The encyclopedia · Strategy & Leadership · Strategic decision · 1999
Excite could have bought Google for $750,000 in 1999 — its CEO said no
In 1999 Google's founders offered to sell their search engine to Excite for $1 million. Excite's CEO declined — even after the price fell to $750,000.
Excite · Google · 1999
What happened
In the late 1990s, Excite was one of the most popular destinations on the web — a high-flying 'portal' whose stock soared in the dot-com boom. Search was only one of its many features, and not the one it bet its future on. In 1996 it had even bought a search engine, Magellan, and struck deals to power search for others.
Early in 1999, two Stanford students, Larry Page and Sergey Brin, decided they wanted to sell their year-old search engine, Google. They went to Excite's CEO, George Bell, and offered to sell it to him for $1 million. Bell rejected the offer. One of Excite's venture capitalists, Vinod Khosla, then talked the pair down to $750,000 — and Bell still said no.
It was a fateful decision. Google's search was already noticeably better than the portal sites' overloaded offerings, and it went on to dominate search and online advertising, becoming one of the most valuable companies in history. Excite, meanwhile, merged with @Home Network, was caught in the dot-com crash, and filed for bankruptcy in 2001. Passing on Google for $750,000 is now cited alongside Yahoo's missed chances as one of the great 'what ifs' of the internet.
Why it happened
- Excite saw itself as a media 'portal' and viewed search as a commodity feature, not the foundation of a giant.
- Its leadership believed it could build or buy equivalent search itself, underestimating how far ahead Google's technology already was.
- The dot-com boom made Excite confident and distracted; a $750,000 price for a pre-revenue startup looked like a distraction, not a bargain.
- Excite missed that search quality was about to become the single most important thing on the web.
The lesson
Excite saw a search engine it could build itself and passed on buying Google. The price wasn't the signal — the trajectory was. When a startup offers you the future cheap, buy what's about to matter.
Aftermath
Excite's rejection of Google is taught, with Yahoo's later passes, as a textbook case of an incumbent failing to recognize a disruptive technology offered to it cheaply. Google became a trillion-dollar company; Excite collapsed in the dot-com bust and changed hands several times, surviving only as a minor portal. The lesson for incumbents is uncomfortable but valuable: the startup that looks like a redundant, overpriced distraction may be the one about to define your industry, and the chance to buy it early is usually a one-time offer.
Sources
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