IT was one of Silicon Valley’s most riveting success stories. Now it stands as a warning to others. Yahoo was founded in January 1994 by Jerry Yang and David Filo at Stanford University when they created a website named “Jerry and David’s Guide to the World Wide Web”. The Guide was a directory of other websites, organized in a hierarchy, as opposed to a searchable index of pages. In April 1994, it was renamed “Yahoo”. The yahoo.com domain was created on January 18, 1995.
At its peak in 2000, Yahoo had a market value of $128 billion. In the dotcom version of Monopoly, Yahoo got the prime slot.
This is history now as on July 25th, 2016 telecoms giant Verizon, made an announcement to acquire Yahoo for $4.8 billion. Even Marissa Mayer who was hired in 2012 cannot escape the inevitable. She failed to turn around the company, but the grave digging for Yahoo had started long before her appointment as the CEO of the company.
The reasons for Yahoo’s downfall are many:
Firstly, it lacked focus, as it was uncertain about whether it should be a media or a technology company. As a result, whenever the Internet changed, Yahoo did not. The rise of Google is attributed to Yahoo as it could not decide the future of search and hence did not invest in the same. It took too long to respond to the emergence of social media and the coming of the mobile Internet.
Instead of focusing, Yahoo expanded in 400 different products and services. Yahoo was dysfunctional and could not match the specialized rivals like Google & eBay.
Secondly, Except for stake in Alibaba, a Chinese e-commerce firm, Yahoo made some wrong investments choices like buying of Tumblr, a social-networking platform, for $1.1 billion in 2013, even though it was about to run out of money. But a company’s success depends, as much on the deals it does not do as on the ones it does. Yahoo’s missed the opportunity to buy Google for $1m when it had the chance. It deal to buy Facebook for $1 billion, did not go through. It eschewed the chance to buy YouTube (subsequently bought by Google), and its purchase of eBay fell through because of clashing egos.
Thirdly, and most annoying of all, Mr Yang, the CEO at the time, had the chance to sell Yahoo to Microsoft for around $45 billion in early 2008 but his ego came in between. Silicon Valley still believes in the idea of founders as visionary turnaround artists but or every Steve Jobs, who successfully revived Apple, there is a Mr Yang.
- Gaurav Sood is a Brand evangelist, researcher, educator, speaker, columnist and a brand communications professional with a 2 decade practice creating strong brands. You can follow him on www.brandmartini.com