They're not really competing with Google. Their big business model seems to be setting up a Gigablast cluster for customers to index a custom collection of info, a la the Google Search Appliance, but more vanilla. Further, they're not doing mail, or news, or reader, or wave, or groups, or chat, or android, or chrome, or GWT, or adsense, or youtube, or iGoogle, or docs, or app engine. So yeah, they have fewer employees, but they're not exactly doing the same set of things either - they're really focusing on performance in one area: search. Google may be about search, but they do a lot more than that.