10 ms·

What Happened to Yahoo

688 points by yagibear 16y ago

tptacek 16y ago
Summing up: * The Innovator's Dilemma, and * Mistaking a key driver of innovation and growth (software development) for a cost center.
justlearning 16y ago
"But they had the most opaque obstacle in the world between them and the truth: money." rings true for humans too.
wilschroter 16y ago
I think there's something to be said for focusing on what the market rewards, and clearly the market wasn't rewarding yahoo for having great technology in 1998. Nor did it reward Google for having great enterprise search. You can't fault Jerry and David for not seeing search when the market had clearly supported banners with no basis for search as a viable model yet.
- paul 16y ago
  When did Google have great enterprise search?
  - seregine 16y ago
    I remember trying a Google intranet search "appliance" around 2003 and it was way better than the previous (homebrew?) intranet search we had.
- ams6110 16y ago
  In 1998 the market was rewarding any and all comers with "dot-com" in their name, based on that and little else. It probably didn't matter much at all what Yahoo was doing or how they thought of themselves: they were one of the best-known .com companies at the time and that's all that really mattered. Speaking as a veteran of a .com that had $30MM of venture money literally handed to them in 1999 for a concept. No customers, no proven ability to implement the concept, no management that had ever attempted anything like it, etc. The money was gone in a little over a year, frittered away on lavish offices, a huge support organization (for no customers!), massively overbuilt technology infrastructure using the most expensive Sun servers, Cisco networking gear, triple-redundant everything. Very few tech companies, customers, or investors in that era had any real idea of what they were doing.
- jeromec 16y ago
  You can't fault Jerry and David for not seeing search when the market had clearly supported banners with no basis for search as a viable model yet. I disagree. Where were those banners shown? Search results pages. The reason people went to Yahoo! was to find stuff. That's the reason Yahoo! became Yahoo in the first place. The Yahoo founders made an invisible, scatterbrained web accessible by giving some sort of list index to it. Google later improved the sorting of the index, but Yahoo was first to build a large, searchable index.
evanjacobs 16y ago
"The worst problem was that they hired bad programmers." Can you provide any specific examples of how bad programmers hurt Yahoo?
- jrockway 16y ago
  Bad programmers wrote a bad search engine, and Yahoo lost all their traffic to the good search engine?
  - strlen 16y ago
    > Bad programmers wrote a bad search engine, and Yahoo lost all their traffic to the good search engine? Yahoo didn't have their own search technology, until acquisition of Inktomi in 2003 (they used Inktomi to serve their results prior to using Google, whom they used until ~2004). Correct way to put it is "they didn't hire enough good programmers to build a search engine". A web search engine isn't something bad programmers can build. They acquired a great search engine (the algorithms were, IMO, better than Google's and more immune to gaming, they were a first distributed search engine paving the way for Google's "cluster of commodity hardware" architecture [1]), but it came too late. [1] See http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.83.4274&rep=rep1&type=pdf http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.83.... for what I mean by "paved the way". Their mistake was using Solaris on SPARC (appropriate choice in 1996) for a few years too long (Google started on Linux/x86 right away, Inktomi transitioned by the time of Yahoo's acquisition).
    - btilly 16y ago
      More than that, Yahoo's deliberate strategy at the beginning was to not build their own search engine, but just to buy the services of whatever was best out there. At one point that was Alta Vista. Later it was Inktomi. After all search was a well-studied problem, and they thought it was pretty much solved. So why put a lot of energy into building expertise in how to build what they thought would be a commodity. Then Google demonstrated that search was not a solved problem, search was not a commodity, and it was too late.
msort 16y ago
How about the 3rd universal factor: growing too big too soon?
strlen 16y ago
> " You can get programmers who would never have come to you as employees by buying their startups. But so far the only companies smart enough to do this are companies smart enough not to need to." Yahoo did do this through the Inktomi (Yahoo Search, 2003-2010) acquisition. I've worked in that organization and learned a tremendous amount from the people. At that time the hiring bar had been considerably raised from what Graham describes (I have no idea whether that was the rule or the exception at that time, I was there 8 years later), nobody was shy of rejecting weak candidates. Much of the knowledge did diffuse to rest of the organization and it's important to note that along side the "dot-com-wannabe-millionaire-vesting-in-peace" crowd the essay describes, there was plenty of genuine technical talent (anyone who has worked there can attest to presence and influence of hackers). Unfortunately, for many reasons, that talent has slowly bled out. There was also a great amount of friction between Search and rest of the organization e.g., resistance (by Search engineers) to dog-fooding of what was often inferior technology. Search was, however, able to maintain a different platform, remaining on Linux, with their own platform/software stack, but were some "wtf" moments like porting and forcing the adoption of a custom user space locking library from FreeBSD when Linux already had futex (on the other hand, the fact there was a custom locking library built in a "media company" does say something). The other key mistake made is that they would position bright, capable new hires in areas that weren't directly correlated to revenue and treated as cost centers. That just seemed highly illogical to me. It's a mistake that's often difficult to fix: once young graduates are used to working on glamorous projects, it's much harder to get them to work on more mundane, but revenue critical projects such as advertiser systems. Google's strategy of a uniformly high hiring bar (vs. some teams hiring people other teams rejected for roles involving the same skill-set) and assigning hires to business priority projects (while allowing individuals to transfer if the project wasn't their cup of tea, with proper incentives in place for some projects) seems to be (at least from an outside point of view, I've never worked at Google) better.
- blantonl 16y ago
  Unfortunately, for many reasons, that talent has slowly bled out This reverts back to the original article. Poor strategic leadership.
maxklein 16y ago
I really don't get these Yahoo is dead stories. It's still the biggest site in the world if all it's properties are put together.
- iamwil 16y ago
  When pg says something is dead, he doesn't mean it from a current revenue or size point of view.
  - randallsquared 16y ago
    When pg says something is dead, he doesn't mean it [...] We got that. :)
- bdr 16y ago
  Read Microsoft is Dead: http://www.paulgraham.com/microsoft.html http://www.paulgraham.com/microsoft.html
- edash 16y ago
  http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1281573170623&chddm=589628&chls=IntervalBasedLine&cmpto=NASDAQ:YHOO&cmptdms=0&q=NASDAQ:GOOG&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... Saying "Yahoo is dead" (pg didn't, btw) is a sensationalist way of saying "Yahoo is in a slow, steady decline." To predict this, look at the leading indicators: - new products - strategic acquisitions - flow of talent - company morale - growth relative to competition - positions in key emerging markets Yahoo seems to be struggling in all these areas. Also, using "biggest site" as a metric is one of the problems with Yahoo that pg mentions in this article.
  - elblanco 16y ago
    It probably doesn't hurt to look at one of Yahoo's contemporaries along the same metrics, AOL.
    - 16y ago
sliverstorm 16y ago
As far as I was concerned (admittedly I was still a kid at the time), all that mattered was the Yahoo homepage was garish and full of ads, and the results were hard to sift through (because they were full of 'sponsored links' and the page was equally garish). Google was the antithesis of all that, and that's why I used, liked, and rooted for Google.
- forgottenpaswrd 16y ago
  That's exactly what I felt. Google respects me(no flashing ads), I respect Google. I was a kid too when I used Altavista, it was a great search tool back in the day... until they fckd it totally. I had seen it happen with other services like ftpsearch(you know the name of a file, you got it instantly). When I saw the first Ad blinking on my face(Altavista put suits on place, "monetizing stuff") I discovered reading on searchlores "Google": It was so easy and powerful and NO annoying ads!! I couldn't believe it, and expected it to surrender to the MBAs forces soon as the other had. But they got money to buy some freedom.
- JustinSeriously 16y ago
  I went through the same thing with Infoseek. They used to be a fantastic search engine, with a full suite of boolean operators and everything. Then they become the Go Network, and their simple homepage was turned into crowded portal. Half the reason I eventually switched to Google was because of their anti-portal philosophy.
bdr 16y ago
Don't miss the allusion ("Theirs was not to reason why") to the poem The Charge Of The Light Brigade. Into the Valley rode the 500. Very funny.
drawkbox 16y ago
How Software Companies Die: http://www.zoion.com/~erlkonig/writings/programmer-beekeeping.html http://www.zoion.com/~erlkonig/writings/programmer-beekeepin...
PanMan 16y ago
I heared that when one of the large investment banks (forgot which one) got a new CEO, the first thing he did was stopping all IT outsourcing projects. He did realize a modern bank is, in fact, a software company, and you shouldn't outsource your core activity.
- csmeder 16y ago
  wow, a smart CEO
- Nwallins 16y ago
  Sounds like Jamie Dimon, of JP Morgan Chase. He ended a multi-billion IT outsourcing deal with IBM in 2004: http://www.informationweek.com/news/global-cio/outsourcing/showArticle.jhtml?articleID=47208515 http://www.informationweek.com/news/global-cio/outsourcing/s...
- mediaman 16y ago
  I believe you're referring to Jamie Dimon, now of JPMorgan Chase, who canceled a $5bn IBM IT outsourcing contract because he believed that technology was a core competency of a modern bank.
  - ivenkys 16y ago
    Yes - he did cancel the Billion Dollar contract but not because I.T suddenly became a core competency. Non-front office facing I.T is being pushed to cheaper locations - primarily to Scotland and Southampton in the UK and is not considered a Core Competency , its outsourcing in a different form , its called IN-Sourcing. The primary reason for the cancellation of the contract was the sheer amount of beauracracy IBM imposed. Their modus-operandi was - pick up staff who were working in "non-critical" areas and make them report to IBM managers. So now all-of a sudden if i need to get something from our DBA i can't walk upto him and ask him , i need to raise a request in a god-awful system which goes to his manager who would be sitting in a remote location in a different time-zone "managing" the work-load of the DBA who sits 5 feet away from me. In the majority of the cases for access to sysadmins and DBA's who were an integral part of your team before you now had to go through this route. I will leave the readers to draw their own conclusions to this marvellous scheme.
Alex3917 16y ago
