A Possibly Premature Post-Mortem on Yahoo

Last Thursday, Yahoo held it ‘s annual shareholder meeting. At that meeting, CEO Marissa Mayer dealt the company a doubled down kiss of death. She stated the goals of the board are fully aligned with one clear priority: “delivering shareholder value to all of you.” She further mentioned, when dealing with the divesture of all that once was Yahoo, that she’s “been very heartened by the level of interest in Yahoo. It validates our business processes as well as our achievements to date.”

It’s fancier language, but it’s basically the same as the butcher saying, “This cow is no longer viable as a cow, so I’m looking at it as a collection of rump roasts, T-Bones and hamburger. I’m hoping we have more of the former and less of the later.”

Yahoo_1996I first encountered Yahoo in 1995, shortly after it’s brief life as Jerry and David’s Guide to the World Wide Web. I think it was probably still parked on Stanford’s servers at the time. At the time, the Internet was like the world’s biggest second-hand store – a huge collection that was 95% junk/5 % useful stuff with no overarching order or organization. David Filo and Jerry Yang’s site was one of the very first to try to provide that order.

As an early search marketer in the run up to the dot-com bubble, you couldn’t ignore the Yahoo directory. The Yahooligans walked with typical Valley swagger. Hubris was never in short supply. They were the cocks of the walk and they knew it.

It was a much-humbled post-bubble Yahoo that I visited in 2004. They had got their search asses soundly kicked by Google, who was now powering their non-directory results. The age of the curated directory was gone, replaced by the scalability of algorithmic search.

As a culture, the Yahooligans were struggling with the mixed management signals that came from then CEO Terry Semel and his team. Sunnyvale was clouded in a purple haze. The Yahooligans didn’t know who the hell they were or what they were supposed to do. Where they a tech company or an entertainment company? The answer, as it turned out, was neither.

I met with the remnants of the once mighty search team to talk about user behaviors. I didn’t know it at the time, but Yahoo was gearing up to relaunch their search service. A much vilified paid inclusion program would also be debuted. It was one of many ill-fated attempts to find the next “Big Thing.”

Marissa Mayer continues to put a brave face on it, but the Yahoo engine ran out of steam at least a decade and a half ago. What amazes me is how long the ride has been. There is a message here for tech-based companies.

If you dig down to the critical incubation period of any tech company, you find a recurring pattern. Some technologically mediated connection allows people to do something they were previously unable to do. This releases pent up market demand. It’s like a thin sliver trying to poke through a water balloon. If successful, this released market demand creates an immediate and sizable audience for whomever introduced the innovation. Yahoo’s directory, Google’s PageRank, Facebook’s “Facemash”, AirBnB’s accommodation directory, Uber’s ridesharing app – they all share the same modus operandi – a tech-step forward creates a new audience and market opportunity.

In hindsight, once you strip away all the hype, it’s amazing how tenuous and unimpressive these technological advances are. Luck and timing typically play a huge part. If the conditions are right, the sliver eases through the balloon’s membrane and for a time, there is a steady stream of opportunity.

The problem is that is that as easily as these markets form, they can just as easily evaporate. When the technological advantage passes to the next competitor, as it did when Yahoo gave way to Google, all that’s left is the audience. When you consider that Yahoo has been coasting on this audience for close to two decades, it’s rather amazing that Mayer still has any assets at all to sell.

 

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