Did you know that Yahoo was once worth an equivalent of $100billion (Ksh10 Trillion)? Yahoo was initially the front page of the internet much like Google is today. The company’s fall from grace can be attributed to several mistakes made by the board and management of the company.
Among the missteps Yahoo made was its refusal to acquire Google in 2002. At this time Larry Page and Sergey Brin had decided to sell Google for $1billion. Yahoo turned down the offer and came back only to find the two had upped their offer to $3billion. Yahoo failed to see the potential search held as an important part of the internet business.
Yahoo bought Flickr, a photo sharing site in 2005. This was before the massive success of Facebook, Instagram and Google photos. The company mismanaged the service and ended up being overtaken by Facebook and other social sites. The company has mismanaged other products like Geocities, Delicious, and Tumblr after overestimating their worth and potential before buying them.
Mark Zuckerberg declined a $1billion acquisition offer from Yahoo in 2006, two years after the start of Facebook.However, reports suggest that the board could have forced Mark to sell off the company had the offer been increased to $1.1billion. The then Yahoo CEO Semel declined to increase the offer which led to yahoo missing out on the social media boom.
The biggest blunder made by Yahoo was rejecting a $44billion takeover bid by Microsoft in 2008. The then Microsoft CEO Steve Ballmer tried his best to convince Yahoo to sell. Yahoo’s board refused the offer stating that the offer was too low. At $44billion the deal would have gone down in history as the largest tech company buyout. During this time, Yahoo was struggling to craft a search engine, efforts that were abandoned the next year in favor of Microsoft’s Bing.
Good leadership is also key to any organization. It is strong leaders that have reversed the fortunes of major tech companies. A good Example would be Apple’s Steve Jobs or Microsoft’s Satya Nadella who turned around the fortunes of their respective companies. Yahoo failed to recruit well-performing CEOs which did little to bolster investor confidence in the tech company. Semel himself was known as one of worst tech executives. Another was Scott Thompson who resigned amid claims that he lied on his CV.
Yahoo’s fall was compounded by the resignation of Yahoo co-founder Jerry Yang in 2012. This was to enable him “pursue other interests outside of Yahoo”. This left the company without a founding figurehead, unlike other big tech companies that enjoy the vision and driving force of the founders. An example is Facebook’s Mark Zuckerberg and SpaceX’s Elon Musk among many others.
The appointment of Marissa Mayer, a former Google executive failed to produce the turnaround for the giant tech company. Even though Mayer acquired social-blogging site Tumblr, hired a team of high-profile journalists and changed the working culture, Yahoo’s profits continued to tumble. This led to a strategic decision to hive off the company’s profit-making arm of the business, a 40% percent stake in Alibaba Group into a different business to be named Atlaba after a proposed sale of Yahoo to Verizon mid this year.
Yahoo has also lacked a clear objective in its business. The company has posted 24 company descriptions in its 21 years of existence. These descriptions range from being a tech company to a media giant. Yahoo has not had a steady vision nor clear long-term goals to work with.
Of the many mistakes made by Yahoo, not building its own search engine must rank at the top. This denied the company the opportunity to benefit from the internet boom dubbed as web 2.0 which other companies like Google and Facebook heavily capitalized on.