You Don’t “Yahoo!” As Much As You Used To
“Do you Yahoo?” That was the ad campaign run by the company circa ~’90s. Yahoo (pardon us for leaving off the “!” for the rest of this article) cleverly dressed up its ad campaign in a healthy suit of self-deprecating irreverence. The Internet, ah, she’s a crazy place, isn’t she?
The disarming goofiness belied the position of Yahoo as the kingpin of the Internet. At the stroke of midnight, December 31st, 1999, Yahoo stock was valued at $108.13 per share, and four days later Yahoo’s Japan branch broke the Japanese record for highest-ever traded stock. By September 10th, 2001, it was down to $5.87. Ever since then, Yahoo has been the unpopular nerd of the Internet, while its competitor Google got all the love and keeps growing to this day. What happened? How did the company poised to be the most dominant web technology corporation run aground?
It certainly wasn’t for their lack of humor.
But if Yahoo was so tragically flawed, why didn’t it die off a long time ago? Like AOL, Yahoo’s corporate culture looks like it should have faded out with the Ottoman empire. But, again like AOL, it stays in business even years after anyone can explain why.
Dave and Jerry Make a Website
Yahoo grew out of the personal website project of two Stanford University students, Jerry Yang and David Filo, in 1994. The two electrical engineering students named their page “Jerry and David’s Guide to the World Wide Web,” in a far more innocent time. Their page was a directory with links to every other website they knew of – which in 1994 was easily a task you could stay on top of during your lunch break. The two renamed their domain to yahoo.com in January of 1995, picking the name because it basically meant what we now call a “redneck.” Dave and Jerry had trouble trademarking the name, since a few other companies already claimed it, so they added the exclamation mark. The company went public by April of 1996, after a round of $3M investor funding, and sold $33M worth of stock immediately.
Yahoo would grow up hand in hand with Silicon Valley. It flowed through the veins of every Northern California student with a garage startup. It painted the first lane stripes on the Information Superhighway. It rode the crest of the dot-com wave from bubble to bust. Yahoo.com was for many users the very first web page they ever beheld. Its history actually goes back farther than the Wayback Machine, but here’s the earliest snapshot they took of the domain yahoo.com.
Feed the Beast
Throughout the rest of the 1990s, Yahoo began rabidly acquiring many of the pieces that would make it the Internet juggernaut we knew by turn-of-century. Rocketmail became Yahoo Mail, ClassicGames.com became Yahoo Games, eGroups became Yahoo Groups, and to that they added GeoCities and Yahoo Messenger. Far past the 1990s, Yahoo continued this feeding frenzy well into recent years, no matter how its stock bounced.
For Yahoo, dear modern readers, was founded on the old-school principle of the “walled garden.” In the early ‘90s, technology companies subscribed to the theory that you would naturally make more money if visitors never left the bubble of your influence. Why leave when we provide that too? Some companies, like Microsoft and Apple, accomplished this with aggressive lock-in, walling up every exit from their gardens. But Yahoo’s philosophy, as a web portal whose very existence was determined by mouse clicks on hyperlinks, was to simply keep building a bigger and bigger garden, with plenty of directional signs pointing the way back in deeper to their maze of web offerings. They brought up dial-up service through SBC Communications. They became a search engine after acquiring Inktomi. You want applications? Wait, don’t leave, here’s Yahoo Widgets! Stepping on any of Yahoo’s tentacles invariably led one to become lost in a maze of mediocre, half-maintained virtual services, and within this sprawling network, anarchy reigned.
The Decline and Fall of the Yahoo Empire
Like many a story of post-dot-bust companies, the decline of Yahoo is told by a series of decisions that must have looked right at the time, but in 20/20 hindsight were Leeroy-Jenkins-level blunders. First they turned down the opportunity to buy Google for $1B in 2002. Yes, you heard that right. Wait, it gets better. In 2006, they turned down the opportunity to buy Facebook for $1.1B; their maximum sticker price was $1B and they’d like a set of steak knives thrown in, thank you. They also resisted a $44.6B buyout attempt from Microsoft in 2008, fighting a long and hissy slapfight with Steve Ballmer in the headlines.
The present author must turn to the wisdom of his idol, Paul Graham, in his essay “What Happened to Yahoo.” Graham has far more insight into the business side of things. In a nutshell, Yahoo was the innovator, the very first Internet company, but it paid the price by stumbling into pitfalls that later companies could avoid. For instance, Graham tells of his meeting with Jerry Yang, who wasn’t impressed with a fair ad revenue business model… because Yahoo was already making a boatload of money over fair market value for banner ads, which at the time were crazy expensive. Today, you can’t get birdseed for banner ad space. Anybody could have made that mistake at the time.
One mustn’t forget the parade of CEOs who ran it into the ground. After Yang stepped down, Terry Semel, Carol Bartz, and Scott Thompson each took turns running the Yahoo ship aground. Even Marissa Mayer couldn’t salvage the Yahoo empire, and she was from Google.
But from the end-user standpoint, we can conclude that even if we never the business end of Yahoo, the dying vital signs were all there to be seen. That walled garden became a vast, lonely space. It was like the boulevards of the Soviet Union, constructed miles wide in anticipation of victorious parades that never came, and now a cold, inhospitable concrete jungle where crossing the street takes five minutes at a brisk jog. GeoCities, Yahoo Mail, Yahoo Messenger, Yahoo Groups, all became havens for spammers, scammers, and trolls. Yahoo’s vast empire became a huge, sprawling slum. Nothing worked, emails to tech support went ignored, anarchy reigned. Later acquisitions, like Delicious and Flickr, suffered the same fate. In most recent news, Meyer has stepped down and Verizon Communications chose to buy Yahoo’s Internet services for less than $5B… for a company that was once valued at over $100B. Oh, remember we mentioned AOL? Yeah, Verizon bought them, too.
Wait! I’m Not Dead Yet!
So, getting back to our other question: Yahoo, currently, is still the sixth most-visited website, with 700 billion visitors per month. Jerry Yang’s nervy investments in things like Alibaba Group, the Chinese ecommerce giant, has helped keep the company afloat. But you still have to ask, where are all these visits coming from?
Well, that’s what happens when you create a walled garden during the dot-com bubble; you get a lot of inertia. Yahoo today is, overwhelmingly, a hangout for old people. And with that, it’s the chief spreader of all that “fake news” you see making the headlines lately. And let’s not forget those spammers and scammers; they never let go of a ripe portal once they get dug in. If your grandmother has been preyed upon by the latest fraud claiming to be a lost Nigerian prince, chances are she met him on Yahoo. Along with all that forwarded, stale humor your mom still stuffs into your inbox.
At the end, Yahoo! ends not with a bang, but a minion meme.