ColdFusion - The Rise and Fall of Yahoo!

Starting point is 00:00:00 You are watching Cold Fusion TV. Hi, welcome to another Cold Fusion video. Before we get started on today's topic, I'd just like to say that if you subscribe to this channel and you haven't hit that little bell button, it'll be cool if you could do that because it seems like a lot of people haven't actually been getting notifications for when I've uploaded new videos. So when you hit that bell button, it makes sure that you get the notifications. So cheers. All right, cool. So today we're going to be having a look at the right. and fall of Yahoo. Looking back now, it's hard to believe that at one stage Yahoo was worth over $100 billion. Today they're just a shell of their former selves. Verizon, an American

Starting point is 00:00:45 communications company, is now buying Yahoo for $4.8 billion, a fraction of that $100 billion that was once worth. It was a huge company, but for me personally, in my mind, it was never really a strong brand, and never really knew where they fit in in the tech space. As you'll see in the end, this is partly what caused the downfall. So what's the story here? How did Yahoo start and where did it all go wrong? Yahoo.com was founded in 1994 by two Stanford graduates, Jerry Yang and David Philo. Does he did a lot of fun, discovery, finding information, you know, that's what Yahoo's all about. It's fairly unimpressive as far as the space is concerned. Most people think it's going to be a huge space with all kinds of computers, but maybe 10 computers that are doing all the work here.

Starting point is 00:01:32 Today we're adding between 500 and 1,000 sites today. rapid expansion, this catch you guys by surprise while you were at Stanford? Well, we certainly never, and we never thought we'd be at this point. When you find in these sites, how do you decide if one is cool? If we find something, as we're adding these, that really catches our eye and it's interesting, we think that other people will think it's really interesting, then we designate that as what's cool. Yahoo was to act as a portal to the internet at a time when it was still just a mess of unorganized

Starting point is 00:02:03 websites and information. time, there were very few meaningful ways to quickly browse for what you wanted to see. The company went public in 1996 and by 1997, they were ranked second in terms of internet traffic, behind AOL, of course. In 1998, Yahoo was approached by two young Stanford PhD students. Their names were Larry Page and Sergey Brin. The pair had just created PageRank, a search engine algorithm and a quick way to get relevant information on the internet. The Stanford students were asking $1 million for their algorithm. Yahoo said no, as they thought that it would take users away from their main website while decreasing traffic and ad revenue. The page rank

Starting point is 00:02:44 algorithm would eventually become Google. Around this time, in the late 1990s, the internet was all the rage. It was seen as a new economy, a disruptive magical concept that could transform the entire planet. This notion was preemptive and overhyped, but there was still a fever pitch of investment. People were throwing their money at any company with a dot-com at the end of their name, even if they didn't have a plan of making revenue. It was ridiculous. This incredible disruption of the social fabric

Starting point is 00:03:16 where there's no concept of old money and new money. There's just, you know, who's the billionaire of the week? Wall Street places a lot of value on these hypergrowth companies that aren't yet making a profit because they get it. The people who get it are saying, luck. Here are companies that are growing more rapidly than ever was possible before. It's possible that this is, like the Great Gold Landrush,

Starting point is 00:03:35 you know, they're staking a claim. Here are companies like, like Amazon, like Yahoo, like others, who are running out there and locking up as much real estate as they can. The financial markets are pouring money into these companies, and they're grabbing as much as they can grab. All bets are off with respect to the old second wave economy. I've got to be here. I've got to be part of changing this world because if I don't, I'm going to look back when I'm 65 years old and I'm going to say, where the hell was I? It gives you Microsoft technology and speeds of up to 56K for fast, reliable connections to the things that interest you most.