"It's probably too much to hope any company could avoid being damaged by depending on a bogus source of revenue. But startups can learn an important lesson from [the fact that] in the software business, you can't afford not to have a hacker-centric culture." I think Yahoo made the correct decision on both counts. As far as depending on a bogus source of revenue, all new advertising mediums are massively undervalued at first, then massively overvalued, and then only eventually even out. It would be a huge mistake not to plan your entire business model around this cycle. Yahoo did this, and they made literally billions of dollars because of it. Sure, if they had chosen to go into a different sort of business they could have perhaps extended their reign, but it's hard to argue that they made the wrong choice. As for not having a hacker-centric culture, I think they made the right choice here as well. Every time Yahoo bought a startup, their stock rose more than they paid for the company, meaning every time they acquired their tech through a buyout the execs took home massive paychecks. Whereas every dollar they spent on elite programmers was money out of their pocket. I think the lesson here, if anything, is that you can make mostly the right decisions and your business can still decline over time. Incidentally, I heard a great story about one of the Yahoo sales guys. Apparently he bought his own inventory at the end of every month to meet his quota, because the stock he was getting vested was worth more than the 100K or so he was required to fork over each month. (Because he obviously couldn't actually make any sales.)
cletus 16y ago
Yahoo went bad because: 1. It has no notable engineering foundation; 2. It has no clear vision about what it is and where it's going; and 3. Like Microsoft, it's put a business person in charge, which is the death knell of any tech company. You need someone with a technical foundation or a product person, not a business wonk.
- werrett 16y ago
  Yahoo went bad because a business person was put in charge? From my point of view I would say that is generally the rule rather the exception. Particularly for those firms wanting to go public. I'm going to defer to mixmax's quip about putting a gardner in charge of a gardening firm's finances [1] as the alternative. You can't argue Jobs or Schmidt are not business people. Although Schmidt could be used to either refute or backup your point depending on how you feel about Google these days. [1] http://news.ycombinator.com/item?id=1596850 http://news.ycombinator.com/item?id=1596850
  - philwelch 16y ago
    Schmidt has a technical background though. Among other things he was the co-author of lex.
- forgottenpaswrd 16y ago
  You need to put a business person in place, who also has a technical background(look at Steve Jobs, although he is not a techie, he worked from day one with technical people and understand them).
  - cletus 16y ago
    Steve is the ultimate product guy. Agree with him or not, agree with his vision or not, he clearly has a vision for Apple and its products. The same can't be said for Carol Bartz or Steve Ballmer. Those are the people you want in the room when you're organizing an M&A deal, not when creating consumer oriented products.
gojomo 16y ago
PG: "But [Yahoo] had the most opaque obstacle in the world between them and the truth: money." Sounds like yet another variant of Upton Sinclair's Law: "When a man's paycheck depends on his not understanding something, you can depend upon his not understanding it."
- portman 16y ago
  The actual quote, from I, Candidate for Governor: And How I Got Licked: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." A terrific read. http://www.amazon.com/dp/0520081986 http://www.amazon.com/dp/0520081986
mrshoe 16y ago
Apple is very conspicuously absent from this article. ...the kind of single-minded, almost obnoxiously elitist focus on hiring the smartest people that the big winners have had. Is Apple a big winner, like Google, Microsoft, and Facebook (the other companies he mentions repeatedly)? Bigger. (Check the last 1, 5 or 10 years on Google finance for the GOOG or MSFT comparison. FB is not public, but...) Do they have this obnoxiously elitist focus? No. They still manage to hire great engineers, though. So which companies need to have a hacker-centric culture?... any company that needs to have good software. I wouldn't say that Apple is dominated by a hacker culture at all. It's dominated by Steve Jobs and a focus on design and attention to detail. Yet that seems to produce much better software than Google or Microsoft, IMHO. That's very subjective, I realize, but the market seems to agree. At any rate, Apple does produce good software. So are the hacker culture and the elitist focus really necessary for a technology company to succeed? Is Apple a complete anomaly while Google, Microsoft, and Facebook are typical? What say you, pg? I realize it's borderline suicidal to post an HN comment that simultaneously calls out pg and lauds Apple, but it's criminal to completely leave the best (imho) technology company out of a discussion about attributes of great technology companies.
- pbhjpbhj 16y ago
  >Apple is very conspicuously absent from this article. The article is about Yahoo and in a round about way the move of internet marketing focus from 90s banner advertising to search marketing in 00s. I didn't find Apple Computers Inc. (as it was) to be missing, indeed I'm kinda at a loss where you think Apple fit in to this article. There are already plenty of articles about Apple.
  - _delirium 16y ago
    I think the implication was that Apple is a counterexample--- a company that does things basically the opposite of Google, and is very ambivalent about being a technology company rather than a media company, yet is very successful. (One difference is that Apple seems to be very good at selling media/entertainment/image, whereas Yahoo was never a superb media company.)
ojbyrne 16y ago
Hindsight is easy. If you look back at the two decades before 1998, it was basically Microsoft, Intel (and to a lesser extent Oracle) buying (hopefully) or crushing every single engineering-centric company out there. They used good ol' monopoly power and FUD, which is pretty far from an engineering culture. Borland, Lotus, Apple, etc. IBM had successfully made a transition to a service company and the conventional wisdom was that that was all that saved them from being crushed in turn. Jerry Yang was just following the conventional wisdom. EDIT: Most importantly they had just witnessed the spectacle of Netscape, a company that seemed unstoppable, just completely buried by MS.
gojomo 16y ago
Rich Yahoo in 1999 overlooked the value of search. Rich Google in 2004 overlooked the value of social networking (both their in-house hit Orkut and outside services).
- lawrence 16y ago
  And what will Facebook overlook? Maybe location? Was Facebook's failed acquisition of Foursquare like Yahoo's non acquisition of Google?
  - jacquesm 16y ago
    Respect for the end-user.
  - kvs 16y ago
    Privacy, perhaps.
    - philwelch 16y ago
      Privacy and social networking are naturally opposing ideas--social networking is all about sharing information with people and privacy is all about keeping information from people. That's like saying Google ("organize the world's information") overlooked the importance of disorganization or ignorance. It won't be privacy at all that Facebook overlooks, it'll be something completely orthogonal to that axis. It is, however, true that Facebook is unlike Google in that, while nearly everyone wants to find information, not everyone wants to share information with other people.
      - wwortiz 16y ago
        Socializing however is all about varying levels of privacy. I won't tell my coworkers or boss the same things I tell my friends, I won't tell my friends what I tell my close friends, and my family sits on the highest tier. Maybe facebook will get this maybe it won't, or in general maybe it is impossible on the web where information tends to be so open.
hrabago 16y ago
So Yahoo's problem was they were trying to get big, and one way was to call themselves a media company (earn ad dollars, avoid MS radar). However, by doing this, they stopped acting like a technology company, and lost their focus on technology and solutions, but rather chasing the next banner ad buyer. In contrast, Google was concerned about perfecting its search product, and therefore was focusing on what would help in that regard (hackers), which helped sustain its hacker culture.
markbao 16y ago
> "I remember telling David Filo in late 1998 or early 1999 that Yahoo should buy Google, because I and most of the other programmers in the company were using it instead of Yahoo for search. He told me that it wasn't worth worrying about. Search was only 6% of our traffic, and we were growing at 10% a month." I'm assuming that their other 94% of traffic came from their content/media business, mail, and other portal-related activities. Since search seems to be a large part of the internet now, has their numbers changed today, or have they stayed about the same? And search was such a small thing back then—did Google set the example for search becoming one of the most important actions on the internet?
- kenjackson 16y ago
  Search has always been important to the web. But as it wasn't at all sticky, it didn't seem to have money making value. This is why Google originally tried to do enterprise search. NOBODY got that targeted ads via search was the way to go. And if Search didn't turn out to be a big money maker via ads, Yahoo would probably still be the biggest web company and Google would probably be a niche company last FAST -- making a profit, but not being the new software power.
mixmax 16y ago
"in the early days Facebook made a point of hiring programmers even for jobs that would not ordinarily consist of programming, like HR and marketing." No offense, but hiring programmers for HR seems like a terrible idea. HR people's main capacity is to understand people and relationships, not exactly something programmers are known for being good at.
- pxlpshr 16y ago
  If most (all) of your early employees are hackers, how does it not make sense to hire a hacker to manage HR?
  - andrew1 16y ago
    Because different jobs need different skill sets? Why does being a 'hacker' make you qualified or even appropriate to manage something like HR or marketing?
    - pxlpshr 16y ago
      How many hackers are CEO's and how many of those were ever qualified for that job at the start?
      - pxlpshr 16y ago
        Down vote and no opinion? Hmm. http://news.ycombinator.com/item?id=1596814 http://news.ycombinator.com/item?id=1596814
    - corin_ 16y ago
      The logic isn't that "any hacker is appropriate for HR work", but that a hacker who is suitible is better than a non-hacker.
  - mixmax 16y ago
    If you start a gardening service does it make sense to hire a gardener to do your finances? Not to be offensive, but I think a little bit of respect for other lines of work would be a good thing here.
srslydude 16y ago
[edit: this thread has some insightful replies by others that are worth reading.] I'm sorry, this may be PG's backyard, but I've gotta call bullshit. Note: I am not a Yahoo employee or corporate shill. 1. "At Yahoo this death spiral started early." Apparently this death spiral took TWELVE YEARS (the WWW is 20 years old), and Yahoo is still #1 (or #2) in terms of total properties on the web. How is this a death spiral? 2. "If there was ever a time when Yahoo was a Google-style talent magnet, it was over by the time I got there in 1998." Are you kidding me? You're implying all the current Yahoo engineers are idiots? Then how come each piece of code they release is revered, lauded and used by everybody? Speaking of talent: Yahoo got best paper at EVERY data-related conference in 2010. No single lab(Google,MS) or university(Stanford etc) has ever done this. Clearly you can achieve this without talent, pg! 3. "In the software business, you can't afford not to have a hacker-centric culture. Probably the most impressive commitment I've heard to having a hacker-centric culture came from Mark Zuckerberg, when he spoke at Startup School in 2007." Which company is responsible for inventing the term "Hack Day": Yahoo. Which is the only company to _promote_ hacking culture to students? Yahoo. Yahoo != Hacker-friendly? WTFFF!!! (edit:goog does soc, but it doesnt have engineers travel around the world teaching kids hands-on like yahoo does) 4. Google and Apple are shiny and get all the attention. Yahoo's the internet's underbelly. It's audience may not be SF hipsters, but they exist and there are a lot of them. Just because they're not like you doesn't mean they dont exist. Just because Yahoo doesnt cater to you doesn't mean it doesn't exist. 5. pg's product got hosed after inclusion into Yahoo. This happens. Reading a Yahoo critique from pg is like reading a Google critique from Evan Williams (Blogger), or a Google critique from the Dodgeball guys. It's a biased opinion. 6. It's a miracle Yahoo has survived for so long despite being criticized by the media /market for more than half its lifetime. The only other company that has had it worse was Apple, when they fired Steve Jobs. Yahoo doesnt have a Steve Jobs, and has been managed badly, but the engineering is SO GOOD that it STILL does a good job overall.
