The death of Yahoo! (and how they almost bought Google)

by birtanpublished on September 9, 2020

This video was brought to you by xyro the easiest way to get your brand online create your own website today using the link in the description and get a 30 off your purchase 125 billion that's how valuable yahoo was at its speak that was more than ford chrysler and general

Motors combined and it all began as a hobby yahoo brought us many of the services we take for granted today including cloud storage and setting up your website but the name

Yahoo has disappeared consumed in the food chain that is the tech world and how did it get to this we'll tell you all about it in today's episode of company forensics the origins jerry and david's guide

To the world wide web isn't a cheap adventure film it's yahoo's original name in early 1994 stanford grads jerry yang and david filo began compiling the websites they liked into a directory

Their site separated pages into categories and subcategories simple even primitive now but back then it was a success they went with yahoo according to some articles the name stands for yet another

Hierarchically organized oracle but both philo and yang say they like the definition of yahoo someone rude unsophisticated uncouth they even added advertising which would be their blessing and their curse with a

Solid idea they sought investment and met with sequoia capital who agreed to invest nearly two million dollars with money in their pockets filo and yan hired a management team that included jeffrey mallett and

Tim coogle two principal characters in this video in 1995 google stepped in as ceo and pushed for an ipo in 96 even with a reported loss of six hundred thousand dollars but it was the age of internet bonanza yahoo showed promise

And investors were interested the ipo was a hit initially the share value was 13 but by the end of the day it had increased 154 percent dating yahoo an 848 million market cap

At the time yahoo's first day gains were the third largest of any ipo on record a sign of things to come because it was to grow a lot growth yahoo was no longer only a website directory it was changing

Internet culture with catchy tv commercials and a new trendy slogan do you yahoo it also expanded its catalog with personalized content news and websites under the my yahoo service

Plus kids could navigate the internet in a safe environment with yahooligans the big move came in 97 when they launched yahoo mail based on rocketmail a company they had purchased users not only had

Email access wherever there was internet service but also personalized web services like classifieds yahoo chat and a storage three megabytes but hey it was something centralized email and tools plus

Personalized content all inside one account do you see the value of what yahoo was doing and it was also global with specific references for individual countries or regions such as yahoo brazil and yahoo hong kong thanks

To the ability to personalize content by 99 yahoo wrote a killer wave of speculation around the dot-com world the stock said initially remember at 13 reached an impressive pre-split value of 475 dollars at the height

Of the dot-com bubble that's january 3rd 2000. up to this point their expansion sounds logical some ideas were good like mailing lists and creating personalized websites but yahoo got into everything

It could it was a lot successful moves here's a list of firsts yahoo did either through mergers or in-house its yahoo briefcase which launched in 99 provided cloud storage way before dropbox or drive did long

Before spotify and apple music check out that video by the way yahoo launched yahoo music in 2001. back then it allowed a freemium service 1 000 songs per month for free

Or ad free and unlimited skips for four dollars per month yahoo also had radio when it purchased for 5.9 billion dollars a lot but it showed promise broadcast provided channels for specific tastes and topics

Think of the potential first radio then video it could have been youtube but all it did was make mark cuban a billionaire yeah at least somebody won the company was also at the forefront of cultural change with an almost

Punk rock attitude former employee tom parker recalls how quickly yahoo became a poster child for carefree attitude within silicon valley it was casual on a college level david fowler didn't wear shoes you could wear shorts

And flip-flops to work it was super entrepreneurial which is now kind of cliche but if you look at where we are now we don't associate any of these technological breakthroughs with yahoo

Not even the culture and that's all their fault the downfall that came in pieces some external elements aided yahoo's fault the biggest of which is of course the dot-com crash

After the bubble burst yahoo's stock went from 475 dollars pre-split to just 8.11 in nine months but a lot of its flaws were internal especially in the leadership department remember team google

Yes he turned yahoo into a profitable company but he also made some critical mistakes back in 2000 aol and time warner joined forces check our aol fault video threatening yahoo's online presence

