Oct 26, 2021
When Google Was Almost Sold For A Million Dollars
How Rejection By A Competing Search Engine In 1999 Led Google On Its War Path Towards Internet Domination
In 1999, Larry Page and Sergey Brin approached a competing search engine “Excite” to sell Google. They really just wanted to get back to their Stanford PhD’s. The price they wanted? A measly sum of $1 million. Incredibly they were rejected. Five years later, Google IPO’d at a market capitalisation of over $23 billion and today is almost worth two trillion dollars. Here is the incredible story of business folly at it’s finest.
Google’s Humble Beginnings
Google was never meant to be a mega corporation. ‘Backrub’, the algorithm behind Google search was created by Larry Page and Sergey Brin as a postgraduate project in 1996. By 1998 the founders had incorporated the company Google Inc, and had released the search service as Google BETA. While the search engine had wowed critics, Larry Page and Sergey Brin had misgivings about abandoning their PhD’s for a foray into business. They knew they had created something big, but assumed that their invention would play out at one of the bigger search companies.
‘Too good’ For Excite
In 1999, they approached a number of search engines and web portals to try and sell their nascent product. One of these companies was Excite. Excite was a web portal that had been founded in 1994 and had become a public company in 1996. They had become famous as the search engine used by AOL (America Online). The Google team was looking for around $1 million plus a small salary for one of the team to help implement this into Excite.
Excite was interested enough to bring the Google team and conduct a series of experiments to compare Google with Excite’s existing search engine. The results clearly demonstrated that Google was far superior to that of Excite, as the Google team had known all along. However, the Excite CEO’s reaction shocked them.
According to the book “In The Plex”, George Bell the Excite’s CEO got upset over the results. Google’s search was ‘too good’ at helping users finding the results they wanted. If the search results was too good users would just navigate to the linked website and not stay on Excite. Excite as a search portal made their revenue’s from ads and users staying on the Excite website was important to them to increase revenues.
Over a decade later on the former Excite CEO would try defend his decision. He stated that he had been turned off by the Google team’s insistence to replace Excite’s search with Google’s and the potential for it to impact on Excite’s culture:
“Larry page insisted that we have to rip out all of the Excite search technology and replace it with Google… we would have actually to rip out a lot of the central parts of our culture as a company. We were really a technology search driven company and I didn’t feel that that was a people risk at the time that I wanted to take.”
Whatever the real story, the fact is that even after the Google agreed to lower the price to $750,000 Excite refused to buy Google.
A Dotcom Folly
The Excite CEO’s logic made some business sense. He was simply focusing on the revenue and given Excite’s financial model it may have been difficult for him to see Google in any other way. This was a time where dotcom companies were still trying to make sense of the internet and how it should be monetised and hindsight can be a brutal thing.
However, what he perhaps failed to realise was that users would appreciate and return to the search engine that offered the most accurate results. In a time where a number of similar inaccurate search engines dominated the market, a far seeing CEO could have realised a superior search engine would become a key differentiating point.
Perhaps Excite had been distracted from seeing Google as the opportunity that it really was. In 1998 and 1999 Excite was engaged in billion dollar acquisition discussions with a number of other companies including Yahoo. Ultimately they merged with a company called ‘@ Home Network’ in a deal worth $6.7 billion. Perhaps Google had just not been a big enough concern that warranted their full undivided attention.
In hindsight, this event was clearly one of the biggest business mistakes in history. The rejection spurred Larry Page and Sergey Brin to abandon their Ph.D.’s and push forward with Google the company which became a competitor to Excite. Ultimately, Google’s search accuracy would propel it to become the number one engine in the United States and most of the world. Within five years Google had cracked the immensely difficult internet monetization problem with ‘Adwords’ and IPO’d with a valuation of $23 billion dollars. Twenty years on they are worth nearly two trillion dollars.
Excite trundled along and after the dot-com bust, was acquired by another smaller player ‘Ask Jeeves’. They somehow survive to this day but as an obscure and little-known company mainly operating in Japan.
