Everyone is aware of how the narrative concludes.
In July 2016, 22 years after it began as a side project for Stanford graduate students Jerry Yang and David Filo, Yahoo decided to sell its core operating business to Verizon in “the saddest $5 billion sales in tech history,” according to Forbes writer Brian Solomon.
However, few people today remember how brilliantly it all began. Yahoo was the internet’s monarch before Google or Facebook.
Jeremy Ring, a prominent sales executive at Yahoo from 1996 to 2001, is one of many who remembers. We Were Yahoo, his just-released memoir, chronicles the incredible rise and fall of what was once the world’s largest online corporation, valued at $125 billion at its peak.
Ring wrote, “Our company was five years old.” “We were worth more than Ford, Chrysler, and General Motors put together.” We were worth more than Disney, Viacom, and News Corporation put together. We could have snatched up any of those wonderful American brands.”
Yahoo Briefcase was the start of it all.
Yahoo was ahead of the curve in practically every internet area because of its entrepreneurial instincts and clever acquisitions. However, it failed to capitalize on its early advantage, allowing later entrants to dominate the field. For example, Yahoo Briefcase pioneered online storage long before Dropbox, Box, and Google Drive.
COMBAT AT THE ENTRANCE TO THE PORTAL
This spunky small startup with the amusing name was the internet for many in the 1990s. It started out as a web directory that was manually vetted and classified by individuals known simply as “surfers.” Yahoo was the first to include news, sports, and finance feeds in its web directory, and all three services are still very popular as part of Oath, Verizon’s AOL-Yahoo media mashup.
Yahoo had expanded its services to include email, shopping, classifieds, personals, games, travel, weather, maps, people search, celebrity chats, a kid-friendly version called Yahooligans, and an online magazine by early 1998. It competed with search portals such as Excite, InfoSeek, and Lycos at the time to deliver everything on the internet in one spot.
Shannon Brayton, a senior manager in Yahoo’s corporate communications department from 1998 to 2001, says, “We didn’t want to name it a portal because a gateway is an entrance to somewhere else, and we wanted users to stay there.”
Yahoo made history along the way. It was the first portal to offer translated directories for major cities and the first to allow users to personalize their own versions of the site, according to David Shen, Yahoo’s original designer and later VP of user experience and design. Shen wrote his own book, Takeover!, on his nine years at Yahoo. Last August, I wrote The Inside Story of the Yahoo Ad Revolution.
Yahoo either pioneered many of the apps and services we now take for granted or they rapidly found a home there. Broadcast.com, which later evolved into Yahoo TV, existed before there was a YouTube. Flickr existed before Instagram. Yahoo Notebook existed before Evernote. Yahoo Music came before Spotify. and on it goes.
The fact that Yahoo invented the pay-per-click advertising model, which quickly spread throughout the internet, is more significant from a commercial perspective, according to Ring, who was working with Yahoo through an independent advertising agency at the time. The first click-through banner on Yahoo was an advertisement for MCI; Ring claims that in order to guarantee clicks, the word “naked” was inserted directly into the ad language.
Yahoo Music Was Where It All Began
Yahoo acquired Launchcast in 2001 and used it as the foundation for its own streaming music service. It used a freemium business strategy before there was a Spotify or Pandora. You could listen to up to 1,000 songs per month for free, or you could pay $4 a month for CD quality, no ads, and unlimited skips.
Yadling for money
According to Tom Parker, who worked at Yahoo from 1998 to 2004 as a copywriter and creative director, even though Yahoo didn’t technically create Silicon Valley culture, it quickly became the model for it.
He describes it as being “college-level casual.” David Filo wore no shoes. You could go to work in flip-flops and shorts. It was quite entrepreneurial, which has become rather cliched.
Ford Minton, senior art director from 1996 to 2001 and informal minister of culture, recalls that early staff frequently dozed off at their desks after having worked all night updating material or producing code.
According to Minton, Yahoos had a reputation for betting on whether the company’s stock price would rise or fall. One loser had his head shaved in front of the entire workforce, and other losers wound up getting tattoos of the business emblem on their posteriors.
He describes it as being very punk rock. We were really inventing the technology as we went. And everything began to spiral out of control.
For the general audience, Yahoo was the business with the amusing TV commercials and the well-known yodel. It had a ton of personality, which was really uncommon for technology companies in the 1990s.
People often overlook the fact that those early TV commercials were what really turned Yahoo into an overnight success as a global brand, claims Parker. “It was the yodel and the Do You Yahoo? slogan. People would start yodeling when they saw me at gatherings when I first started in 1998.
The yodel was created by San Francisco-based advertising firm Black Rocket for a run of TV commercials that began in March 1996.
According to John Yost, president of Black Rocket at the time, “there were at least 130 other search engines when we debuted Yahoo with a TV campaign on both coasts.” They were the first to go out and make a large-scale advertisement, but none of them had that humorous name.