Rumors said that yahoo would merge with another big company in the e-commerce world ebay the reason is that yahoo relied heavily on ads for income and ebay would have allowed the company

To branch out into other sources of income but google rejected the idea which led to conflict with another veteran president jeffrey mallett even with the dot-com crash sequels ebay still turned

In 184 million dollars in revenue and to this day still operates meanwhile advertising plummeted and yahoo's wallet shrunk soon after google stepped down as

Ceo you might have heard of sergey brin larry page and the search engine prototype they created in 98 called google well initially they tried to license their engine to other companies

Then they met with david philo and he gave them one tip to launch the engine by themselves he even introduced him to michael moritz of sequoia capital who would become one of google's first backers

Let's cut filo some slack because he couldn't have imagined their success but that's because in part philo didn't believe in search engines in an interview y combinator creator paul graham recalls

I remember telling david fallow in late 98 or early 99 that yahoo should buy google because i and most of the other programmers in the company were using it instead of yahoo for search he told me

This wasn't worth worrying about search was only six percent of our traffic and we were growing at 10 a month it wasn't worth doing better because yahoo relied

Heavily on ads it was easier to outsource its searching services they even signed an agreement with google in 2000 to do so but graham's warning echoed google was too important not to take into consideration

By 2002 under ceo terry samuel yahoo saw the potential in search engines the company even tried to buy google for one billion dollars but took too long to decide by the time semel and the board agreed to buy it

Google's price had gone up three billion dollars and yahoo backed out yahoo bought inktomy to up their searching game and the final product wasn't bad per se compared to google it was limited as it

Worked through bidding instead of bidding and statistical analysis as google did the rivals efficiently slowly lured away users from yahoo in the search engine war a war they would eventually lose

No vision we wish we could say the search engine war alone killed yahoo but no it was doing too much at the same time for example flickr it was one of their best if not the best photo sharing service at the time

After buying it the potential was there to create the next big thing in social networking yahoo forced flickr staff to think more about integration than innovation experts say that all

That mattered was flickr's database and not creating new services and improving customer care and yahoo didn't see the signs in a gizmodo interview a former yahoo employee stated that

I spent years at yahoo trying to signal the alarm that facebook was going to take over unless we stepped in and used our existing social networks to fight back by the way yahoo tried and failed

Again due to internal lethargy to purchase facebook yahoo had too much in its hands music real estate cars jobs classifieds attempts at social networking but nothing stood out

What do i mean well spotify is for music google is for search youtube is for video yahoo a kingdom without leaders yahoo's failure to find an identity came from the top

Leadership at yahoo was always lacking here are some examples under ceo jerry yang in 2008 yahoo famously rejected microsoft's offer to buy them for 45 billion dollars because yang felt it

Undervalued the company and still believed in the success of ads alone this decision cost him his job between 2011 and 2012 four ceos tried to fix yahoo before marissa mayer its last

Ceo got the job she showed promise as the stock doubled in less than a year but there was little else to celebrate she also made the controversial tumblr purchase for 1.1 billion dollars only to have it

Float along with no innovation nor control over the content no one understood why they had bought tumblr in the first place then there's the alibaba ipo back in 2005 yahoo invested 1 billion dollars in

The chinese giant during mayor's tenure in 2014 yahoo sold millions of shares back to alibaba just before the ipo but the offering was so successful that it meant yahoo practically had left

36 billion dollars on the table a week's stock wrong decisions mediocre products and a lack of identity the king was slowly dying and verizon brought the axe to finish the job in 2016 the

Telecom giant announced it would buy yahoo's core business for 5 billion pocket change compared to what it was once worth ironically yahoo ended up in the same dustbin

As aol another former giant two former kings now were pawns for another company but it wouldn't end there because their names were quickly erased on the verizon's branch

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Building with xaro in the comments maybe it's another yahoo hopefully not see you next week you

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