Michael Girdley explains how Yahoo passed on buying Google for $1 billion in 2002 and Facebook for $850 million in 2006. Those two companies are now worth over $3 trillion combined, while Yahoo sold for $4 billion in a fire sale.
In 2002, Yahoo agreed to buy Google for $1 billion. Then a few days later, the founders of Google, they tripled the price and suddenly asked for $3 billion. Yahoo walked away from, even then, what could have been the greatest investment in tech history. At the time, Yahoo was still the king of the internet. Heck, Google hadn't even really figured out how to do AdWords yet, and Google Cloud and Gmail, those were still a twinkle in their eye. But Terry Simmel, who was the CEO of Yahoo at the time, he knew the future was helping people discover stuff not just on the Yahoo site but on the broader internet. And the way to that was to own a search engine. And Google, well, they were number one. Problem was, when he sat down with Google's founders, Yahoo was only worth $5 billion at the time. If he paid $3 billion for Google, it would go from being an acquisition to a merger of equals. 4 years later, Simmel would try to buy Facebook from a young entrepreneur named Mark Zuckerberg. His board authorized him to spend $1.2 billion. Mark Zuckerberg wanted a cool billion, and Simmel, well, he wouldn't go above $850 million. No deal ever got done. Those two acquisitions would have cost Yahoo about $4 billion. Seems like a lot of money, except you look at what Facebook and Google are trading for these days. Well, with their new names, of course, that would, would be worth over $3,000 billion, $3 trillion. And because of these mistakes and a few other ones, Yahoo would eventually sell basically in a fire sale for $4.5 billion. If you want to know more about the rise and fall of Yahoo and how it all went wrong, I put a link to the long-form video I did below.
