If there are three companies that are dominating the technology space, they are — Apple, Microsoft, and Google. And you know how Apple and Microsoft makes money. But, do you know how Google makes money?
Sixty billion dollars ($60 bn). Guess what? That was the annual revenue (and it was $37 billion when I first published this blog post back in 2012) of the world’s largest search engine, Google, in 2014.
But how is that really possible when they hardly have any tangible products or when they don’t charge a penny for most of their products and services?
Well, it’s advertising, and again advertising. Google’s majority revenue comes from two advertising platforms — Google AdWords and Google AdSense. In fact, 96% of Google’s revenue is from advertising.
Recently, I came across this interesting thread on Quora.com where Oliver Emberton answered the question “If I want to become an entrepreneur, where do I start?“.
Think of a company as a machine you design and build. Your ‘machine’ always has certain parts. It sells something to someone, and re-invests some of that to help make more sales in future. What’s left over is profit for the owners.