Someone Thought Google Was a Bad Idea

In the ever developing world of technology, a lack of vision can be fatal.

 

In January 1997, Larry Page was ready to sell Google (formerly BackRub) for $1.7 million. Yes million, with an “m”. Page was negotiating to sell his newly developed search engine to a company called “Excite”, an internet portal that hosted a collection of web services, including a search engine*. At that time, Excite was a publicly traded industry giant that was buying out competitors and partners left and right.

 

The deal, obviously, never took place. BackRub became Google, a company with a market cap of $375 billion. As for Excite, it went through a serious of mergers with “Ask Jeeves” and soon became part of the forgotten, dusty corners of internet history. So why did the deal fall through?

 

It wasn’t the price. In fact, Excite were able to negotiate Page down from $1.7m to $750,000, and Page agreed to it. But still, Excite’s then CEO, George Bell, turned down the opportunity.

 

Bell and his board turned down Google because they thought it was too effective of a search engine. That’s right: they didn’t want to buy Google because it worked too well and, more importantly, too fast.

 

What you have to keep in mind is that during the start of the internet revolution in the mid 90’s, banner advertisement was a powerful revenue driver. The key to a revenue-generating banner ad was to keep the user on the website for as long as possible, as to provide maximum exposure to the banner. Google’s main value proposition was that it did search “faster” and allowed users to “find what they wanted in seconds and leave”. It was a value proposition in which Bell could not see monetary turnover. He told Page that BackRub was a great search tool, but a bad business idea.

 

In retrospect, both Bell’s and Page’s lack of vision at that time is astonishing. Larry Page was about to sell a product to a competitor despite his belief that it was superior in every way (understatement). Bell didn’t take that opportunity because he failed to look beyond his current revenue model and create a new model that leverages better user experience.

 

For Excite, that decision driven by a lack of vision proved fatal. For Page, it was a lucky escape.

 

Slice of Advice

Have faith in your product, and be skeptical of what the incumbent “experts” might say. Often, these experts have learned to do something in a particular way, and fail to recognize the ingenuity and value of a new idea.

 [The most dangerous phrase in the language is, “We’ve always done it this way.”] –Grace Hopper

 

 

*Reference: http://www.businessinsider.com/larry-page-tried-to-sell-google-for-16-million–358-billion-less-than-its-worth-today-2014-4
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