The Glory That Was Yahoo

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There was a time when yahoo conquered the internet world!

The Glory That Was Yahoo

[Photo: Flickr user Jennifer Morrow]

The Stanford graduate students Jerry Yang and David Filo had never thought that their hobby will become one of the biggest internet companies at the time i.e. Yahoo!

After 22 years of its glorious journey, Yahoo! agreed to sell its core operating business to Verizon in which Forbes quoted “the saddest $5 billion deal in tech history“.

But at the time, it was one of the most popular and valuable internet company before today’s giant Google, Facebook. Yahoo! worth $125 billion at its height.

Jeremy Ring, who was a top sales executive at Yahoo, quoted “We were worth more than Ford, Chrysler, and GM combined. Hell, we were worth more than Disney, Viacom, and News Corp combined. Each of those great American brands could have been swallowed up by us.”

“Yahoo! is a story of the greatest mistakes in the history of business,” he began before enumerating several points at which Yahoo! erred. Most mistakes involved not acquiring companies at the right time – in other words, not following their luck.

Yahoo! had the opportunity to acquire PageRank, which eventually turned into Google, for $1 million. A second chance with Google arose for $6 billion. A chance with Facebook was negotiated for $1.1 billion. Each time, Yahoo! turned the deal down, overplaying its hand, Ring said.


It Started @ Yahoo: Yahoo Briefcase

Due to its entrepreneurial instincts, yahoo started Yahoo Briefcase in Aug 1999 (Also known as cloud storage) much earlier than the current dropbox, google drive, etc.

But it couldn’t capitalize on it and had closed its services in Mar 2001 but they didn’t disclose the reason behind it.

Yahoo started expanding its hand by the acquisition of web search engineNet Control” in the year of September 1997 at US$1.4 million and the acquisition never stopped.

In the 1990s, There was no player who can beat Yahoo and it added other services, like Yahoo mail, Classified, Travels, Yahoo games, shopping, and many other services. With time, many of the services discontinued and some are still serving awesome.

Yahoo becomes the full fledge internet giant and there’re no other players close to it by then.

“We didn’t want to call it a portal, because a portal is a door to somewhere else, and we wanted people to stay there,” says Shannon Brayton, a senior manager in Yahoo’s corporate communications department from 1998 to 2001.

Yahoo was the first web directory, it was the first website to offer localized directories for almost all the categories like cities, places, etc. Users were able to customize the site of their own version.

Many of the apps and services we now take for granted were either invented at Yahoo or quickly found a home there. Before there was a YouTube, there was Broadcast.com, which turned into Yahoo TV. Before Instagram, there was Flickr. Before Evernote, there was Yahoo Notebook. Before Spotify, Yahoo Music. And on and on.

More important from a business standpoint, Yahoo pioneered the pay-per-click advertising model that soon became ubiquitous across the internet, notes Ring, who was working with Yahoo via an outside ad agency at the time. The first click-through banner on Yahoo was an ad for MCI; to ensure people clicked on it, Ring says, they embedded the word “naked” inside the ad copy.


It Started @ Yahoo: GeoCities

Another 1999 acquisition, GeoCities let millions of people build their own websites, with results that were infectiously enthusiastic and famously ugly. Today’s Squarespace and WordPress let you build sites that are a thousand times more attractive, but the web lost some of its soul when Yahoo killed GeoCities in 2009.


It Started @ Yahoo: Broadcast.com

Today, Broadcast.com is best known for the fact that Yahoo paid $5.9 billion for it in 1999, thereby turning internet entrepreneur Mark Cuban into internet billionaire Mark Cuban. Though the service didn’t go much of anywhere under Yahoo ownership, it’s recognizable as the proto-YouTube of the dial-up era.


YODELING FOR DOLLARS

And if Yahoo didn’t exactly invent Silicon Valley culture, it quickly became the poster child for it, says Tom Parker, who was at Yahoo from 1998 to 2004 as a copywriter and creative director.

“It was casual on a college level,” he says. “David Filo didn’t wear shoes. You could wear shorts and flip-flops to work. It was super entrepreneurial, which is now kind of a cliché.”

Early employees routinely slept at their desks after having spent all night writing code or updating content, says Ford Minton, senior art director from 1996 to 2001, who also held the informal title minister of culture.