Starting point is 00:04:10 The problem at the time was the technology just wasn't good enough yet, meaning that nobody was delivering on all these grand promises of infinite growth and technological revolution. Eventually, investors caught onto the Ponzi scheme and the party came to an end in the year 2000. The majority of tech stocks were sold in a panic as everyone tried to rush out the door. All the tech companies were hit badly, but Yahoo, Google and a few others survived through the storm. Yahoo didn't escape with some immense damage though. Their stock price went from over $118 to just $4.6. In 2002, Yahoo was still the most visited site on the internet, but it loses to Google

Starting point is 00:05:08 in a big way in terms of search. In 2005, the company bought a 40% stake in the emerging online retail company, Alibaba. The remainder of these holdings now worth $30 billion make up the majority of Yahoo's market capitalization today. In this year, they would also purchase the photo sharing site Flickr. One year later, the company was turned down by a 22-year-old Mark Zuckerberg. Yahoo offered to buy Facebook for $1 billion, but Zuckerberg declined. According to some sources, if the offer was $1.1 billion, Facebook's board would have forced

Starting point is 00:05:44 Zuckerberg to take it, and the world may have been in a very different place. In 2008, Microsoft offers $44 billion to buy Yahoo. They laughed it off saying that it didn't highlight the value of the company. They'd soon wish they did accept because this was the highest offer they would ever receive. After a slow, steady decline, former Google executive Marissa Mayer comes on board in 2012 and Yahoo begins to heavily invest in mobile and update the brand's look and feel. Two years later, they acquire Tumblr. All of this didn't work.

Starting point is 00:06:15 By 2016, the company was suffering a $4.4 billion loss and was absolutely bleeding money. At the end of 2016, Verizon buys out Yahoo for $4.8 billion. That's about 1% of what Microsoft was willing to pay. In the course of its lifetime, Yahoo had bought 114 companies. None of them turned into a hit which could save the company. Okay, so that's the timeline of what happened, but let's look a little deeper. Where did it all go wrong? To answer that, we have to start by rewinding back to the times just after the dot-com crash.

Starting point is 00:06:53 this time and in the next few years, web portals started to become more irrelevant as web users tended to search Google for what they wanted and then venture on into individual sites. After this, eventually, Yahoo just got left behind in all areas of business by companies that just did it better. For example, Yahoo's mail service got overtaken by Gmail and hotmail. Yahoo Messenger got invalid by WhatsApp, WeChat and Facebook Messenger. Instead of getting their news from web portal sites, people began to go to social media to get their news, mainly Facebook, Twitter, dedicated news websites, and even YouTube. By 2010, Yahoo had been chipped away from every angle until there was very little left.

Starting point is 00:07:38 And here's the clincher for where it all fell apart. As users drifted away from Yahoo's services, so did the ad revenue and company profits. It was a complete disaster and nobody knew what to do. This is highlighted by the fact that the company went to do. through four CEOs in six years. Unfortunately, this was at a time when the company needed solid leadership the most. To make things worse, investors were getting very anxious and called for more change to fix the problem. This created even more instability in upper management, turning the whole thing into a vicious cycle, a feedback loop. It was a flaming sinking ship and all the captains

Starting point is 00:08:14 were already rowing away in their lifeboats. During its later years, if there was any chance of Yahoo surviving, it would have been through Marissa Meyer. The main issue was that she was just not a good CEO. She wasn't a leader. Marissa just couldn't decide which direction to take the company and even the multi-billion dollar Alibaba stake was left sitting there. Nothing was done with it. Being a CEO is by no means an easy thing, but this particular situation just goes to show that if you're going to take on the top job, indecision should be avoided at all costs. In the end, the story of Yahoo shows that a lack of focus, inability to change and a lack of company direction can be fatal. In Yahoo's case, cutting some of the excess fat in their operations and actively reacting to the changing internet landscape around them, could have saved them. By staying so stagnant and so vague, Yahoo lost everything.

Starting point is 00:09:10 As for the future, not a lot is known, but we have to see what Verizon does with the remnants of Yahoo. On the bright side, if there's one good thing that Yahoo has left us with, it's Yahoo answers. Am I pregnant? Am I pregnant? Am I pregnant? Am I gregnant? Am I pegnate? Help? Is there possibly that I'm pegrant? Am I pregnant? Am I pregnant or am I okay? Could I be pregonate? How do I know if I'm Prengan? Can you get pregnant? Alright, so that's what we'll leave it today. Thanks for watching. Don't forget to subscribe to this channel if you're new. Give this video a thumbs up if you liked it. Anyway, this has been Degogo. You've been watching Cold Fusion, and I'll catch you again soon for the next video.

Starting point is 00:09:53 Cheers, have a good one. Cold Fusion, it's new thinking.

ColdFusion - The Rise and Fall of Yahoo!

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.