What Sank Yahoo? Blame Its Nice Guy Founders

Discussion in 'Misc. Professional Topics' started by Arpit131, Jul 30, 2016.


  1. Arpit131

    Arpit131 Active Member VIP

    Mar 12, 2014
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    The epilogue in the long, sad story of Yahoo!, the web portal with the perpetually ebullient exclamation mark, is finally being written. After emerging as the top bidder in a five-month auction, Verizon Communications has agreed to buy the historic web franchise’s core assets for $4.83 billion.

    Yahoo Chief Executive Officer Marissa Mayer will assist with the transition until the sale is complete and then depart the company with a comfortable parachute worth more than $50 million in cash and stock. So let’s not weep for her. But inevitably, a passel of eulogies will be crafted about her failed four-year attempt to turn around the company. These reflections will be largely unfair, because the decline and demise of Yahoo isn’t totally her fault. It’s at least partially the fault of its founders, Jerry Yang and David Filo.

    The early story of Yahoo is now Silicon Valley mythology. As graduate students at the Stanford School of Engineering in 1994, Yang, a math-oriented Taiwanese immigrant, and Filo, a quiet programmer from Louisiana, created a directory of links called Jerry and David’s Guide to the World Wide Web. It was a handy map to what was then an unnavigable digital landscape, and web surfers loved it. The following year, when Sequoia Capital invested in the newly renamed startup, it brought in a former Motorola executive named Tim Koogle to be CEO.

    The move reflected the reigning conventional wisdom of the time—bring in an experienced chief executive and go public early. But while they stepped aside to become “chief Yahoos,” as their business cards said, Filo and Yang stayed intimately involved. Filo, as the technical leader, wrote the very first version of Yahoo search and made the bulk of decisions about the company’s underlying technical architecture. Yang stayed close to strategic decisions and was instrumental after the dot-com crash in replacing Koogle with Terry Semel, the longtime co-CEO of Warner Brothers.

    Semel brought with him a core group of native media execs whose names are now familiar in Silicon Valley, like Jeff Weiner, the CEO of LinkedIn, and Dan Rosensweig, CEO of textbook rental service Chegg. This was the origin of what would become Yahoo’s enduring split-personality: Was it a technology company or a media company? Sitting on perhaps the most valuable piece of real estate on the web, shuttling between its offices in Santa Monica, California, and Sunnyvale, Yahoo executives tried to be a little bit of both.

    We now know what it takes for technology companies to succeed: fierce, often unpleasant, founders who are able to make hard choices and place unpopular bets. During the years that Yahoo was banking on the media business, Jeff Bezos of Amazon.com, for example, expanded into unprofitable lines of online retail, brooked a painfully hollow stock price, cut workers, and finally spawned a completely different business in the cloud, called Amazon Web Services. At Google, Larry Page and Sergey Brin brought in Eric Schmidt as CEO, but they governed as a triumvirate of equals, inventing an insanely profitable text advertising business that augmented web search results, rather than distracting from them like Yahoo’s eye-ball burning banner ads.

    During the 2000s, Yahoo’s biggest mistakes were failures of will. Semel, billed as a “deals guy” from Hollywood, could have bought Google in 2002, as Fred Vogelstein reported in Wired. Yahoo also came close to buying Facebook in 2006, until Semel lowered his offer from $1 billion to $850 million after a disappointing earnings report, alienating an already reluctant Mark Zuckerberg in the process, according to David Kirkpatrick’s book, The Facebook Effect.

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  2. Unknownstyle

    Unknownstyle Business Member Business Account ★★★★★★★★★★

    Dec 4, 2004
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