- brown9-2 16y ago
  Yahoo is still #1 (or #2) in terms of total properties on the web. How is this a death spiral? How is this a metric for success?
tailrecursion 16y ago
In 2002, Yahoo! began a serious effort to compete with Google in search by buying Inktomi (plus Altavista and FAST). In what must have been early 2004, I came over with the rest of the Inktomi crew to work on search. The Inktomi people were top notch, Yahoo! seemed earnest about doing what it took to go head to head with Google, and the integration efforts were done really well. While I was there I worked in an island of Inktomi people (plus some from Altavista), and I repeatedly got the impression that Y! people, technical and otherwise, were a little soft, maybe even complacent, relatively speaking. I do feel Y! did a great job -- and made a great decision -- in integrating its search acquisitions; but those acquisitions threw into sharp relief what Y! really was. It's hard to get into too much trouble when all you're doing is throwing horoscopes onto web pages; but Yahoo! never struck me as being serious about software, and as Paul says, they didn't seem to think that was a problem. Somewhere in 2005-2006, Y! made an attempt to revamp its search ad services with a large-scale software project called Panama. It was going to do a lot of things, including ad ranking refinements to improve revenue per query, and allowing advertisers to create more complex ad campaigns. This project seemed to undergo huge troubles, and I wonder if it was ever completed in any real sense, because I heard so little about it, and everything I heard suggested disaster. Honestly I don't know if the fruits of Panama -- such as improved auctions for ads on search result pages, which is a critical thing -- were ever deployed. But a couple years later they made the Microsoft deal. Over the last couple years, select people at Y! have moved on to Google, and many many others are now at Microsoft.
- mkramlich 16y ago
  Great insight from somebody who should know, thanks for posting that. I also wanted to ask, am I the only one who thinks it would be completely awesome to work on a project called Panama, simply because you'd have an excuse to have a Van Halen song as your theme? "Pa-na-ma-ha... Panama!"
- nl 16y ago
  Panama was eventually deployed (end of 06: http://techcrunch.com/2006/12/13/yahoo-begins-panama-roll-out-in-the-us/ http://techcrunch.com/2006/12/13/yahoo-begins-panama-roll-ou...), but it didn't compare well to Google's offerings in that it still didn't give as good relevancy for advertisers.
plinkplonk 16y ago
"Most technology companies eventually get taken over by suits and middle managers." Interesting statement. I suspect this process is well under way at Google these days. But why does this happen? Is it just that once companies grow large enough, you need middle managers, (who then consolidate power and control)? Is there a more nuanced explanation?
- enneff 16y ago
  "I suspect this process is well under way at Google these days." What's your basis for this speculation?
  - plinkplonk 16y ago
    ""I suspect this process is well under way at Google these days." What's your basis for this speculation?" Conversations with friends who work there mostly. One of the advantages of being older is that you know people in most companies who talk to you off the record over beer, sometimes in very "high" positions.
    - mkramlich 16y ago
      I had a similar realization this year. For the first time I realized I knew people who currently work at, or very recently just worked at, all the big software companies: Google, Amazon, Apple and Facebook. It may be partly helped by age, but also perhaps if you've ever worked at a large company with a ton of engineers, then leave, and those seeds scatter, eventually at least one ends up taking root at each of the big shops.
  - deleted 16y ago
    [deleted]
  - smallchou 16y ago
    Having worked there, it is definitely very much under way. A great indicator is probably how desirable a company is on the list of Top Companies for MBA's to Work For: http://money.cnn.com/magazines/fortune/mba100/2009/full_list/ http://money.cnn.com/magazines/fortune/mba100/2009/full_list...
shalmanese 16y ago
"In technology, once you have bad programmers, you're doomed. I can't think of an instance where a company has sunk into technical mediocrity and recovered." In any conflict, there is always a risk of fighting the last battle. I see today many companies, inspired by the lessons learned from the first dot-com bubble, making the opposite mistake; thinking that they need to be a technology company when they're really a experience providing company. Twitter is the refutation to pg's thesis. Despite their initial technical incompetence, they managed to attract a top-notch technical team because they managed to deliver a crawl-over-broken-glass experience (it's so compelling people are willing to crawl over broken glass to experience it, see also: craigslist, plentyoffish). It was interesting attending the YC work at a startup day and seeing RethinkDB present. Their pitch, in not as many words was basically "Look, we're the only company here that is actually working on a problem that demands world-class engineers (in the non-debased sense of the term)". For most of the other startups, despite all their bluster, the technology platform they were using was commoditized and technology was not their differentiating factor.
- encoderer 16y ago
  I disagree with your "incompetent" assessment of Twitter. First, there's a lot of false info out there about what parts of Twitter were built using which technologies and why it had uptime issues. Second, their issue was massive scalability. A high-class problem.
  - jarek 16y ago
    > Second, their issue was massive scalability. A high-class problem. That a lot of other companies nevertheless solved far more successfully.
  - shalmanese 16y ago
    I've talked to people who currently work at twitter who are pretty open that a large part of their job is paying down the technical debt from the early days. The engineers who were at twitter in the early days were by no means bad but it's pretty open within the company that they weren't "world class"
startupcto 16y ago
Tens years from now, will you be writing the same article with the title "what happened to Google?". I'd say likely. Companies come and go. Just like assuming Facebook is the THE social graph because somewhere somehow another entrepreneur is working on that next Facebook or Google.
- loewenskind 16y ago
  10 years? I'd say it will happen in less than half that time. Personally, I think the cycles (like everything else) are getting faster.
kvs 16y ago
Here is a Forbes article from 1998 Spring about Anil Singh and his team's perspective: http://www.forbes.com/asap/1998/0223/068.html http://www.forbes.com/asap/1998/0223/068.html
- revorad 16y ago
  Choice quote: "I'm here to generate sales for the company, and whether that means we have good products, bad products, or indifferent products," he says, "I have a job to do -- meeting our plans from a top- line standpoint."
jacquesm 16y ago
Yahoo! is definitely not beyond being turned around, though it will take a huge effort.
elblanco 16y ago
The essay seems to draw the conclusion that the difference between Yahoo and Google was more or less a matter of historical happenstance. Google did well because at the time Google was being built, they simply weren't (and couldn't be) part of the typical business model of the day, while Yahoo simply became trapped by it.
marknutter 16y ago
Somebody please help poor pg and design him some prettier buttons than those purple beveled monstrosities..
- pg 16y ago
  It's Yahoo Store. Those buttons were slick in 1996.
  - jsyedidia 16y ago
    I wrote some Perl code that improved the look of those buttons (based on Trevor Blackwell's engine) at Viaweb back in 1997. I distinctly remember Paul, Trevor and others gathered around my screen to admire the new buttons. So nobody criticize the Yahoo Store buttons!
    - photon_off 16y ago
      I remember waiting for them to load on 56k. You really had to go all out with the bevel instead of regular text?
      - jsyedidia 16y ago
        The images that are used by a Yahoo Store website are created once and for all and then stored as very small .gif files. For example, all the buttons in Paul Grapham's web-site are stored as the .gif file http://ep.yimg.com/ca/I/paulgraham_2117_16484650.gif http://ep.yimg.com/ca/I/paulgraham_2117_16484650.gif. You can download that file for yourself and examine it and learn that it has a size of 2896 bytes. So even on a 56K connection, it should take a fraction of a second to download all of the buttons Paul uses.
        photon_off 16y ago
        It's possible that my memory is faulty on the matter. I was probably around 14 or 15 at the time, but I remember looking for a nice heatsink/fan combo so I could try overclocking, a project which would later lead me to make a really awesome water-cooling contraption (it involved a sizable A/C radiator soaked in ice water, hooked up to a doubly stacked set of 60w and 80w peltier coolers -- I ultimately had problems with frost which ended up frying things). At any rate, I (think) I remember waiting forever for each individual and unappealing icon to load at this store. It's completely possible that the store was a Yahoo Store knock-off, or that it was before the optimization you mention. I guess we'll never know, since I've probably cleared my cache since then.
zmmmmm 16y ago
I find it interesting that Yahoo is considered not to have a "hacker" culture when they produce things such as YUI, YQL and YSlow which seem to have no reason to be there other than that they think of themselves as a company that has hackers and coding in their DNA. I guess these are small examples in the large scheme of things but it still seems odd that there is this disconnect - at the high level, they are just media company, at the low level they are right there in the hacker community producing, I would say, above their weight.
newmediaclay 16y ago
Great post. This left me wondering -- what do you think would have happened if Yahoo had been successful in their $1b bid for Facebook? Would FB have turned the company around by instilling a start-up/hacker culture. Or would it have just died there, infected by Yahoo?
10ren 16y ago
Aside: sorting advertisements by bids originated with goto.com in Feb 1998 (from Idealab), years before Google started using it. It was a great idea, original and effective, though I'm not how to feel about their patenting it. If they hadn't, they would have been copied and crushed without credit. http://en.wikipedia.org/wiki/Goto.com#Origins_of_Goto.com http://en.wikipedia.org/wiki/Goto.com#Origins_of_Goto.com As it was, they got 2.7 million shares from Google's infringement, and later acquired by Yahoo for $1.63 billion.
sh1mmer 16y ago
