Also worked at Google in the 00s, and have spoken personally with several people who worked on Google when it was still a Stanford grad project.
To hear Larry tell it, his original idea for Google was to download the whole web and throw away everything but the links, and he was inspired by academic notions of citation indexes. It wasn’t specifically (or really at all, until Google books came out) about books - that sounds like a cover story to get grad student funding for his actual idea, because you can’t really go to a university and say “I want to download the whole web and throw away everything but the links” without telling them why or connecting it to some plausibly useful idea.
The acquisition offer is often cited, but I don’t think Larry and Sergey were ever really serious about taking it. They didn’t, after all. But if you’re living on a grad student stipend (which was like $20k in the 90s), a million bucks is a lot of money.
And they absolutely knew it would be big, they just didn’t know how it would be big. It was quite popular within the Stanford lab as well…it’s interesting, looking through the early CVS commits for Google, how much work was done by people who ended up not actually becoming employees of Google or having a major part in its story. I think the real genius of Google was treating the web as an object that could be studied and manipulated, and not as some amorphous thing you were part of. That was exciting even if people didn’t know how it would be.