"Five billion dollars, 7 billion, 10 billion. I don't know what they're really worth -- and you don't either," he told his staff. "There's no fucking way we're going to do this!"
Semel could talk tough because he had a backup plan. Yahoo would go out and buy its own top-notch search engine and its own search-advertising technology, and it would beat Google in the emerging arena of little text ads that pop up next to search results.
-- "How Yahoo Blew It", by Fred Vogelstein
Office discussion ensues...
Of course, if Yahoo had bought Google, they would have killed it. Google wouldn't be Google today in that scenario, they'd look more like Intkomi or Overture.
Yes, the tyranny of the linear time continuum. We can never really know what things would have looked like if they had paid the $5B. But, since most big acquisitions wreck both companies, it probably wouldn't have come out too well.
Chris joins in. Paraphrasing:
The $5B meeting that Semel rejected is a journalistic device. Someone needs to be to blame for Yahoo's mess; it might as well be the CEO. And if you can find a smoking gun meeting, so much the better -- regardless of whether that particular choice really was an actual decision point for them. The overall truth that we valley techies believe -- that culturally Yahoo chose the wrong road, pursuing media over technology, is still true.
Chris, not finished, cranked up the what-if ray further:
Although, if Yahoo had bought Google, thus killing it, there would be no Google today to make Yahoo look so bad by comparison. There would just be the regular industry mess we had before. People would still think Yahoo was cool. They should have bought Google, not to capitalize on its potential growth or technology, but to take out a dangerous competitor. The move would have succeeded, regardless of whether they integrated it well, or completely fucked it up.
The thing is, the real mistake here was not buying Google sooner. Yahoo was seriously late to the party in 2002. Heck, I tried to buy Google for AOL in 1999. I had no authority, having only been at AOL 2 months after the acquisition of NewHoo. Dave Beckwith, VP of Search at Netscape and I visited Larry and Sergey in their Menlo Park garage headquarters. Dave was being cagey so I asked Larry flat out -- how much? Larry's reply: "You don't understand. We don't want to just get rich ourselves. We want to make our family and friends rich too." Cool. Of course AOL would have killed them.
Jim Lanzone of Ask Jeeves also tried to buy Google, but the $1B ask was too high. Overture tried to buy them and was rebuffed. There seems to have been a long line of folks in 1999-2000 who recognized Google's value, but couldn't justify the price then.
Yahoo's stock was higher in 1999-2000, and Google only cost $1B. Two years later, Yahoo was down and Google's price had shot up. It was too late.