking system that they named PageRank, and they explained in the paper how it worked: “A page can have a high PageRank if there are many pages that point to it, or if there are some pages that point to it and have a high PageRank.  Intuitively, pages that are well cited from many places around the web are worth looking at.”  So, rather than themselves as humans trying to decide what results to return to a user search, and rather than using metrics like page hits that were flawed or susceptible to tampering, Page and Brin had the insight that the way to rank popularity of pages was to simply count the number of links referring to it from other pages, and that this information was available within the pages themselves and could be discovered by crawling all over the web to discover the links.
 
While this insight was thrillingly simple, it was another thing for Page and Brin to actually engineer a system that could put PageRank into production so that a user could search the web.  As they wrote, “Creating a search engine which scales even to today's web presents many challenges. Fast crawling technology is needed to gather the web documents and keep them up to date. Storage space must be used efficiently to store indices and, optionally, the documents themselves. The indexing system must process hundreds of gigabytes of data efficiently. Queries must be handled quickly, at a rate of hundreds to thousands per second.”  And yet they set out to produce just such a system, indeed they produced a system, as doctoral students at Stanford, that would do exactly these things.
 
At the end of the paper they evaluate their system.  They wrote, “The most important measure of a search engine is the quality of its search results. While a complete user evaluation is beyond the scope of this paper, our own experience with Google has shown it to produce better results than the major commercial search engines for most searches. As an example which illustrates the use of PageRank…Figure 4 shows Google's results for a search on "bill clinton".  A number of results are from the whitehouse.gov domain which is what one may reasonably expect from such a search. Currently, most major commercial search engines do not return any results from whitehouse.gov, much less the right ones.   All of the results are reasonably high quality pages and, at last check, none were broken links. This is largely because they all have high PageRank.  Finally, there are no results about a Bill other than Clinton or about a Clinton other than Bill.  Of course a true test of the quality of a search engine would involve an extensive user study or results analysis which we do not have room for here. Instead, we invite the reader to try Google for themselves at http://google.stanford.edu.”
 
It is breathtaking to read through this paper, with some of its clunky syntax and misspellings, its original home on the campus of Stanford, and realize that you are reading the description of the work that forms the basis for one of the world’s great companies.  People all over the world took up Page and Brin’s invitation to visit Google, and they found the search results delivered by the system to be superior to others.  Google added an advertising component so that the company could get paid.  And eventually Google went public and offered its shares to anyone who wished to buy them.  The rise in the price of Google’s stock is the main way that people think about its creation of wealth.  Since going public at $86 a share, the stock now trades at $693 per share, an eightfold increase.  But this perspective doesn’t really convey the astounding creation of capital that Google represents.  Instead, consider the rise in the value of the company as a whole.  Ten years ago Google consisted of the breakthrough PageRank idea of two university students; a mere decade later, the world’s most public stock market places a value on Google of $216 billion, placing it among the top ten most valuable companies in the United States.  Google is believed to possess the world’s largest private computer data center and network in the world, still doing what Page and Brin were doing on the Stanford campus a decade ago, crawling, indexing, storing, and responding to users of the ever growing Web.  In short, Google represents one of the greatest and fastest, if not the greatest and fastest, return on investment capital ever, a thirteen-fold increase in the market value of invested capital in two handfuls of years.  As I write this monologue, bringing home to me the startling and rapid rise in the fortunes of Google is the fact that I am using Microsoft Word 2000, and one word consistently comes up as being unrecognized by the spell checker, the word “Google”, underlined with a red squiggly line suggesting its unfamiliarity.  I think it is safe to say that though Microsoft did not recognize Google in 2000, it surely does now.
 
To this day, Larry Page and Sergey Brin’s PageRank system remains the core of Google’s value, presenting a quasi-democratic ranking of results to web queries.  And while Google gets paid extraordinarily well for the ad listings that it places around the search results, it does not take a penny in payment for the search results themselves.  In fact, one way I know that this radio show is reaching increasingly more people, is that the Google PageRank of our website has gone from non-existent, to 0, to 1, and recently to 2.  While it’s not exactly Google-type growth, I promise that you listeners will be the first to know the day that we reach ten, the highest PageRank possible.
 
