Panoramio: The day that we rejected an acquisition offer from Google

This post was originally published by Eduardo Manchon, co-founder of Panoramio, on his blog.

Google bought Panoramio.com in May of 2007, but no one knows, because we never made it public until today, that a year before we finally joined Google they tried to buy us and we declined the offer. On that day we said no to Google and we prayed that our decision would not come back to haunt us.

October 2006. We had been exchanging lots of phone calls and emails with Google, discussing the terms of our potential acquihire. When they first approached us, I thought to myself that we should reject the offer and continue doing what we were doing at Panoramio. I had no desire to have a boss and I wasn’t sure how my non-technical profile could fit in with Google.

Back then we didn’t even realize that we were in the middle of an acquihire, a type of startup acquisition where what is of interest to the company is not the product, but the team. Google’s initial proposition was mostly a job offer that implied the closing of Panoramio and a compensation/bonus that we would have to negotiate with them.

I wasn’t in favour of accepting the offer, but it was worth discussing the size of the bonus with Google. Before moving forward, they wanted to get to know us (and the product) better. If it were an acquisition there would have been a due diligence process, but since this was mostly an acquihire, they were just interested in interviewing the team. Joaquín Cuenca, my co-founder, flew to Mountain View and did 5 interviews in a single day. He passed Google’s filter. I’ve known him since our high school days and I knew he would.

We had launched Panoramio exactly a year ago and the project was growing nicely. The site had 50,000 user-generated photos; a small but interesting number. Thanks to many volunteers the site had been translated into several languages ​​(German, Italian, French, Catalan, Swedish and Hungarian) and Jose Florido, who had just joined the team, had created a beautiful homepage. Everything was going smoothly and our community of users loved the site. Cuenca’s crazy idea from a few months back that consisted in geopositioning photos on a map had people hooked.

We were thrilled with our project, but Google’s offer meant that we would have to shut it down. On one side it was kind of depressing but… how could we say no to Google? It was the golden age of the search engine, when we all really believed in their ‘don’t be evil’ mantra. Many would have loved to work at Google.

In reality, by the time they showed interest in Panoramio we had been collaborating with Google for a few months. Google Earth’s founder, John Hanke, had invited us to the Where 2.0 conference in Silicon Valley and to Google’s offices to meet the team. Google had put a link to Panoramio bringing us a lot of traffic and they had even offered their servers. They were extremely polite to us. It was a very good relationship and we didn’t want to spoil it.

However, after starting to talk about the size of the acquisition it became quite clear that it was just an acquihire. We didn’t like it. The first thing we tried to do was to position the deal as a pure acquisition, but this wasn’t easy. We were 29, from a small village in Alicante, Spain, and with very little negotiating and English skills, talking on the phone to a demanding and tough person like Anil Hansjee. Although we barely understood most financial aspects we were discussing over the phone, we were able to make progress and increase the value of the offer.

In the meantime, the process had forced us to thoroughly review the evolution of Panoramio’s metrics. Photo uploads were doubling every three to four months. In August 2006 users uploaded 35,000 images; in October 55,000. With Adsense we were not making enough money to pay a full salary -around €700/month-, but with our growth rates we thought that in a year we could reach the €1,000 level for each of us. The site was growing and in a short amount of time we were going to be able to work full time on it. However, it wasn’t this that made us think twice about Google’s offer and reject it.

What opened our eyes was the fact that we realized Panoramio’s real value wasn’t in its metrics, product or community. Panoramio’s value was in our heads and in what we had learned in the year since we had started developing it. With that knowledge we were sure we could turn it into a big project. However, the reality was that Google would have never value Panoramio from our subjective point of view, so we decided to back off from the deal. We told them: “We have decided to keep working on Panoramio”. And they nicely replied: “Wow, a real entrepreneur – hats off to you”.

They didn’t take our reaction the wrong way. Few weeks later, in December 2006, they fully integrated Panoramio into Google Earth, which caused all of our metrics to grow by 30X in just one day. Panoramio was Google Earth’s most popular layer for quite some time.

That integration was the main cause behind a real acquisition process that started in March 2007 and ended two months later. 19 months since the launch of the project until its acquisition by Google. The most thrilling time of our lives.