The 1998 TED Talk That Quietly Unveiled Google’s Future

It was February 1998. The dot-com boom was nearing its zenith, and the internet, while exploding in popularity, still felt like a somewhat untamed frontier. At a relatively niche TED conference – long before the talks became ubiquitous online viewing – entrepreneur Bill Gross took the stage. He spoke of a decade-long “quest for relevance” in the burgeoning online world, culminating in an idea he admitted might be “surprising and maybe even controversial.”

He wasn’t wrong about the controversy. What Gross detailed that day was the prototype for GoTo.com, a search engine built not just on algorithms, but on a marketplace model: pay-per-click advertising for search results. It was an idea that, despite initial resistance, would eventually form the bedrock of Google’s multi-trillion-dollar empire. Yet, few remember GoTo.com, and fewer still connect Gross with the genesis of paid search. The story of GoTo.com is a fascinating look back at the internet’s formative years and a stark lesson in timing, patents, and perhaps, audacity.

Searching for Order in the Digital Chaos

As Gross explained in his 1998 talk and reflected upon recently on the Computer Freaks podcast from Inc., the late 90s web presented a scaling problem. Existing search engines like AltaVista, Lycos, and Excite struggled to index the rapidly expanding web and deliver consistently relevant results. “We just couldn’t get anything like this to work for anything more than maybe even a million documents,” Gross recalled of earlier attempts at algorithmic ranking. The web, he argued back then, was fundamentally “a marketplace for attention,” with sites vying for visibility.

Spam was also rampant. As Gross noted in a recent interview for the podcast, search quality was declining across the board because “spammers were outwitting the search engines.” People manipulated results by stuffing pages with hidden keywords (like white text on a white background) or using other tricks to game the algorithms. It was, he termed it, an “unethical game of cat and mouse.”

A Marketplace for Clicks

Frustrated with algorithmic limitations and spam, Gross and his team at Idealab pivoted. Their “controversial” idea, GoTo.com, was to create an open market for search placement. Inspired by the Yellow Pages, where businesses pay more for larger ads, GoTo.com allowed websites to bid on keywords. The higher the bid (paid per click-through), the higher the ranking in the search results for that term.

“We actually put the price right next to every search result,” Gross explained in 1998, emphasizing the transparency. He believed this model was inherently less “fudgeable” or “fakeable.” Why? Because money kept the bidding honest. Bidding high on irrelevant keywords would be financially ruinous. “If you bid too high and you’re not relevant, you’ll go out of business because you’ll be buying the wrong word,” Gross recently elaborated. It was, in his view, a scalable, self-correcting system for relevance driven by economic incentives.

An Idea Before Its Time?

The reaction at TED ’98, however, was far from enthusiastic. “Oh, there were people in the audience who booed practically when they saw this,” Gross recounted. TED founder Richard Saul Wurman, who had invited Gross to speak, remembered the idea simply didn’t “stick” with that particular audience.

As Tim Cadogan, now CEO of GoFundMe and an early internet executive, explained on the podcast, the early internet was steeped in idealism. “The idea of bringing business into search… was viewed as maybe even somewhat immoral,” he said. Many academic purists and early web enthusiasts felt search results should remain “pure,” untainted by commercial interests.

This sentiment clashed with Gross’s pragmatic approach. He saw paid placement not as corrupting search, but as a more honest and effective way to deliver relevant commercial results, cutting through the spam that plagued other engines.

The Google Parallel and Missed Chances

Around the same time GoTo.com was launching its marketplace, two Stanford PhD students, Sergey Brin and Larry Page – whom Wurman affectionately called the “Bobbsey Twins” – were developing their own search engine, Google. Their initial focus was purely on algorithmic relevance through their PageRank system. They, too, presented at TED a few years after Gross, and their vision, focused on superior technology, captured the imagination.

Crucially, GoTo.com, despite its innovation, made a critical error. “We never filed for the patent on pay-per-click keyword advertising,” Gross admitted, calling it a “trillion-dollar lesson.” The idea seemed too obvious, perhaps too controversial at the time, and they only patented subsidiary aspects of the system at the bankers’ insistence before their 1999 IPO (under the new name Overture).

This oversight proved costly. Google, initially resistant to paid ads, eventually adopted the pay-per-click model. According to Gross and others like Nick Hynes, who ran Overture’s international operations, Google copied significant parts of their system. Overture (GoTo’s later name) sued Google for patent infringement in 2002, focusing on those subsidiary patents they did file. The suit was settled in 2004 after Yahoo acquired Overture, with Google giving Yahoo 2.7 million shares (pre-IPO).

Even before the lawsuit, opportunities were missed. Gross recalls suggesting acquiring or merging with Google in its very early, pre-revenue days (around 2000-2001), first floating a $200 million figure, later suggesting $1 billion. He recounted his board’s reaction: “They just said, ‘Bill, you’re a lunatic… the stock market is telling us how much we’re worth. How could you say [Google is] worth $100 billion?'” (A figure Gross predicted it would reach, though he admits his timing was off by about eight years). The board, focused on Overture’s existing “money mint,” couldn’t see the value in a company with great relevance but no revenue.

Different Strategies, Different Outcomes

Beyond patents and acquisitions, strategic choices played a role. Overture focused heavily on becoming the wholesale engine powering search for partners like Yahoo, MSN, and AOL, neglecting its own consumer-facing brand. Google, conversely, built a powerful brand directly with users while also pursuing distribution deals (often displacing Overture).

Google’s relentless focus on engineering and product quality, as described by early Google employee Kate Burns on the podcast, also set them apart. “Their order of doing things was: build first… build an exceptional, world-class, world-beating product,” she said. This product-first obsession, combined with shrewd business moves, allowed Google to eventually dominate.

Pioneers Who Paved the Way

Today, pay-per-click is the engine driving billions in online advertising revenue, precisely the model Bill Gross outlined in 1998. GoTo.com/Overture pioneered the industry, proving the model worked and even enabling small businesses, previously shut out of expensive banner ads, to compete online, as former GoTo executive Jeffrey Brewer noted.

Yet, despite seeing the future, Gross and GoTo/Overture ultimately didn’t own it. Was it a failure to patent, missed acquisition opportunities, strategic missteps, or as former Overture executive Stephanie Scapa suggested, simply not being “audacious” or “cutthroat” enough? Perhaps it was a combination of all these factors, underscored by Wurman’s point about timing.

Bill Gross remains an “enigma,” as Wurman put it – a “clever machine” brimming with ideas. While the GoTo.com story might seem like one of missed billions, Gross himself remains optimistic, proud of the innovation and thankful for the eventual acknowledgment from Google’s founders. It stands as a potent reminder from the early internet’s history: having the right idea is crucial, but execution, timing, and sometimes, a bit of ruthlessness, are what ultimately shape the market.