Yahoo and the yodel become synonymous for many people. Yahoo set the Guinness World Record for Largest Simultaneous Yodel in November 2003. Yahoo Inc. set a new record in March 2015, when it celebrated its 20th anniversary.
“In 1998, when someone asked me what I did, I’d say I worked at Yahoo, and they’d go ‘Ya-HOOO-ooo,'” Brayton recalls. “They actually accomplished it. Karen Edwards, our CMO at the time, did an incredible job building a brand with a high level of awareness. People were curious as to who this strange corporation was.”
Broadcast.com was the start of it all at Yahoo.
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.
BY THAT MUCH, I MISSED IT.
The pleasant days were short-lived. The dot-com meltdown, which began in April 2000, cost Yahoo many of its advertising and nearly all of its worth. It never really got back on track. The squandered possibilities are now what people remember the most.
In 1998, Yahoo had the opportunity to pay $1 million to license an innovative new search technology developed by a pair of Stanford graduate students. Instead, David Filo persuaded Sergey Brin and Larry Page to do it alone and referred them to Michael Moritz of Sequoia Capital, one of Google’s first investors.
“That $1 million price tag was perhaps the best deal ever offered in the history of Silicon Valley, California, the United States, planet Earth, and the universe,” Ring writes.
Yahoo had a second chance to buy Google in 2002. This time, CEO Terry Semel made an offer of $3 billion for the company, but Page and Brin declined, reportedly demanding $5 billion.
But that isn’t Yahoo’s most well-known squandered chance. That happened in July 2006, when Yahoo attempted to buy Facebook for $1.1 billion, at the time a college-oriented network with about 7 million members. According to Internet lore, Mark Zuckerberg walked away from the purchase because Semel reduced the offer to $800 million due to a decline in Yahoo’s stock price. According to Peter Thiel, one of three members of Facebook’s board of directors at the time, Zuckerberg never contemplated selling the company.
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 splurges 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.”
It Started @ Yahoo: GeoCities
GeoCities, another 1999 acquisition, allowed millions of individuals to create their own websites, with results that were both viral and notoriously ugly. Squarespace and WordPress today allow you to create sites that are a thousand times more appealing, yet Yahoo destroyed GeoCities in 2009, and the web lost some of its essences.
FAILURE HAS MANY FATHERS
Everyone has a different perspective about why Yahoo collapsed, and they’re all probably correct to some extent.
Yahoo’s biggest blunder, according to Ring, was not allowing paid search advertisements to coexist with organic search results. For the first several years of its existence, search results were treated as editorial material that could not be tainted or diluted by advertisements. By the time Yahoo realized its error–and spent $1.6 billion for Overture, the firm that created paid search advertising–Google had already forged ahead.
Rather than fine-tuning Overture to compete with Google’s more complex system, Yahoo chose to construct its own ad platform from the ground up, according to Flake, who joined Yahoo as part of the Overture acquisition. The new platform, code-named Project Panama, took nearly three years to develop. The search wars were ended by then, and Google had triumphed.
Yahoo, on the other hand, has never really chosen what it wants to be when it grows up. Was it a technological firm? Is there a platform for search advertising? Is there a budding social network here?
Terry Semel, Yahoo’s second CEO, attempted to transform the company into a new media behemoth. Marissa Mayer, the business’s eighth and final CEO, sought to turn it into a mobile technology company. Neither company was willing to let up on Yahoo’s revenue-generating operations.
Yahoo’s demise, according to Parker, was its attempt to be everything to everyone.
“We were like Eratosthenes, who was known as Beta because he came in second place in everything he attempted,” he explains. “Yahoo was the company.” We had a few best-in-class core goods, such as mail, but the majority of our offerings were second-best.”
Ring believes that, under the right leadership, Yahoo could have turned into a hybrid of Google, Facebook, and Netflix. However, it lacked vision.
“Yahoo had a very restricted mindset,” he adds, “where we’d gather material, put it in front of our users, and call it a day.” “They controlled the globe, but they didn’t look up.”
It Started @ Yahoo: Flickr
Acquired by Yahoo a little over a year after its 2004 launch, Flickr was the first great way to share photos on the net. But after cofounders Caterina Fake and Stewart Butterfield departed, their brainchild languished, giving Instagram the opportunity to be the defining photo-sharing service of the mobile age.
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.
Many ex-Yahoos claims to still “bleed purple” today. They still have a strong attachment to Yahoo that was, as well as a yearning for Yahoo that could have been.
Mimi Lyons, one of the first surfers who joined in November 1995 and stayed for seven years, says, “The whole experience feels sacred to me.” “It’s something that suddenly appeared out of nowhere.” We were fortunate to have the most fantastic folks at the right place at the right moment. “Those memories, as well as the people who were there, are still important to me.”
Perhaps that’s something worth yodeling about.