Yahoo CEO laments not buying Google

In the annals of missed opportunities by tech CEOs, Yahoo Chief Terry Semel has a doozy.

In a talk with The New Yorker writer Ken Auletta as part of a Newhouse School lecture series, Semel was asked what his dumbest decision was after taking the job at the Net media company in 2001.

(The story may have been told before, but it's still a delight to hear from Semel's lips.)

Shortly after joining Yahoo, Semel said, company founders Jerry Yang and David Filo suggested he look at buying up-and-comer Google, whose Stanford grad founders looked up Yahoo's inventors. So Semel said he had dinner with Larry Page and Sergey Brin, asking them what their business was with Yahoo paying only $7 million annually as its biggest licensor of Google search technology.

"They had no thought process on the subject," Semel said in the conversation, which was posted online Thursday at the New Yorker Web site.

So Semel nevertheless asked to buy Google. They replied that they wanted $1 billion and didn't want to sell. Semel said he'd think about the price.

Another dinner and Semel agreed to the $1 billion. Larry and Sergey replied that they wanted $3 billion and didn't want to sell.

"I couldn't and didn't buy this company and the rest is history," Semel said, adding that it was also fortuitous because that harkened the birth of the search-advertising business.

Not too long after that, Overture Services, then GoTo, approached Semel's company with a plan to add $75 million to Yahoo's bottom line with revenue from paid-search advertisements, when it had been losing money after the dot-com bust.

"Turns out we earned over $200 million that year (from Overture) and that was the start of search," Semel said.