A Brief History

Ryan McIntyre, Co-founder

Where it all began…

Who were we?

Joe Kraus, Ben Lutch, Ryan McIntyre, Martin Reinfried, Graham Spencer and Mark Van Haren.

Six Stanford undergrads who met in the same freshman dorm in 1989.

As graduation approached, we decided it would be more funto work for ourselves than go find real jobs.

In March 1993, over burritos at Rosita’s Taqueria in Redwood City, CA, we decided to start a company.

“Unencumbered by reality”

Why decide to build a search engine in 1993?

We chose to start a company first. Then we chose the application.

Six founders: two CS majors, three Symbolic Systems majors, one Political Science major. We liked software and language.

Our observation: relational databases had more or less “solved” the structured data problem, but unstructured text documents still lacked adequate tools for search anddiscovery.

So we set out to build a search engine.

Architext Software was born.

Next stop: Stanford Surplus Store

We bought five VT-220 terminals and two Sun workstations.

Then we hit Costco and bought a few folding tables.

I “borrowed” a few extra desk chairs from Oracle.

Five of us started to code, Graham was our architect and technical leader.

The sixth, Joe Kraus took to the phones, earning his moniker, “phone boy”.

1st Worldwide Headquarters: 3958 Sutherland Drive, Palo Alto,CA

The early days…

If you’re starting a company, read a “how to” book…

First customer leads us to a big decision.

Joe Kraus calls up Bob Cringely.

Bob Cringely introduces Joe & Graham to InfoWorld Magazine.

IDG pays Architext $80k to develop a search engine foran online archive of their magazine properties.

IDG introduces us to Charles River Ventures in Boston.

Charles River introduces us to Geoff Yang at IVP.

Geoff Yang introduces us to Vinod Khosla of Kleiner Perkins.

Vinod buys us a 9GB hard drive after a one hour meeting.

Kleiner Perkins (Vinod) and IVP (Geoff Yang) offer to invest.

Verity offers to buy us.

First Big Crossroads

Late 1994:Verity offers to buy us for $3M.Kleiner Perkins & IVP offer to invest $3M.(Not bad for a year’s work.)

Do we cash out?Do we double down?

2nd Worldwide Headquarters: 10280 Lockwood Dr., Cupertino,CA

Venture Funding!

$500k Round - early 1995Kleiner Perkins - Vinod KhoslaIVP - Geoff Yang

$2.5M Round - Fall 1995Same Investors

First Press!

3rd Worldwide Headquarters: Garcia Ave, Palo Alto,CA

Next Step: find a business model

We had venture money and a real office, but no business model.

We began hiring engineers and senior management.

At Vinod’s urging, we experimented with three ideas:

1. Enterprise Software (like Verity)2. Online Classified Ads3. Web Search Engine

We launched Excite.com in October 1995 and quickly soldmillion-dollar advertising sponsorships.

We chose door number three.

The Launch!

October 1995Excite.com launchesIndex Size: 1.5M pages(Google Index Today: over 8B pages)

4th Worldwide Headquarters: 1091 Shoreline Dr, Mountain View, CA

Homepage February 1996

CEO then IPO

Netscape IPO changes the game.

Successful launch of Excite.com

IPO plans rumored by Infoseek, Lycos, Yahoo.

We need to go public to stay competitive.

We need a CEO.

January 1996, Excite names George Bell as CEO.

April 4, 1996, Excite goes public on the Nasdaq (XCIT),selling 2,000,000 shares at $17/share.

April 11, 1996, Yahoo goes public.

Let the deal making begin!

July 1996, Excite acquires Magellan.

November 1996, Excite acquires WebCrawler from AOL,AOL invests in Excite, Excite search powers AOL Search.

April 1997, Netscape Search & Directory Partnership

October 1997, Intuit invests $40M in Excite, Excite Businessand Investing Channel is launched

November 1997, Excite buys Netbot, comparison shopping engine

February 1998, Excite buys MatchLogic for $90M

April 1998, Excite buys Classifieds2000 for $50M

Late 1998, M&A talks begin with Yahoo, Microsoft, others

Excite revenues for 1998 reach $154M, Q4 1998 is cash-flow positive.

5th Worldwide Headquarters: 555 Broadway, Redwood City, CA

Excite puts personalization on home page, April 1998

It seemed like a good idea at the time…

December 1998, Excite CEO George Bell and @Home CEOTom Jermoluk meet for the first time.

January 1999, @Home announces plans to buy Excite for $6.7B in stock.

Vision: marriage of content and broadband access createsAOL of the broadband age.

Excite CEO George Bell becomes CEO of combined company.

Merger officially closes in May 1999.

Q4 1999. First (and only) profitable quarter on $169M revenue.

CY 1999 Revenues reach $420M. Peak market cap of $35B.Peak headcount of ~3200.

Silicon Valley Foreshadowing:Excite@Home moves into shiny new HQ across the street.

Final Worldwide HQ: 400 - 420 Broadway, Redwood City, CA

Meteoric Rise…

Homepage Fall 1999, Search Index Grows to 250M Pages

The beginning of the end…

June 1998, AT&T buys TCI for $48B.

May 1999, AT&T buys MediaOne for $54B.

mid 1999, Open Access Debate reaches fever pitch,calling into question E@H’s exclusivity dealswith cable operators, the company’s largest shareholders.

July 1999, Excite@Home buys iMall for $425M.

December 1999, Excite@Home buys Blue Mountain Artsfor $780M, $350M in cash.

April 2001, CEO George Bell resigns.

Patti Hart, former CEO of Telocity, becomes CEO.

The death spiral.

June 2001, Excite@Home raises $100M in convertible debtfrom Promethean Capital Management and Angelo & Co.

August 2001, E@H fires Ernst & Young, hires PWC. Debtholders demand $50M debt repayment.

Cox & Comcast announce they will cease to offer internet via E@H.

September 2001. Blue Mountain Arts sold to American Greetingsfor $35M in cash.

October 2001. Excite@Home files for Chapter 11. Nationwidehigh-speed fiber network sold to AT&T for $307M.

iWon.com acquires Excite brand and Excite.com domain for $10M.

March 2004, Ask Jeeves acquires Excite Network.

March 2005, InterActiveCorp (Barry Diller) acquires Ask Jeeves.

What might have been?

Would Excite have survived as an independent company?

Would Excite have survived as a brand by merging with Yahoo?

Or Microsoft?

Probably not.

Excite’s revenues were built entirely on old-media style impression-based banner ads and sponsorships.

In the bursting of the bubble, non-measurable, non-CPC spenddropped substantially.

Excite’s focus was too broad, the cost-structure too expensive. Unlikely that the company could have re-tooled and restructured quickly enough to adapt to the rise of the CPC ad model and live through the “nuclear winter” of 2001 - 2003.

So Close, Yet So Far…

Or, why wasn’t Excite Google?

Key Contributors to Google’s Dominance:

1. Late mover advantage2. Focus on search, a better mousetrap3. Open source, commodity hardware, cheap bandwidth4. “Discovery” of a sustainable business model*5. Great Execution6. Luck

*CPC advertising has transformed marketing into a quantitative discipline with measurable ROI.

The End