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When google first appeared, the popular search engines at the time looked for keywords in web pages to determine which sites were more relevant to a particular search. So a guy who was selling herbal Viagra on a website and put "microsoft windows" on his homepage about 500 times might appear in the top few results in a search for "microsoft windows." Google came up with a new method of determining search relevancy that, among other things, looked at how many other pages linked to a particular page about a particular subject. People started realizing that when they searched for stuff on google, they didn't get results from a bunch of spammers and porn sites that were loaded up with bogus key words, and google blew their competition away. People still find ways to get their spam sites ranked higher (even on google) but at the time it was a major improvement. Yes, they generate a lot of their revenue from ads. Like many successful business people, the guys who founded google had a great idea that they could sell to investors and were in the right place at the right time.