Minton says Yahoos were known to wager on whether the company’s stock price would go up or down. One loser had his head shaved in front of the entire staff, others ended up at tattoo parlors to have the company logo permanently enshrined on their posteriors.

“It was very punk rock,” he says. “We were kind of making the technology up as we went. And things started getting crazy.”

To the public, Yahoo was the company with the funny TV ads and the famous yodel. It had personality in spades, which for technology companies in the ’90s was exceedingly rare.

“One of the things people don’t realize is that it’s those early TV spots that really made Yahoo an overnight global brand sensation,” says Parker. “It was that Do You Yahoo? tagline and that yodel. When I started in ’98, I’d go to parties, and people would see me and start yodeling.”


MISSED IT BY THAT MUCH

The good times didn’t last. Yahoo lost many of its advertisers, and nearly all of its value, in the dotcom crash that began in April 2000. It never truly recovered. Now what people remember most are the missed opportunities.

In 1998, Yahoo had a chance to license an innovative new search technology created by a pair of Stanford grad students for $1 million. Instead, David Filo convinced Sergey Brin and Larry Page to strike out on their own and introduced them to one of Google’s earliest investors, Michael Moritz of Sequoia Capital.

As Ring writes, “That $1 million price tag was probably the best deal offered in the history of Silicon Valley, California, the United States, planet Earth, and the Milky Way Galaxy.”

In 2002, Yahoo had a second chance to buy Google. This time, CEO Terry Semel offered $3 billion for the company; Page and Brin turned him down, reportedly holding out for $5 billion.

But even that’s not Yahoo’s most famous missed opportunity. That came in July 2006, when Yahoo tried to buy Facebook, then a college-oriented network with roughly 7 million members, for $1.1 billion. Internet lore has Mark Zuckerberg walking away from the deal when Semel cut the offer to $800 million after a drop in Yahoo’s share price. According to Peter Thiel, one of three members on Facebook’s board at the time, Zuckerberg never seriously considered selling.

Yahoo also had opportunities to acquire eBay and YouTube and even entertained making an offer for Apple two years before the iPhone was unveiled, according to Gary Flake, principal scientist at Yahoo from 2003 to 2005. (The Apple idea didn’t get much traction, he adds.)

And Yahoo spurned offers—most famously when then CEO Jerry Yang aggressively rejected Microsoft’s attempts to buy Yahoo for $44.6 billion in 2008.

Rewriting history is always a tricky business. But given Yahoo’s less-than-stellar track record with large acquisitions–its $3.7 billion purchase of GeoCities, its $5.7 billion splurge for Broadcast.com, the $1.1 billion it dropped on Tumblr, none of which really amounted to much–it’s unlikely Google or Facebook would be the behemoths they are today if they’d become part of Yahoo.

“If you could suspend your disbelief and assume Yahoo would not have screwed up those acquisitions, it could have ended up being the most valuable company in the world,” says Flake. “Or, unbeknownst to everyone, it would have set the internet back a couple of years, because we’d lose Google and Facebook, and the world would have had to reinvent them.


PURPLE REIGN

Today, Yahoo’s DNA can be found all over Silicon Valley and beyond.

“You can’t go to any company in the valley and not find Yahoo’s imprint,” says Ring. “We come from the greatest alumni from any company in history.”

The list of startups launched by ex-Yahoos includes WhatsApp, Y Combinator, NextDoor, Slack, Cloudera, Bandcamp, and Polyvore (later acquired by Yahoo). Former Y! executives have filled up the C-suites at LinkedIn, Facebook, Google, Microsoft, Twitter, Airbnb, Dropbox, Etsy, IndieGogo, Kleiner Perkins, and Sequoia Capital, to name but a few.

You could even argue that Alibaba, China’s massive online marketplace, might not be a $160 billion company today without Yahoo’s $1 billion investment in 2005.

To this day, many ex-Yahoos say they still “bleed purple.” They continue to feel a deep connection to the Yahoo that was, along with a wistfulness for the Yahoo that could have been.

“The whole experience feels sacred to me,” says Mimi Lyons, one of the original surfers, who joined in November 1995 and stayed for seven years. “It’s something that just magically happened. We had the most amazing people at the right time in the right place. The memories of that, and the people, still matter to me.”

And that, perhaps, is something worth yodeling about.

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