google: Yahoo rejected a $1 million offer from two PhD students for its site. Here’s why they’re still “grateful”

In the mid-90s, an ambitious project at the university paved the way for it to become a giant in the digital realm. In 1996, Stanford University doctoral students Larry Page and Sergey Brin embarked on a quest to build a powerful search engine that would transform the Internet. By 1998, their vision caught the attention of Sun Microsystems co-founder Andy Bechtolsheim, who provided initial funding with a $100,000 check written before Google was officially founded.

That same year, Mr. Page and Mr. Brin turned to Yahoo and other big tech companies for investment and acquisition support. The founders approached Yahoo about selling their PageRank system for just $1 million, but Yahoo refused.

1 million dollar offer rejected

In early 1999, the founders, feeling that their academic research was being interfered with by the burgeoning project, offered their search engine to Excite for $1 million. Even though venture capitalist Vinod Khosla negotiated the price up to $750,000, Excite CEO George Bell turned them down.

The evolution of Google and the rise of AdWords

By 2002, Google transformed its business model through AdWords, a system that redefined digital advertising. The platform allowed advertisers to bid on keywords, and the visibility of an ad was determined not only by the bid price but also by click-through performance. Ineffective ads were removed immediately, ensuring high-quality results for both advertisers and users. Google also leveraged its vast database to help clients optimize their campaigns. This innovation has helped Google become a major player in the technology industry.

Yahoo’s missed opportunity

In 2002, Yahoo CEO Terry Semel considered buying Google. Semel said Yahoo founders Jerry Yang and David Filo encouraged him to consider the idea. At a dinner with Brin and Page, Semel asked about their business goals. “They had no thought process about this,” Semel later said in an interview published on the New Yorker website.

Initially, Google’s founders asked for $1 billion. Once Semel agreed to the price, the request was raised to $3 billion. Negotiations ended without an agreement. Semel later pursued alternative strategies, including the acquisition of Inktomi, the second-largest search engine after Google. However, this effort was unable to counter Google’s growing dominance.

Lessons from missed opportunities

The rise of Google and the failure of Yahoo highlight the unpredictability of technological innovation and business strategy. What started as a university project became one of the most successful companies in history, but early skepticism from industry leaders turned to regret. Today, Google remains a leading force in the digital economy, a testament to the power of innovation and resilience.