Disclaimer #1: My job is technology evangelist for Yahoo! So refuting this is probably the definition of my job. Disclaimer #2: This is my own completely unsanctioned opinion and does not necessarily represent Yahoo!'s views or opinions. I'm obviously biased here, but I have a great respect for HN and PG so I wanted to talk about this. PG accuses Yahoo! of two things right at the very top of the article and the rest of the article is more details on those things. They are a) access to easy money removed Yahoo!'s desire to find the next big thing b) ambivalence about being a technology company. I'm not going to substantially repute a) because I think it is true. However, I think it's a pretty big ask to expect someone being successful to see past the current success to the next big win. PG admit's neither he nor Larry and Sergey really understood how big search was. As such I feel it's a slightly ad-homonym attack to blame Yahoo! for not being Google. We didn't win the big prize, but we also aren't AOL, Lycos or Ask.com either. Just because we didn't become Google doesn't mean Yahoo! has failed. As an engineer though PG's second point strikes me as deeply unfair. I joined Yahoo! in 2004 in the UK. The team I joined was exceptional. For a team of 30 people there were about 15 book authored by the team. I personally had written W3C standards and multi Web Standards Project founders littered the team. The rest of the team were coders, much better than I. Now I work in US for the developer network and I get to see the vast range of technologies that Yahoo! does from Y! Research through to the engineering teams. There is a reason 'Hack Days' started here, because the engineers here are passionate about those technologies and playing with them. I'm also on the Yahoo! Open Source Working Group and I see all the open source we put out of the door. We should probably do a better job of telling people how much, but it's a lot more than you think. I find it troubling that PG who left the company 10 years ago, can now, accuse me and my colleagues of apathy about technology when it's so fundamental to what Yahoo! does. I think what PG is really talking to is two things. Firstly, it's important for a company to have a 'core competency'. Describing ourselves as a media company makes it clear to our investors and our employees the field of play. Secondly, the ease at which a cash-cow, such as Google's search war chest, allows them to make their presence felt in the technology community reminds people about all the things they touch. I am both proud an envious that Google have the freedom to do that, but again, it doesn't mean Yahoo! failed because we don't.
- 321speak 16y ago
yurylifshits 16y ago
What Yahoo employees think about Yahoo: http://www.glassdoor.com/Reviews/Yahoo-Reviews-E5807.htm http://www.glassdoor.com/Reviews/Yahoo-Reviews-E5807.htm
ariels 16y ago
There is no single Yahoo (part of the identity problem Yahoo has) and therefore you cannot generalize a culture across Yahoo. Each division within Yahoo really had its own culture. The search group culture was entirely different from the media (news, sports, etc.) group which was entirely different from the listings (real-estate, etc.) business. A group like Yahoo Search (prior to its sale) was an entirely tech centric organization. Many of the top engineers from Yahoo Search Yahoo! are now co-founders within top Silicon Valley startups.
grandalf 16y ago
Try logging into yahoo domains. It's nearly impossible. I think Yahoo's problems are 100% UI and navigation related.
davidw 16y ago
A minor stylistic nit: I wouldn't have put 'hosed' in the lead. There are many equally valid words that convey the same meaning without such a colloquial feel to them; in other words, in 10/20 years they won't look as out of place as 'hosed' might.
netcan 16y ago
"In the software business, you can't afford not to have a hacker-centric culture." I think you have to tread carefully in an area like this if you are a programmer. Many opportunities to to confirm a bias. First, the world is not composed of productive hackers and politicians. In a media company, for example, there are writers, producers, actors, etc. Some of them brilliant. A good strategy for a media company could be to have the best of these. Second, it's not always obvious what business you are in. I think this is especially for startups because they don't have a big version of themselves to look at. If you are a budding fast food chain, you know what business you are in and you've got examples. Yahoo didn't. Not all internet companies turned out to be technology companies. Not all such companies in the future will either. I'm sceptical that Yahoo was ever a great media company either.
demodifier 16y ago
http://www.wired.com/wired/archive/15.02/yahoo.html http://www.wired.com/wired/archive/15.02/yahoo.html Anyone remember this article in Wired from way back in 2007? It goes into the details of the technology company vs a media enterprise dilemma of Yahoo as identified by Paul Graham in his piece and how then CEO Terry Semel messed it all up.
fleaflicker 16y ago
Very similar to AOL's situation except they went even further in becoming a media company. Dial-up access was their inflated source of revenue and their focus for much of the 2000s was on ad sales and not hacking.
hello_moto 16y ago
The definition of hackers back in the 90's is (and should be) different than the definition of hackers today.
kahawe 16y ago
PG: And without good programmers you won't get good software, no matter how many people you put on a task, or how many procedures you establish to ensure "quality" IMHO truer words have never been spoken.
jteo 16y ago
The interesting thing is that Yahoo could have solved their problems by buying Google for a pittance.
ljlolel 16y ago
Funny. I made a similar comparison with Facebook. PG said that Yahoo was a de facto pyramid scheme, although ponzi scheme is a better analogy: http://blog.jperla.com/facebook-is-a-ponzi-scheme-0 http://blog.jperla.com/facebook-is-a-ponzi-scheme-0 >> By 1998, Yahoo was the beneficiary of a de facto pyramid scheme. Investors were excited about the Internet. One reason they were excited was Yahoo's revenue growth. So they invested in new Internet startups. The startups then used the money to buy ads on Yahoo to get traffic. Which caused yet more revenue growth for Yahoo, and further convinced investors the Internet was worth investing in. When I realized this one day, sitting in my cubicle, I jumped up like Archimedes in his bathtub, except instead of "Eureka!" I was shouting "Sell!"
GFischer 16y ago
It's bad to nitpick, but I take issue with the quote "It's hard for anyone much younger than me to understand the fear Microsoft still inspired in 1995.": I was born in 1981 and I clearly remember the fear and awe Microsoft inspired in 1995 :) . There were articles about how Bill took things personally and crushed competition. I read the 1992 biography "Hard Drive" ( http://www.amazon.com/Hard-Drive-Making-Microsoft-Empire/dp/0887306292/ref=pd_sim_b_3 http://www.amazon.com/Hard-Drive-Making-Microsoft-Empire/dp/... ); Bill was kind of a role model back then (a successful and well-known technologist). Edit: See also ojbyrne's comment: http://news.ycombinator.com/item?id=1596737 http://news.ycombinator.com/item?id=1596737
HilbertSpace 16y ago
Sorry, PG, but I believe your post is an example of "dancing 'round and 'round and suppose while the secret sits in the middle and knows". The most important thing is, the CEO very much needs to know nearly everything important for his company. For a company heavily involved in software, the CEO needs to understand software in general and the software of his company in particular. In a startup, he needs to be able to understand all the software, in detail, from the 'architecture' down to line by line. So, for this he needs to have enough knowledge of computing to understand, evaluate, and construct the architecture and have good knowledge of all the crucial 'software tools'. So, if the software is in C++ and Apache, then the CEO needs to understand these two. Windows? He needs to understand some or all of .NET, the CLR, C#, Visual Basic .NET, ADO.NET, ASP.NET, etc. Now we come to a curious point: For the CEO to acquire that knowledge takes more of his time than writing the code, given the knowledge. So, really, once the CEO has learned to write the code, he can, for less than the time investment in learning the tools, just go ahead and write the code. He should. Since the CEO wrote the code, maybe that makes his company a 'hacker culture'? I hope not: There are things more important than ASP.NET, etc. While knowing ASP.NET might be necessary, it is not sufficient. Just because the CEO drives his car does not make him a chauffeur. Instead, the software is just part of his job. Next, my experience is that the best software developers and, in particular, the ones best at the most technical details of software, and the best at software 'architecture' are not 'hackers' and are not even 'computer scientists' but are mathematicians who took out a few afternoons to understand, say, AVL trees, extensible hashing, Cartesian trees, minimum spanning trees, DeRemer's LALR parsing, and monotone locking protocols but also understand dynamic programming, linear programming on networks, Lagrangian relaxation and non-linear duality, Poisson and Markov processes, and martingales. Sorry 'bout that! With that technical knowledge and work, he has to pay close attention to the product, customers, revenue, hiring, etc. Not so strange.
bhellman1 16y ago
As a former yahoo I can relate.
bl4k 16y ago
Relevant question on Quora: Why did the web services (Web 2.0) group at Yahoo faill after acquiring Flickr, delicious, upcoming, mybloglog et al: http://www.quora.com/Why-did-the-web-services-group-at-Yahoo-fail-after-acquiring-Flickr-Delicious-Upcoming-MyBlogLog-and-others http://www.quora.com/Why-did-the-web-services-group-at-Yahoo...
dougb 16y ago
Excellent Essay PG! I was at Lycos about the same time, and what was going on there was very similar to what you describe at Yahoo. Search was considered a commodity and out sourced to FAST. Lycos wanted to be considered a "Media Company" too.
stcredzero 16y ago
So which companies need to have a hacker-centric culture? Which companies are "in the software business" in this respect? As Yahoo discovered, the area covered by this rule is bigger than most people realize. The answer is: any company that needs to have good software. In my time, I've heard and seen an number of non-software companies choke, stumble, and even become acquisition targets because of bad software. Budget car rentals was one that immediately comes to mind that I can actually talk about. For awhile I had a spate of bad customer service experiences where the reps explained that "our system crashed." If PG is right, all companies are going to need a hacker-centric culture! Another takeaway from the article: Bogosity kinda works, but only on shorter timescales and for a minority of participants.
Aegean 16y ago
I loved the last sentence on hacker culture: "But there are worse things than seeming irresponsible. Losing, for example."
5teev 16y ago
I would remind people that PG's credibility as a successful "big thinker" is largely based on the cash he made winning the dot-com lottery by selling his first company to people who, as he says, had little idea of, and less interest in, what they were buying.
ruang 16y ago
Difference is the focus: Business people -> ROI,IRR -> fast profits Hackers -> hard-to-do -> sustainable profits
huhtenberg 16y ago
> The prices seemed cheap... cheap -> low
- huhtenberg 16y ago
  Why is this down-modded? "Cheap" is a property of having a relatively low price. Therefore it's either low prices or cheap products, but not cheap prices.
shalmanese 16y ago
From Quora: http://www.quora.com/How-valid-are-the-reasons-for-Yahoo-problems-mentioned-in-Paul-Grahams-new-article-What-Happened-to-Yahoo-Are-they-still-valid-in-current-Yahoo http://www.quora.com/How-valid-are-the-reasons-for-Yahoo-pro... The main point of Graham's article is that Yahoo! didn't have a hacker-centric culture. If there was a time when that was true, it must have been before I joined. A company without a hacker-centric culture doesn't encourage the kind of risk-taking and experimentation I saw when I was at Yahoo! Search. As an engineer, I had direct input into product features at every level, from ideation to design to implementation to launch. If I had a crazy idea, I was encouraged not just to tell people about it (up to and including executives), but to implement it and see if it tested well with users. I was able to add my own personal touch to parts of the product (sometimes big parts) without needing to ask permission or wade through excessive red tape. This may not sound impressive to someone who's used to the way things work at startups or small companies. But this was at one of the largest Internet companies in the world, on one of the most visited websites in the world. For Yahoo! to give me and other engineers the kind of freedom and power we had is not normal for a company or a product that operates at this scale.
toddh 16y ago
They hired many very good programmers. That's just crazy to say otherwise. But if you lead programmers into a dessert you can't blame the troops when you die of thirst.

