Yahoo rejected two PhD students' $1 million offer for their site. Here's why they are still "thankful" for it

In the mid-’90s, an ambitious university project paved the way for what would become a titan in the digital realm. Larry Page and Sergey Brin, two PhD students at Stanford University, embarked on a quest in 1996 to build a formidable search engine that would transform the internet. By 1998, their vision caught the attention of Sun Microsystems’ co-founder, Andy Bechtolsheim, who provided their first funding with a $100,000 check, remarkably issued prior to Google’s official incorporation.

During the same year, Page and Brin sought support from Yahoo and other major tech companies for investment or acquisition. The founders had approached Yahoo to sell its PageRank system for as little as $1 million, but Yahoo rejected them.

The $1 Million Offer That Was Rejected

In early 1999, the founders, feeling that their academic work was being disrupted by their burgeoning project, offered their search engine to Excite for $1 million. Excite’s CEO George Bell turned them down, even after venture capitalist Vinod Khosla negotiated the price to $750,000.

Google’s Evolution and AdWords Breakthrough

By 2002, Google had transformed its business model through AdWords, a system that redefined digital advertising. This platform allowed advertisers to bid on keywords, with ad prominence determined not only by bid price but also by clickthrough performance. Ineffective ads were swiftly removed, ensuring high-quality results for advertisers and users alike. Google also used its vast database to help clients optimize their campaigns. This innovation turned Google into a major player in the tech industry.

Yahoo’s Missed Opportunities

In 2002, Yahoo CEO Terry Semel considered acquiring Google. According to Semel, Yahoo’s founders, Jerry Yang and David Filo, encouraged him to explore the idea. At a dinner with Brin and Page, Semel inquired about their business goals. “They had no thought process on the subject,” Semel later stated in an interview posted on The New Yorker website.

Initially, the Google founders demanded $1 billion. When Semel agreed to the price, they raised their demand to $3 billion. The negotiations ended without a deal. Semel later pursued alternative strategies, including acquiring Inktomi, a search engine considered second to Google. However, this effort failed to compete with Google’s growing dominance.

A Lesson in Missed Opportunities

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