Well Yahoo is at it again. Of course not in a positive light. The news is not good, missed earnings, layoffs and lawsuits…oh my! It does not seem that long ago they were high flyers in tech (I am showing my age it was 15 years ago). I would see employees on planes…I could tell as they wore their badges. I was at Microsoft and the blue badge had lost its bluster. Not that I ever wore it on a plane.  But Yahoo at the time, like many companies in the Silicon Valley, was a high flyer and a recognized name in the industry. Their CEO and founder Jerry Yang was one of the many “new” Bill Gates wannabe’s, Steve Jobs re-emergence was still several years off.  As has been taught over and over again in this industry business models change and the wheels can come off very quickly. Yahoo has tried to maintain some level of luster, but in technology when the glory is gone, it seems never to come back.

Like many companies in the industry you can have tremendous value and sometimes a bigger opportunity lies just in front of you within your grasp, only to be missed and sadly slip from your hands.  In the case of Yahoo it was search.  Back in the dotcom boom everyone monitored their website traffic.  Claiming millions of views.  Bragging of the number of unique visitors.  The problem was no one had figured out how to monetize it.  There were a lot of search engines such as Yahoo, Lycos, Alta Vista etc..but then came Google and the whole game changed.  Jerry Yang was irrelevant before he knew it, but it took a long while for him to figure it out (still not sure he has).  The new kings were Larry Paige and Sergey Brin.

Microsoft has lost its luster and though they were tinkering and perfecting their existing revenue streams (Windows, office, Server software etc..) They were looking for the next big bang.  Ballmer and Gates admitted they blew it on search.  I have not always been nice to them on this point, they never would have figured this out.  Advertising revenues were a foreign concept to Microsoft.  They had no experts in the subject in-house so they had to build from the ground up.  They went through MSN Search, Live, AdCenter etc..Each came and went with a failing grade.  In the mean time Google just churned out more and more revenue.  In the end Microsoft got a bit desperate and offered Yahoo a whopping $44.6 billion for the company.

Enter Jerry Yang, seemingly back from the dead and horrified by Steve Ballmer’s proposal.  He fought tooth and nail against the buyout.  He was not going to let his baby fall into the hands of the evil empire.  he fought for pride and ego and not for business. In the end Jerry would prevail and will go down in history and in MBA courses as an idiot.  Not realizing that the battle for internet supremacy had been lost, there would be no tomorrow for Yahoo.  In the end Yahoo would do a deal with Microsoft where it would use Microsoft’s back-end technology for search,thus lowering costs.  Jerry Yang would step down as CEO, replaced by Carol Bartz.  By 2012 Jerry would resign from the board and have no activity with Yahoo. In the end he left on a downward spiral but his current net worth is $1.5 billion, so no tears shall be shed for Jerry.

The saga would continue as on 2012 Yahoo would snatch Google exec and starlet Marissa Mayer.  I do not know the details but I would hope Marissa would have consulted with Google God Eric Schmidt on what to expect when taking over a techno loser.  if you remember between Sun Microsystems and Google, Eric was CEO of Novell Networks.  A true techno  loser.  They had it all before Windows Server and the Internet killed them off.  Marissa came with excellent credentials having lead various search businesses at Google, but the trapping of power have a away of corroding all and in 2012 she was recruited to take over struggling Yahoo.

Yahoo under Marissa would try to re position itself and make itself relevant again. Through a series of acquisition and partnerships it seemed to want to redefine itself, but in the end it seemed to resemble nothing more than a web portal, a term more associated with the dotcom boom.  Not to say it was bad, I actually use it every day, but it was nothing really cutting edge.  It almost plays more like an internet gossip column, the People magazine of the web.  That is not a bad thing unless you are trying to position yourself, because of your legacy, as some type of leader in the industry,  There is a perception difference between the New York Times and the Enquirer.  In the end corporate executives are competitive and cannot refuse a challenge.  It can lull you to sleep and see and believe things that are not there which is what happened to Marissa.  Yahoo was dying before Microsoft made a bid and nothing really changed afterwards.

As of Yahoo’s last earning it seems the wheels are starting to come off, thought Marissa managed to bring the stock back up to previous high’s in the end it does not seem enough.  In my view Yahoo! struggled with its identity.  They had to compete against Google, but it never seemed their heart was in it.  They did “trending now” but that was more of Twitters area.  They were more or less forced into a partnership with Microsoft, lest they look like complete fools for not accepting Microsoft’s buyout offer (which in the end they did).  They created a nice web-portal, but that was out of style.  Failed to capitalize on mobility.  Yahoo is still alive but down the road will we see them in the morgue of missed opportunities like so many other tech companies who road the technology shooting star. Only time will tell,but it seems as if it is just that a matter of time.

Good Night and Good Luck

Hans Henrik Hoffmann March 16, 2016

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