688 points by yagibear 16y ago

Summing up: * The Innovator's Dilemma, and * Mistaking a key driver of innovation and growth (software development) for a cost center.

justlearning 16y ago

"But they had the most opaque obstacle in the world between them and the truth: money." rings true for humans too.

wilschroter 16y ago

I think there's something to be said for focusing on what the market rewards, and clearly the market wasn't rewarding yahoo for having great technology in 1998. Nor did it reward Google for having great enterprise search. You can't fault Jerry and David for not seeing search when the market had clearly supported banners with no basis for search as a viable model yet.

paul 16y ago
When did Google have great enterprise search?
- seregine 16y ago
  I remember trying a Google intranet search "appliance" around 2003 and it was way better than the previous (homebrew?) intranet search we had.
ams6110 16y ago
In 1998 the market was rewarding any and all comers with "dot-com" in their name, based on that and little else. It probably didn't matter much at all what Yahoo was doing or how they thought of themselves: they were one of the best-known .com companies at the time and that's all that really mattered. Speaking as a veteran of a .com that had $30MM of venture money literally handed to them in 1999 for a concept. No customers, no proven ability to implement the concept, no management that had ever attempted anything like it, etc. The money was gone in a little over a year, frittered away on lavish offices, a huge support organization (for no customers!), massively overbuilt technology infrastructure using the most expensive Sun servers, Cisco networking gear, triple-redundant everything. Very few tech companies, customers, or investors in that era had any real idea of what they were doing.
jeromec 16y ago
You can't fault Jerry and David for not seeing search when the market had clearly supported banners with no basis for search as a viable model yet. I disagree. Where were those banners shown? Search results pages. The reason people went to Yahoo! was to find stuff. That's the reason Yahoo! became Yahoo in the first place. The Yahoo founders made an invisible, scatterbrained web accessible by giving some sort of list index to it. Google later improved the sorting of the index, but Yahoo was first to build a large, searchable index.

evanjacobs 16y ago

"The worst problem was that they hired bad programmers." Can you provide any specific examples of how bad programmers hurt Yahoo?

jrockway 16y ago
Bad programmers wrote a bad search engine, and Yahoo lost all their traffic to the good search engine?
- strlen 16y ago
  > Bad programmers wrote a bad search engine, and Yahoo lost all their traffic to the good search engine? Yahoo didn't have their own search technology, until acquisition of Inktomi in 2003 (they used Inktomi to serve their results prior to using Google, whom they used until ~2004). Correct way to put it is "they didn't hire enough good programmers to build a search engine". A web search engine isn't something bad programmers can build. They acquired a great search engine (the algorithms were, IMO, better than Google's and more immune to gaming, they were a first distributed search engine paving the way for Google's "cluster of commodity hardware" architecture [1]), but it came too late. [1] See http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.83.4274&rep=rep1&type=pdf http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.83.... for what I mean by "paved the way". Their mistake was using Solaris on SPARC (appropriate choice in 1996) for a few years too long (Google started on Linux/x86 right away, Inktomi transitioned by the time of Yahoo's acquisition).
  - btilly 16y ago
    More than that, Yahoo's deliberate strategy at the beginning was to not build their own search engine, but just to buy the services of whatever was best out there. At one point that was Alta Vista. Later it was Inktomi. After all search was a well-studied problem, and they thought it was pretty much solved. So why put a lot of energy into building expertise in how to build what they thought would be a commodity. Then Google demonstrated that search was not a solved problem, search was not a commodity, and it was too late.

msort 16y ago

How about the 3rd universal factor: growing too big too soon?

strlen 16y ago

> " You can get programmers who would never have come to you as employees by buying their startups. But so far the only companies smart enough to do this are companies smart enough not to need to." Yahoo did do this through the Inktomi (Yahoo Search, 2003-2010) acquisition. I've worked in that organization and learned a tremendous amount from the people. At that time the hiring bar had been considerably raised from what Graham describes (I have no idea whether that was the rule or the exception at that time, I was there 8 years later), nobody was shy of rejecting weak candidates. Much of the knowledge did diffuse to rest of the organization and it's important to note that along side the "dot-com-wannabe-millionaire-vesting-in-peace" crowd the essay describes, there was plenty of genuine technical talent (anyone who has worked there can attest to presence and influence of hackers). Unfortunately, for many reasons, that talent has slowly bled out. There was also a great amount of friction between Search and rest of the organization e.g., resistance (by Search engineers) to dog-fooding of what was often inferior technology. Search was, however, able to maintain a different platform, remaining on Linux, with their own platform/software stack, but were some "wtf" moments like porting and forcing the adoption of a custom user space locking library from FreeBSD when Linux already had futex (on the other hand, the fact there was a custom locking library built in a "media company" does say something). The other key mistake made is that they would position bright, capable new hires in areas that weren't directly correlated to revenue and treated as cost centers. That just seemed highly illogical to me. It's a mistake that's often difficult to fix: once young graduates are used to working on glamorous projects, it's much harder to get them to work on more mundane, but revenue critical projects such as advertiser systems. Google's strategy of a uniformly high hiring bar (vs. some teams hiring people other teams rejected for roles involving the same skill-set) and assigning hires to business priority projects (while allowing individuals to transfer if the project wasn't their cup of tea, with proper incentives in place for some projects) seems to be (at least from an outside point of view, I've never worked at Google) better.

