What Went Wrong With Yahoo you ask? The whole internet is flooded with news of Yahoo’s sale to Verizon for $4.8 billion ending a process of endless bidding. The news might not be as shocking to many who were unaware of Yahoo in the first place. I used to have Yahoo as my homepage when Yahoo used to be a major player in the world of internet. But that was a decade ago and the price being paid today (By Verizon) for it is a bargain for what Yahoo was worth. The Y2k kids hardly used Yahoo ever. People like us, learned to chat on the internet using Yahoo messenger (a/s/l please?). The news media and Tech Bloggers responded in a variety of ways around the globe. It also sparked insecurities amongst its employees at all levels because they were not sure if they will be part of the company any longer or not. However, some people have set high hopes for Yahoo. Following the sale, it might now be able to find the right direction (finally) and may prosper in the future. It is too soon to say anything as yet because the sale just happened and its impact cannot be seen before we give them a couple of years. Yahoo already lagged far behind its rivals. It might take Verizon years to bring it to a level playing field, to compete with others in the market. Tech is an unpredictable space and continuously evolving. If the market expands and the rivals move further on Yahoo’s turf, then it might be more difficult for the new owners of Yahoo to bring it back on track. So what seems more likely to be the future of Yahoo cannot be decided as yet.
So, The Big Question “What Went Wrong With Yahoo?” What didn’t work out??
Before we penetrate deeper into the future of Yahoo, we need to look into its past. A lot of the planning and execution of its policies within the company has that led to its current fate. The mistakes of the past can be a teacher for not only Yahoo but also for many others. It could be dubbed as a case study for other Tech companies. Keep doing what is working and avoid the ones which are not. Yes, there are no single answers to what went wrong with Yahoo rather there are some possible explanations for this question. Its failure could range from strategic reasons to product ideas and cultural issues. I am no expert, But I can certainly try to highlight the main causes behind Yahoo’s current circumstances. Here are some of my perspectives:
Too Much Focus on Products That Did Not Deliver
The ambition, determination, hard work, and teamwork are some of the key tenets to success for a company. However if these principles are employed in the wrong direction, then it might lead to some problems. A similar situation happened in the case of Yahoo when it focused far too much time towards Panama which was the competitor of “Google Adwords” and Search in general. This long and stagnant focus did not help the company earn much. Rather they had to lose out to Google and finally outsource it’s search business to Microsoft back in 2009. If the center of focus is not clearly defined or it is not wisely chosen, then it is more than likely that you could face unfavorable circumstances like Yahoo.
Lack of Focus
Yahoo missed out a lot of lucrative opportunities primarily due to lack of focus. If you have multiple centers that keep on changing regularly, then you are more likely to make a mess out of everything. Unfortunately, Yahoo made the same mistake as it did before. No single point of focus which made its ambitions vague. Turning down to buy google for $1 million in 1998. Later, Yahoo CEO Jerry Yang had offered to buy Google for roughly $3 billion, But Google was not interested anymore.
The Development of Smartphones Apps
Smartphones and other gadgets like tablets just ended the culture of desktop computers (Post-PC Era) which was a key contributor to the development of unfavorable circumstances for Yahoo. Smartphone users mostly use and love Facebook (Including WhatsApp) and Google services whereas Yahoo failed to launch its successful smartphone apps or any other social products. So, even the most loyal users moved and diverted its interests towards its rivals. Yahoo itself became too bloated, and no one wanted to use the products or its web properties. Yahoo simply was not being able to keep up with its competitors.
Wrong Investment Focus
Yahoo invested by buying Flickr for $35 million in January 2005. But it let Flickr loose its steam and eventually lost users and market share. Buying Flickr was a bargain if we keep in mind the importance of photographs on social media today. If they would have directed the application towards the right path, then it could have had the potential of leaving Facebook or Instagram behind. But sadly enough they invested in it but lost its potential and lagged way behind as far as social media is concerned.
Making the Wrong Choices
It failed to acquire Google and Facebook even though it had great opportunities to buy both when it was vividly clear that both these companies are going to be hugely successful in the future and it would not have to pay much for them still it missed the golden chances. For example, in the case of Facebook the deal was being closed at around $100 million but then Yahoo’s ratings came out, and the prices came down to $80 million. Just for the sake of not bringing the price at the first level, Yahoo canceled the deal, and today we can see who made this huge mistake. Thus, it is necessary to avail opportunities when you can.
Many blame the last CEO of Yahoo Marissa Mayer was the main reason behind the failure of the company. However, it is not correct because she tried to take responsibility of a difficult job and somehow made it even tougher. She is not the only one to blame rather it is the last few leaders who were frequently changed and in the process, lost a proper vision or path for the company to follow.
Before Yahoo, the Internet was a government research project. Yahoo CEO, Merissa Mayer
Acceptance of Lower Quality Employees
Though highly debatable and subjective, Many insiders felt that the firm recruited a lot of inefficient workers at critical positions which affected the decision-making process. It eventually became one of the reasons for its failure.
To conclude, several reasons slowly paved the way for Yahoo’s failure as the company failed to keep track with its competitors. As a loyal old-time user, I would want Yahoo to make a strong comeback as much as I want Nokia to come back to smartphones. I guess time will tell.