Google represents an enormous increase in the store of human knowledge capital.  For the most part, however, it is not creating additional information and knowledge, it is organizing, prioritizing, and making more accessible existing knowledge.  For that function alone, it is extraordinarily profitable.  What Google does with its profits is of course of interest to its shareholders.  Corporate managements have a handful of things they can do with profit: they can pay dividends to shareholders, they can buy back stock shares, they can acquire other companies, or they can re-invest in their own business.
 
On Tuesday November 27, two days ago, Google announced a new set of investments, though these seemingly have little to do with the Internet search and advertising business, and might therefore give its shareholders pause for concern that management is forgetting its main business.  A new initiative called RE<C was released with a public document that announces:
 
“Clean and affordable energy is a growing need for our company, so we’re excited about launching RE<C, a strategic initiative whose mission is to develop electricity from renewable sources cheaper than electricity produced from coal. Initially, this project to create renewable energy cheaper than coal will focus on advanced solar thermal power, wind power technologies, and enhanced geothermal systems – but we’ll explore other potential breakthrough technologies too.
We’re busy assembling our own internal research and development group and hiring a team of engineers and energy experts tasked with building 1 gigawatt of renewable energy capacity that is cheaper than coal. (That’s enough electricity to power a city the size of San Francisco.) Google’s R&D effort will begin with a significant effort on solar thermal technology, and will also investigate enhanced geothermal systems and other areas.”
 
There is a video, available of course on Google, of Larry Page and Sergey Brin addressing a large technology conference from a couple of years ago.  One of the most astounding and impressive things that they show on the presentation screen onstage behind them is a dynamic display of a spinning globe of the earth.  It is dynamic because where Google is currently, at that very second, in heavy use, stacks of lighted dots pile up and emanate from that location.  What results is a graphical dashboard of Google use worldwide.  As Page and Brin spoke, you could see vast rays of light emanating from North America, Europe, parts of Asia, a literal enlightenment in wealthy and developing parts of the world.  And as the globe spun, you could see that other areas, such as Africa, remained dark.
 
The Wall Street Journal notes in its article on the new Google energy initiative that “Google co-founder Sergey Brin said the company will encourage its partners to license their technology for modest sums to encourage rapid deployment and bring electricity to parts of the world that don't have it now -- roughly 1.6 billion people, or 24.5% of the world's population in 2005. "We don't feel like we need to own every piece" of the technology, Mr. Brin said. "We want the problem solved."  Sergey Brin, as he himself will tell you, has a self-interest in bringing power to powerless parts of the world.  Where there is power, there are computers, and where there are computers, there are Google users. 
 
Still, I believe the wider implications of the entire Google history and its newest press release are clear.  There is nothing wrong with coal, there is something very wrong with the way we use it.  There is nothing wrong with making automobiles, there is something very wrong with the automobiles that we make.  There is nothing wrong with using resources for our needs, there is something very wrong with the way we use those resources.  There is nothing wrong with a democracy that preserves individual liberty, but there is something wrong with a democracy that preserves individual liberty without any corresponding preservation of the common good.  There is nothing wrong with public education or public health, there is something very wrong with what we have done to these vital institutions.  In these and in so many other cases, our existing systems are deficient, lacking, unsatisfying, inefficient, and all too often, polluting and degrading.
 
In 1997 two young men, Larry Page, the son of a computer science professor, and Sergey Brin, the Russian immigrant son of a mathematics professor, looked around at the young world wide web and the search engines that had sprung up to try to make sense of it for people.  They found that there was nothing wrong with the world wide web and its underlying hypertext protocol, and that there was nothing wrong with the idea of a search engine.  What they found was something very wrong with the way the existing search engines were designed.  And they wanted the problem solved.
 
And the rest, as they say, is history.
 
I’m Leo Gold.  This is The New Capital Show.