blantonl 16y ago
Unfortunately, for many reasons, that talent has slowly bled out This reverts back to the original article. Poor strategic leadership.

maxklein 16y ago

I really don't get these Yahoo is dead stories. It's still the biggest site in the world if all it's properties are put together.

iamwil 16y ago
When pg says something is dead, he doesn't mean it from a current revenue or size point of view.
- randallsquared 16y ago
  When pg says something is dead, he doesn't mean it [...] We got that. :)
bdr 16y ago
Read Microsoft is Dead: http://www.paulgraham.com/microsoft.html http://www.paulgraham.com/microsoft.html
edash 16y ago
http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1281573170623&chddm=589628&chls=IntervalBasedLine&cmpto=NASDAQ:YHOO&cmptdms=0&q=NASDAQ:GOOG&ntsp=0 http://www.google.com/finance?chdnp=1&chdd=1&chds=1&... Saying "Yahoo is dead" (pg didn't, btw) is a sensationalist way of saying "Yahoo is in a slow, steady decline." To predict this, look at the leading indicators: - new products - strategic acquisitions - flow of talent - company morale - growth relative to competition - positions in key emerging markets Yahoo seems to be struggling in all these areas. Also, using "biggest site" as a metric is one of the problems with Yahoo that pg mentions in this article.
- elblanco 16y ago
  It probably doesn't hurt to look at one of Yahoo's contemporaries along the same metrics, AOL.
  - 16y ago

sliverstorm 16y ago

As far as I was concerned (admittedly I was still a kid at the time), all that mattered was the Yahoo homepage was garish and full of ads, and the results were hard to sift through (because they were full of 'sponsored links' and the page was equally garish). Google was the antithesis of all that, and that's why I used, liked, and rooted for Google.

forgottenpaswrd 16y ago
That's exactly what I felt. Google respects me(no flashing ads), I respect Google. I was a kid too when I used Altavista, it was a great search tool back in the day... until they fckd it totally. I had seen it happen with other services like ftpsearch(you know the name of a file, you got it instantly). When I saw the first Ad blinking on my face(Altavista put suits on place, "monetizing stuff") I discovered reading on searchlores "Google": It was so easy and powerful and NO annoying ads!! I couldn't believe it, and expected it to surrender to the MBAs forces soon as the other had. But they got money to buy some freedom.
JustinSeriously 16y ago
I went through the same thing with Infoseek. They used to be a fantastic search engine, with a full suite of boolean operators and everything. Then they become the Go Network, and their simple homepage was turned into crowded portal. Half the reason I eventually switched to Google was because of their anti-portal philosophy.

bdr 16y ago

Don't miss the allusion ("Theirs was not to reason why") to the poem The Charge Of The Light Brigade. Into the Valley rode the 500. Very funny.

drawkbox 16y ago

How Software Companies Die: http://www.zoion.com/~erlkonig/writings/programmer-beekeeping.html http://www.zoion.com/~erlkonig/writings/programmer-beekeepin...

PanMan 16y ago

I heared that when one of the large investment banks (forgot which one) got a new CEO, the first thing he did was stopping all IT outsourcing projects. He did realize a modern bank is, in fact, a software company, and you shouldn't outsource your core activity.

csmeder 16y ago
wow, a smart CEO
Nwallins 16y ago
Sounds like Jamie Dimon, of JP Morgan Chase. He ended a multi-billion IT outsourcing deal with IBM in 2004: http://www.informationweek.com/news/global-cio/outsourcing/showArticle.jhtml?articleID=47208515 http://www.informationweek.com/news/global-cio/outsourcing/s...
mediaman 16y ago
I believe you're referring to Jamie Dimon, now of JPMorgan Chase, who canceled a $5bn IBM IT outsourcing contract because he believed that technology was a core competency of a modern bank.
- ivenkys 16y ago
  Yes - he did cancel the Billion Dollar contract but not because I.T suddenly became a core competency. Non-front office facing I.T is being pushed to cheaper locations - primarily to Scotland and Southampton in the UK and is not considered a Core Competency , its outsourcing in a different form , its called IN-Sourcing. The primary reason for the cancellation of the contract was the sheer amount of beauracracy IBM imposed. Their modus-operandi was - pick up staff who were working in "non-critical" areas and make them report to IBM managers. So now all-of a sudden if i need to get something from our DBA i can't walk upto him and ask him , i need to raise a request in a god-awful system which goes to his manager who would be sitting in a remote location in a different time-zone "managing" the work-load of the DBA who sits 5 feet away from me. In the majority of the cases for access to sysadmins and DBA's who were an integral part of your team before you now had to go through this route. I will leave the readers to draw their own conclusions to this marvellous scheme.

Alex3917 16y ago

"It's probably too much to hope any company could avoid being damaged by depending on a bogus source of revenue. But startups can learn an important lesson from [the fact that] in the software business, you can't afford not to have a hacker-centric culture." I think Yahoo made the correct decision on both counts. As far as depending on a bogus source of revenue, all new advertising mediums are massively undervalued at first, then massively overvalued, and then only eventually even out. It would be a huge mistake not to plan your entire business model around this cycle. Yahoo did this, and they made literally billions of dollars because of it. Sure, if they had chosen to go into a different sort of business they could have perhaps extended their reign, but it's hard to argue that they made the wrong choice. As for not having a hacker-centric culture, I think they made the right choice here as well. Every time Yahoo bought a startup, their stock rose more than they paid for the company, meaning every time they acquired their tech through a buyout the execs took home massive paychecks. Whereas every dollar they spent on elite programmers was money out of their pocket. I think the lesson here, if anything, is that you can make mostly the right decisions and your business can still decline over time. Incidentally, I heard a great story about one of the Yahoo sales guys. Apparently he bought his own inventory at the end of every month to meet his quota, because the stock he was getting vested was worth more than the 100K or so he was required to fork over each month. (Because he obviously couldn't actually make any sales.)

cletus 16y ago

Yahoo went bad because: 1. It has no notable engineering foundation; 2. It has no clear vision about what it is and where it's going; and 3. Like Microsoft, it's put a business person in charge, which is the death knell of any tech company. You need someone with a technical foundation or a product person, not a business wonk.

werrett 16y ago
Yahoo went bad because a business person was put in charge? From my point of view I would say that is generally the rule rather the exception. Particularly for those firms wanting to go public. I'm going to defer to mixmax's quip about putting a gardner in charge of a gardening firm's finances [1] as the alternative. You can't argue Jobs or Schmidt are not business people. Although Schmidt could be used to either refute or backup your point depending on how you feel about Google these days. [1] http://news.ycombinator.com/item?id=1596850 http://news.ycombinator.com/item?id=1596850
- philwelch 16y ago
  Schmidt has a technical background though. Among other things he was the co-author of lex.
forgottenpaswrd 16y ago
You need to put a business person in place, who also has a technical background(look at Steve Jobs, although he is not a techie, he worked from day one with technical people and understand them).
- cletus 16y ago
  Steve is the ultimate product guy. Agree with him or not, agree with his vision or not, he clearly has a vision for Apple and its products. The same can't be said for Carol Bartz or Steve Ballmer. Those are the people you want in the room when you're organizing an M&A deal, not when creating consumer oriented products.

gojomo 16y ago

PG: "But [Yahoo] had the most opaque obstacle in the world between them and the truth: money." Sounds like yet another variant of Upton Sinclair's Law: "When a man's paycheck depends on his not understanding something, you can depend upon his not understanding it."

portman 16y ago
The actual quote, from I, Candidate for Governor: And How I Got Licked: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it." A terrific read. http://www.amazon.com/dp/0520081986 http://www.amazon.com/dp/0520081986

mrshoe 16y ago

Apple is very conspicuously absent from this article. ...the kind of single-minded, almost obnoxiously elitist focus on hiring the smartest people that the big winners have had. Is Apple a big winner, like Google, Microsoft, and Facebook (the other companies he mentions repeatedly)? Bigger. (Check the last 1, 5 or 10 years on Google finance for the GOOG or MSFT comparison. FB is not public, but...) Do they have this obnoxiously elitist focus? No. They still manage to hire great engineers, though. So which companies need to have a hacker-centric culture?... any company that needs to have good software. I wouldn't say that Apple is dominated by a hacker culture at all. It's dominated by Steve Jobs and a focus on design and attention to detail. Yet that seems to produce much better software than Google or Microsoft, IMHO. That's very subjective, I realize, but the market seems to agree. At any rate, Apple does produce good software. So are the hacker culture and the elitist focus really necessary for a technology company to succeed? Is Apple a complete anomaly while Google, Microsoft, and Facebook are typical? What say you, pg? I realize it's borderline suicidal to post an HN comment that simultaneously calls out pg and lauds Apple, but it's criminal to completely leave the best (imho) technology company out of a discussion about attributes of great technology companies.

pbhjpbhj 16y ago
>Apple is very conspicuously absent from this article. The article is about Yahoo and in a round about way the move of internet marketing focus from 90s banner advertising to search marketing in 00s. I didn't find Apple Computers Inc. (as it was) to be missing, indeed I'm kinda at a loss where you think Apple fit in to this article. There are already plenty of articles about Apple.
- _delirium 16y ago
  I think the implication was that Apple is a counterexample--- a company that does things basically the opposite of Google, and is very ambivalent about being a technology company rather than a media company, yet is very successful. (One difference is that Apple seems to be very good at selling media/entertainment/image, whereas Yahoo was never a superb media company.)

