The death of Yahoo

Over the years, I've carefully followed every acquisition, every hire and every product launch.

 

Allen Weiner

Business

Published Oct 4, 2014   Updated May 30, 2021, 11:32 am CDT

During the height of Silicon Valley’s early glory days, I had the right job, in the right place, at the right time. Just before everything went boom in the late ‘90s.

It was 1994, and I was in my first year in the market research business and I got a call one day from a guy named Jerry Yang who wanted to come over to our offices to ask a few questions about ISPs. Yang was a wonderfully personable guy who didn’t take himself seriously and not only did we talk about “the online space” (which is what it was called back then), he told me some personal family anecdotes and the story of how he and his college roommate (David Filo) first came up with the idea for Yahoo.

A few weeks later, I was invited over the Yahoo headquarters. I met some of the early employees and chatted about where they saw themselves in the near future. If memory serves me correctly, Dan Rosensweig had just joined the company and was on his way to becoming COO.

Over the years, I carefully followed every acquisition, every hire and every product launch. I was something like a “Yahoo watcher,” which everyone in the industry was at the time. I got to know many of the company CEOs along the way. In addition to Yang, I met Tim Koogle, as well as Carol Bartz. 

As competition from Google, Amazon, Apple and countless others began to marginalize Yahoo’s place in the public eye, the number of Yahoo watchers declined, and the iconic yodel was little more than the answer to a fairly easy trivia question. Still, I remained curiously interested in the company. Revenue was declining, notable acquisitions bombed, and an attempt to create a digital magazine barely made its way out of beta before it was shelved. Earnings calls were clouded with empty promises until former Googler Marissa Mayer was brought in to lead the company to the promised land.

And yet again Yahoo is at another crossroads, with large investors calling for the company to merge with AOL. There was even renewed chatter about Yahoo merging with Microsoft. (Those of us who followed the 2008 circus that was Microsoft’s attempt to purchase Yahoo are laughing at that one.) But no one who remembers Yahoo’s storied past is laughing at the sad message the company posted on its Tumblr blog on Sept. 26:

Yahoo was started nearly 20 years ago as a directory of websites that helped users explore the Internet. While we are still committed to connecting users with the information they’re passionate about, our business has evolved and at the end of 2014 (December 31), we will retire the Yahoo Directory.

The Directory. Yahoo’s North Star. Yahoo’s touchstone whose name was derived from the words Yet Another Hierarchical Officious Oracle. It sure looked dorky, but the original home page had an early sensibility to it that seemed just right at the time. Even if its directory was an anachronism, its summary execution in the form of a blog post is proof positive that Yahoo is no longer Yahoo. The spirit of a company just weird and cool enough to once name its conference rooms after the 10 plagues mentioned in the Book of Exodus, is now an Edsel. A Betamax. An Eight Track. Netscape.

Yahoo’s fall from glory did not happen overnight. The company’s slippery slope is a result of a series of missteps born out of a lack of vision, a misreading of the tech tea leaves and a sense of invulnerability often found stretching from the Golden Gate Bridge down through San Jose. While many of these failures predate most millennials entry into the world of digital craziness, they are worth noting if only to gain perspective on the collapse of the Yahoo empire.

Search

Yes, you could search on Yahoo in its early days, but once your term was entered into the rectangular box, the request was sent off to another provider to be completed. That worked for a while but search changed when Google and its purely algorithmic approach to search took the Web by storm. Yahoo later went native with its own technology (actually, purchased from Inktomi) but the damage was done. When it came to conversations about search, Yahoo was on the outside looking in.

Video

Yahoo failed here in two ways—one for missing the boat and the other for being a tad too ahead of the game. When Google bought YouTube in 2006, Yahoo had no answer despite the growing interest in consumer-generated video. Yahoo’s efforts here have been paltry and its attempt to be a player in the video distribution business died after it purchased Maven Networks only to later shut it down.

Under the Terry Semel regime (2001-2007), Hollywood became an important part of Yahoo’s strategy and the vision to turn the company into a new media creation and distribution network seemed like a good idea. Semel was a former executive with Warner Brothers, so the cred and experience was there, but the evolution from search portal to entertainment megasite was ahead of its time, for starters because high-speed bandwidth wasn’t what it is today. And the notion of “TV Everywhere,” which gave consumers more movie/TV consumption options, just wasn’t penetrating the market at the time.

An honorable mention has to go to Yahoo’s efforts in the world of second screen/interactive TV. Partnerships with major consumer electronics manufacturers to fold Yahoo’s interactive TV platform into their products has petered out and apps such as Into_Now have failed to take hold.

Commerce

In 2000, all the talk was about Yahoo buying eBay. That never happened. Then later, the buzz was about it buying Groupon. Also, nothing more than idle chatter. The point is that Yahoo has never successfully entered the world of e-commerce either as a marketplace portal or a retail platform ala Amazon. It was never a case of money—Yahoo always has had plenty of that. The issue was vision: Yahoo has had and still has a lack of continuity in its vision and a total lack of agreement among its senior staff about direction. Commerce is only one of many areas that indecision and disagreement has been an obstacle to Yahoo’s progress.

Mobile and hardware

These two areas go hand in hand. I recall a conversation in which I asked Yahoo quite early in its evolution if it ever intended to go into the ISP business. The company was in a tight partnership with Southwest Bell (which now is AT&T) for many years wherein Yahoo was a reseller of the telco’s Internet service as well as its consumer email provider. For reasons that were never clearly explained, that relationship quietly ended and, since then, Yahoo has been void of telco connections in the U.S. Getting into the ISP business as more than a reseller would have positioned Yahoo to develop a powerful, sustainable revenue stream that could come in handy right about now.

By the same token, Yahoo has consistently said it would not go into the hardware business as it was not part of its core competency. Actually, Yahoo has been in the hardware business—in a manner of speaking—offering smartphones in Southeast Asia, India and other emerging areas. Perhaps because of its roots—Yang’s connections to Asia and investments from Softbank Japan–the company has been far more focused on innovations in that region as opposed to the U.S.

I wish I could tell all those who still ask me about the future of Yahoo where the company will be in five years. Or if there will be a Yahoo in five years. Having missed out on so many opportunities and suffered from so many management issues, Yahoo is out of pivots with its only turnaround option being sale or merger.  Whether the company merges with AOL, MSN or someone wildcard option, Yahoo will never be Yahoo again. The yodel truly is dead.

Photo by yukop/Flickr (CC BY-SA 2.0)

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*First Published: Oct 4, 2014, 1:30 pm CDT