Failure of Yahoo!: A Billion Dollar Mistake and A Major Life Lesson

Yahoo! is done, after years of struggle in the online world, it marks its exit.

Yahoo! was among the first ever search engines on the internet. It was an online sensation back in the day when the people came to know how internet works. As a media company, it spread into the market among the masses. With over various purchases around 1995-2001, it single-handedly put it together a multipurpose website gaining high popularity. Yahoo! Broadcast was purchased by the company for around 6 billion dollars with was quite similar to present day’s YouTube. Before there was Gaana or Spotify, there was Yahoo! Music that let people listen to the songs at low prices.

Among the first online website that introduced the world with modern e-mailing was Yahoo! Mail. The organization was at the growing stage with proper advertising that was responsible for its popularity among the other competitors. As a result, Yahoo! had the opportunity of putting together an organization similar to the combination of Google, Netflix and YouTube. The search engine with a cheeky name was once the ruler of the online world.  

However, it’s the end of the company and the failure of the foundation it has set over the years. What makes a company grow is the vision, seeking the opportunities and grasping them. Over the course of time, Yahoo! was facing failure in grabbing the right opportunity at the right time. The arising opportunities were at the doorstep waiting for the approval. Nevertheless, the chances went wrong due to the lack of vision and strategy.

Lost Opportunities of Yahoo!

Yahoo! climbed a ladder to success but failed to stay there. As a famous saying goes “Consistence is the key”. This case was somewhat similar to Yahoo. However, it was the consistent decline in the effective decisions and development. News, Finance, Mail, Music, you name it and Yahoo had it all.

Yahoo! is among the major inspirations of the Silicon Valley work culture. Employees could show up in shorts and t-shirts to work and develop the codes. Many of them would sleep in the office hours and work overnight. The introduction to the casual work culture was done by the internet giant way back in the day. However, none of it could help in overturning the failure. The downfall of the company was the result constant mistakes and missing of opportunities.

Declining to Buy Google at just 1 Million Dollars

Larry Page and Sergey Brin

In 1998, Sergey Brin and Larry Page approached Yahoo! to initiate an innovative search engine. The Stanford College Graduates were developing a new technology and were ready to sell it to Yahoo. They were willing to work with the biggest website and offer a price of 1 Million Dollars for the inventive tech. However, David Filo declined to purchase the idea and convinced them to stand out on their own and introduced them to Michael Moritz, the earliest investor. Google was the result of the invention of these grad students.

Though, David Filo was the motivation behind the now-billion-dollar company, one of the biggest competitors of Yahoo! would’ve been off the market. 1 Million Dollars might have been the best deal in the history of Earth for a company like Google. Nonetheless, Yahoo! was lacking vision and ideology. Later, after the establishment of Google, Yahoo! was willing to acquire the company for 3 Billion Dollars. Page and Brin were demanding 5 Billion Dollars. As a result, Yahoo! stepped back once again from buying Google.  

Failure in Buying Facebook

Mark Zuckerberg in early days of Facebook

Dismissing Google twice was also not the biggest opportunity Yahoo! lost. In July 2006, Yahoo was placing an offer to attain Facebook. Before the popular household name, Facebook was just a college-oriented social website with roughly 7 million members. The first offer by Yahoo was for 1.1 Billion Dollars which almost confirmed the partnership. However, the deal came to an end with Mark Zuckerberg walking away when Terry Semel cut the offer to $800 million. Yahoo had a clear chance of purchasing what is now one of the biggest companies in the world. According to Peter Thiel, Zuckerberg was never seriously considering selling the company.

Frequent Server Crashes in 2001

Constant Server Crashes

With the increasing competition in the internet world, the quality of Yahoo! kept declining constantly. Google, Bing and several other search engines were emerging while Yahoo was still massive. Nevertheless, the servers of Yahoo kept crashing constantly in the peak of time. In 2001, there were several disturbances among the users as the work was carrying on slower. E-mails were not delivering on time and this was the reason behind the users quitting. Members of Yahoo community were disconnecting due to these problems. These errors were also beneficial for Google as a search engine as the users were considering another search engine with better interface and efficiency.    

Promoting itself as a Media Company

Promoting itself as a Media Company

Yahoo! was the first website to introduce the users with e-mail technology. However, it was also among the most entertaining websites on the internet. The latest news, viral videos and attention grabbing headlines did manage the traffic to increase. With Broadcast and Music, Yahoo! had the upper hand over all the other websites. With the aim to grow as the biggest media company, it stubbornly spread itself as one. Nevertheless, it kept ignoring the technical improvements and latest innovations in the website. The regular news updates and viral articles with cheeky headlines were not enough to hold the viewers as the interface kept failing and the newer technology was lacking in the search engines.

Refusing Paid Search Ads with the Organic Search Results

Refusal of Paid Search Ads

One of the major reasons for the shutdown of the company was the losses it was facing. Yahoo! over the years have been refusing the paid ads to co-exist with the organic searches. This was one of the biggest mistakes by the company that ultimately led to its downfall. The belief was that the profits could be earned by the viewer traffic which in-turn led to a loss. For the first few years, it kept refusing the possibility of making money by advertising and increase its revenue. Ultimately, Yahoo realized its mistake and acquired Overture, the company that invented paid search advertising for $1.6 billion. However, it was too late as Google already stood on top of the market.

Dismissing Marissa Mayer as the CEO

Marissa Mayer

According to the employees at Yahoo, Marissa Mayer was one of the only CEOs who had the “strategic vision”. Some of the higher authorities at Yahoo also kept mentioning how Marissa Mayer alone transformed the company which resulted in survival of the company for a few more years. Marissa Mayer was planning and developing to launch a mobile application of Yahoo. Also, she was preparing a set of most innovative plans over the years to prevent the elimination of the company. However, Yahoo has never been famous for making good decisions. Trouble soon began for the organization when Marissa Mayer was dismissed as the CEO of the company in 2017. The never-ending defeat was the result of lacking a visionary leader in power. As a result, it failed to rise in the market once again.

Rejecting Microsoft’s offer at 44.6 billion in 2008

Microsoft

There were several big mistakes and lost opportunities that Yahoo failed to notice. However, the final nail in the coffin was refusing the offer of Microsoft round-the-clock. The biggest company in the world was planning to save Yahoo! and make the best out of it. Microsoft was continuously approaching Yahoo to purchase the company. In 2005, 2006, 2007, Yahoo had already rejected it multiple times for 30-40 Billion Dollar Deal. Nevertheless, Microsoft’s final offer of 44.6 Billion Dollar was made to Yahoo which was eventually declined. As a result, the company kept failing later in the market due to losses.

Later, Yahoo was sold to a company called “Verizon” at 4.6 Billion Dollars. The website is dead, all the content is being deleted and the mails are being cleared. Verizon has plans to re-launch Yahoo as “Altaba”.

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