ojbyrne 16y ago

Hindsight is easy. If you look back at the two decades before 1998, it was basically Microsoft, Intel (and to a lesser extent Oracle) buying (hopefully) or crushing every single engineering-centric company out there. They used good ol' monopoly power and FUD, which is pretty far from an engineering culture. Borland, Lotus, Apple, etc. IBM had successfully made a transition to a service company and the conventional wisdom was that that was all that saved them from being crushed in turn. Jerry Yang was just following the conventional wisdom. EDIT: Most importantly they had just witnessed the spectacle of Netscape, a company that seemed unstoppable, just completely buried by MS.

gojomo 16y ago

Rich Yahoo in 1999 overlooked the value of search. Rich Google in 2004 overlooked the value of social networking (both their in-house hit Orkut and outside services).

lawrence 16y ago
And what will Facebook overlook? Maybe location? Was Facebook's failed acquisition of Foursquare like Yahoo's non acquisition of Google?
- jacquesm 16y ago
  Respect for the end-user.
- kvs 16y ago
  Privacy, perhaps.
  - philwelch 16y ago
    Privacy and social networking are naturally opposing ideas--social networking is all about sharing information with people and privacy is all about keeping information from people. That's like saying Google ("organize the world's information") overlooked the importance of disorganization or ignorance. It won't be privacy at all that Facebook overlooks, it'll be something completely orthogonal to that axis. It is, however, true that Facebook is unlike Google in that, while nearly everyone wants to find information, not everyone wants to share information with other people.
    - wwortiz 16y ago
      Socializing however is all about varying levels of privacy. I won't tell my coworkers or boss the same things I tell my friends, I won't tell my friends what I tell my close friends, and my family sits on the highest tier. Maybe facebook will get this maybe it won't, or in general maybe it is impossible on the web where information tends to be so open.

hrabago 16y ago

So Yahoo's problem was they were trying to get big, and one way was to call themselves a media company (earn ad dollars, avoid MS radar). However, by doing this, they stopped acting like a technology company, and lost their focus on technology and solutions, but rather chasing the next banner ad buyer. In contrast, Google was concerned about perfecting its search product, and therefore was focusing on what would help in that regard (hackers), which helped sustain its hacker culture.

markbao 16y ago

> "I remember telling David Filo in late 1998 or early 1999 that Yahoo should buy Google, because I and most of the other programmers in the company were using it instead of Yahoo for search. He told me that it wasn't worth worrying about. Search was only 6% of our traffic, and we were growing at 10% a month." I'm assuming that their other 94% of traffic came from their content/media business, mail, and other portal-related activities. Since search seems to be a large part of the internet now, has their numbers changed today, or have they stayed about the same? And search was such a small thing back then—did Google set the example for search becoming one of the most important actions on the internet?

kenjackson 16y ago
Search has always been important to the web. But as it wasn't at all sticky, it didn't seem to have money making value. This is why Google originally tried to do enterprise search. NOBODY got that targeted ads via search was the way to go. And if Search didn't turn out to be a big money maker via ads, Yahoo would probably still be the biggest web company and Google would probably be a niche company last FAST -- making a profit, but not being the new software power.

mixmax 16y ago

"in the early days Facebook made a point of hiring programmers even for jobs that would not ordinarily consist of programming, like HR and marketing." No offense, but hiring programmers for HR seems like a terrible idea. HR people's main capacity is to understand people and relationships, not exactly something programmers are known for being good at.

pxlpshr 16y ago
If most (all) of your early employees are hackers, how does it not make sense to hire a hacker to manage HR?
- andrew1 16y ago
  Because different jobs need different skill sets? Why does being a 'hacker' make you qualified or even appropriate to manage something like HR or marketing?
  - pxlpshr 16y ago
    How many hackers are CEO's and how many of those were ever qualified for that job at the start?
    - pxlpshr 16y ago
      Down vote and no opinion? Hmm. http://news.ycombinator.com/item?id=1596814 http://news.ycombinator.com/item?id=1596814
  - corin_ 16y ago
    The logic isn't that "any hacker is appropriate for HR work", but that a hacker who is suitible is better than a non-hacker.
- mixmax 16y ago
  If you start a gardening service does it make sense to hire a gardener to do your finances? Not to be offensive, but I think a little bit of respect for other lines of work would be a good thing here.

srslydude 16y ago

[edit: this thread has some insightful replies by others that are worth reading.] I'm sorry, this may be PG's backyard, but I've gotta call bullshit. Note: I am not a Yahoo employee or corporate shill. 1. "At Yahoo this death spiral started early." Apparently this death spiral took TWELVE YEARS (the WWW is 20 years old), and Yahoo is still #1 (or #2) in terms of total properties on the web. How is this a death spiral? 2. "If there was ever a time when Yahoo was a Google-style talent magnet, it was over by the time I got there in 1998." Are you kidding me? You're implying all the current Yahoo engineers are idiots? Then how come each piece of code they release is revered, lauded and used by everybody? Speaking of talent: Yahoo got best paper at EVERY data-related conference in 2010. No single lab(Google,MS) or university(Stanford etc) has ever done this. Clearly you can achieve this without talent, pg! 3. "In the software business, you can't afford not to have a hacker-centric culture. Probably the most impressive commitment I've heard to having a hacker-centric culture came from Mark Zuckerberg, when he spoke at Startup School in 2007." Which company is responsible for inventing the term "Hack Day": Yahoo. Which is the only company to _promote_ hacking culture to students? Yahoo. Yahoo != Hacker-friendly? WTFFF!!! (edit:goog does soc, but it doesnt have engineers travel around the world teaching kids hands-on like yahoo does) 4. Google and Apple are shiny and get all the attention. Yahoo's the internet's underbelly. It's audience may not be SF hipsters, but they exist and there are a lot of them. Just because they're not like you doesn't mean they dont exist. Just because Yahoo doesnt cater to you doesn't mean it doesn't exist. 5. pg's product got hosed after inclusion into Yahoo. This happens. Reading a Yahoo critique from pg is like reading a Google critique from Evan Williams (Blogger), or a Google critique from the Dodgeball guys. It's a biased opinion. 6. It's a miracle Yahoo has survived for so long despite being criticized by the media /market for more than half its lifetime. The only other company that has had it worse was Apple, when they fired Steve Jobs. Yahoo doesnt have a Steve Jobs, and has been managed badly, but the engineering is SO GOOD that it STILL does a good job overall.

brown9-2 16y ago
Yahoo is still #1 (or #2) in terms of total properties on the web. How is this a death spiral? How is this a metric for success?

tailrecursion 16y ago

In 2002, Yahoo! began a serious effort to compete with Google in search by buying Inktomi (plus Altavista and FAST). In what must have been early 2004, I came over with the rest of the Inktomi crew to work on search. The Inktomi people were top notch, Yahoo! seemed earnest about doing what it took to go head to head with Google, and the integration efforts were done really well. While I was there I worked in an island of Inktomi people (plus some from Altavista), and I repeatedly got the impression that Y! people, technical and otherwise, were a little soft, maybe even complacent, relatively speaking. I do feel Y! did a great job -- and made a great decision -- in integrating its search acquisitions; but those acquisitions threw into sharp relief what Y! really was. It's hard to get into too much trouble when all you're doing is throwing horoscopes onto web pages; but Yahoo! never struck me as being serious about software, and as Paul says, they didn't seem to think that was a problem. Somewhere in 2005-2006, Y! made an attempt to revamp its search ad services with a large-scale software project called Panama. It was going to do a lot of things, including ad ranking refinements to improve revenue per query, and allowing advertisers to create more complex ad campaigns. This project seemed to undergo huge troubles, and I wonder if it was ever completed in any real sense, because I heard so little about it, and everything I heard suggested disaster. Honestly I don't know if the fruits of Panama -- such as improved auctions for ads on search result pages, which is a critical thing -- were ever deployed. But a couple years later they made the Microsoft deal. Over the last couple years, select people at Y! have moved on to Google, and many many others are now at Microsoft.

mkramlich 16y ago
Great insight from somebody who should know, thanks for posting that. I also wanted to ask, am I the only one who thinks it would be completely awesome to work on a project called Panama, simply because you'd have an excuse to have a Van Halen song as your theme? "Pa-na-ma-ha... Panama!"
nl 16y ago
Panama was eventually deployed (end of 06: http://techcrunch.com/2006/12/13/yahoo-begins-panama-roll-out-in-the-us/ http://techcrunch.com/2006/12/13/yahoo-begins-panama-roll-ou...), but it didn't compare well to Google's offerings in that it still didn't give as good relevancy for advertisers.

plinkplonk 16y ago

"Most technology companies eventually get taken over by suits and middle managers." Interesting statement. I suspect this process is well under way at Google these days. But why does this happen? Is it just that once companies grow large enough, you need middle managers, (who then consolidate power and control)? Is there a more nuanced explanation?

enneff 16y ago
"I suspect this process is well under way at Google these days." What's your basis for this speculation?
- plinkplonk 16y ago
  ""I suspect this process is well under way at Google these days." What's your basis for this speculation?" Conversations with friends who work there mostly. One of the advantages of being older is that you know people in most companies who talk to you off the record over beer, sometimes in very "high" positions.
  - mkramlich 16y ago
    I had a similar realization this year. For the first time I realized I knew people who currently work at, or very recently just worked at, all the big software companies: Google, Amazon, Apple and Facebook. It may be partly helped by age, but also perhaps if you've ever worked at a large company with a ton of engineers, then leave, and those seeds scatter, eventually at least one ends up taking root at each of the big shops.
- deleted 16y ago
  [deleted]
- smallchou 16y ago
  Having worked there, it is definitely very much under way. A great indicator is probably how desirable a company is on the list of Top Companies for MBA's to Work For: http://money.cnn.com/magazines/fortune/mba100/2009/full_list/ http://money.cnn.com/magazines/fortune/mba100/2009/full_list...

shalmanese 16y ago

"In technology, once you have bad programmers, you're doomed. I can't think of an instance where a company has sunk into technical mediocrity and recovered." In any conflict, there is always a risk of fighting the last battle. I see today many companies, inspired by the lessons learned from the first dot-com bubble, making the opposite mistake; thinking that they need to be a technology company when they're really a experience providing company. Twitter is the refutation to pg's thesis. Despite their initial technical incompetence, they managed to attract a top-notch technical team because they managed to deliver a crawl-over-broken-glass experience (it's so compelling people are willing to crawl over broken glass to experience it, see also: craigslist, plentyoffish). It was interesting attending the YC work at a startup day and seeing RethinkDB present. Their pitch, in not as many words was basically "Look, we're the only company here that is actually working on a problem that demands world-class engineers (in the non-debased sense of the term)". For most of the other startups, despite all their bluster, the technology platform they were using was commoditized and technology was not their differentiating factor.

encoderer 16y ago
I disagree with your "incompetent" assessment of Twitter. First, there's a lot of false info out there about what parts of Twitter were built using which technologies and why it had uptime issues. Second, their issue was massive scalability. A high-class problem.
- jarek 16y ago
  > Second, their issue was massive scalability. A high-class problem. That a lot of other companies nevertheless solved far more successfully.
- shalmanese 16y ago
  I've talked to people who currently work at twitter who are pretty open that a large part of their job is paying down the technical debt from the early days. The engineers who were at twitter in the early days were by no means bad but it's pretty open within the company that they weren't "world class"

startupcto 16y ago

Tens years from now, will you be writing the same article with the title "what happened to Google?". I'd say likely. Companies come and go. Just like assuming Facebook is the THE social graph because somewhere somehow another entrepreneur is working on that next Facebook or Google.

loewenskind 16y ago
10 years? I'd say it will happen in less than half that time. Personally, I think the cycles (like everything else) are getting faster.

kvs 16y ago

Here is a Forbes article from 1998 Spring about Anil Singh and his team's perspective: http://www.forbes.com/asap/1998/0223/068.html http://www.forbes.com/asap/1998/0223/068.html

revorad 16y ago
Choice quote: "I'm here to generate sales for the company, and whether that means we have good products, bad products, or indifferent products," he says, "I have a job to do -- meeting our plans from a top- line standpoint."

jacquesm 16y ago

Yahoo! is definitely not beyond being turned around, though it will take a huge effort.

elblanco 16y ago

The essay seems to draw the conclusion that the difference between Yahoo and Google was more or less a matter of historical happenstance. Google did well because at the time Google was being built, they simply weren't (and couldn't be) part of the typical business model of the day, while Yahoo simply became trapped by it.

marknutter 16y ago

Somebody please help poor pg and design him some prettier buttons than those purple beveled monstrosities..

pg 16y ago
It's Yahoo Store. Those buttons were slick in 1996.
- jsyedidia 16y ago
  I wrote some Perl code that improved the look of those buttons (based on Trevor Blackwell's engine) at Viaweb back in 1997. I distinctly remember Paul, Trevor and others gathered around my screen to admire the new buttons. So nobody criticize the Yahoo Store buttons!
  - photon_off 16y ago
    I remember waiting for them to load on 56k. You really had to go all out with the bevel instead of regular text?
    - jsyedidia 16y ago
      The images that are used by a Yahoo Store website are created once and for all and then stored as very small .gif files. For example, all the buttons in Paul Grapham's web-site are stored as the .gif file http://ep.yimg.com/ca/I/paulgraham_2117_16484650.gif http://ep.yimg.com/ca/I/paulgraham_2117_16484650.gif. You can download that file for yourself and examine it and learn that it has a size of 2896 bytes. So even on a 56K connection, it should take a fraction of a second to download all of the buttons Paul uses.
      - photon_off 16y ago
        It's possible that my memory is faulty on the matter. I was probably around 14 or 15 at the time, but I remember looking for a nice heatsink/fan combo so I could try overclocking, a project which would later lead me to make a really awesome water-cooling contraption (it involved a sizable A/C radiator soaked in ice water, hooked up to a doubly stacked set of 60w and 80w peltier coolers -- I ultimately had problems with frost which ended up frying things). At any rate, I (think) I remember waiting forever for each individual and unappealing icon to load at this store. It's completely possible that the store was a Yahoo Store knock-off, or that it was before the optimization you mention. I guess we'll never know, since I've probably cleared my cache since then.

zmmmmm 16y ago

I find it interesting that Yahoo is considered not to have a "hacker" culture when they produce things such as YUI, YQL and YSlow which seem to have no reason to be there other than that they think of themselves as a company that has hackers and coding in their DNA. I guess these are small examples in the large scheme of things but it still seems odd that there is this disconnect - at the high level, they are just media company, at the low level they are right there in the hacker community producing, I would say, above their weight.

newmediaclay 16y ago

Great post. This left me wondering -- what do you think would have happened if Yahoo had been successful in their $1b bid for Facebook? Would FB have turned the company around by instilling a start-up/hacker culture. Or would it have just died there, infected by Yahoo?

10ren 16y ago

Aside: sorting advertisements by bids originated with goto.com in Feb 1998 (from Idealab), years before Google started using it. It was a great idea, original and effective, though I'm not how to feel about their patenting it. If they hadn't, they would have been copied and crushed without credit. http://en.wikipedia.org/wiki/Goto.com#Origins_of_Goto.com http://en.wikipedia.org/wiki/Goto.com#Origins_of_Goto.com As it was, they got 2.7 million shares from Google's infringement, and later acquired by Yahoo for $1.63 billion.

sh1mmer 16y ago

Disclaimer #1: My job is technology evangelist for Yahoo! So refuting this is probably the definition of my job. Disclaimer #2: This is my own completely unsanctioned opinion and does not necessarily represent Yahoo!'s views or opinions. I'm obviously biased here, but I have a great respect for HN and PG so I wanted to talk about this. PG accuses Yahoo! of two things right at the very top of the article and the rest of the article is more details on those things. They are a) access to easy money removed Yahoo!'s desire to find the next big thing b) ambivalence about being a technology company. I'm not going to substantially repute a) because I think it is true. However, I think it's a pretty big ask to expect someone being successful to see past the current success to the next big win. PG admit's neither he nor Larry and Sergey really understood how big search was. As such I feel it's a slightly ad-homonym attack to blame Yahoo! for not being Google. We didn't win the big prize, but we also aren't AOL, Lycos or Ask.com either. Just because we didn't become Google doesn't mean Yahoo! has failed. As an engineer though PG's second point strikes me as deeply unfair. I joined Yahoo! in 2004 in the UK. The team I joined was exceptional. For a team of 30 people there were about 15 book authored by the team. I personally had written W3C standards and multi Web Standards Project founders littered the team. The rest of the team were coders, much better than I. Now I work in US for the developer network and I get to see the vast range of technologies that Yahoo! does from Y! Research through to the engineering teams. There is a reason 'Hack Days' started here, because the engineers here are passionate about those technologies and playing with them. I'm also on the Yahoo! Open Source Working Group and I see all the open source we put out of the door. We should probably do a better job of telling people how much, but it's a lot more than you think. I find it troubling that PG who left the company 10 years ago, can now, accuse me and my colleagues of apathy about technology when it's so fundamental to what Yahoo! does. I think what PG is really talking to is two things. Firstly, it's important for a company to have a 'core competency'. Describing ourselves as a media company makes it clear to our investors and our employees the field of play. Secondly, the ease at which a cash-cow, such as Google's search war chest, allows them to make their presence felt in the technology community reminds people about all the things they touch. I am both proud an envious that Google have the freedom to do that, but again, it doesn't mean Yahoo! failed because we don't.

321speak 16y ago

yurylifshits 16y ago

What Yahoo employees think about Yahoo: http://www.glassdoor.com/Reviews/Yahoo-Reviews-E5807.htm http://www.glassdoor.com/Reviews/Yahoo-Reviews-E5807.htm

ariels 16y ago

There is no single Yahoo (part of the identity problem Yahoo has) and therefore you cannot generalize a culture across Yahoo. Each division within Yahoo really had its own culture. The search group culture was entirely different from the media (news, sports, etc.) group which was entirely different from the listings (real-estate, etc.) business. A group like Yahoo Search (prior to its sale) was an entirely tech centric organization. Many of the top engineers from Yahoo Search Yahoo! are now co-founders within top Silicon Valley startups.

grandalf 16y ago

Try logging into yahoo domains. It's nearly impossible. I think Yahoo's problems are 100% UI and navigation related.

davidw 16y ago

A minor stylistic nit: I wouldn't have put 'hosed' in the lead. There are many equally valid words that convey the same meaning without such a colloquial feel to them; in other words, in 10/20 years they won't look as out of place as 'hosed' might.

netcan 16y ago

"In the software business, you can't afford not to have a hacker-centric culture." I think you have to tread carefully in an area like this if you are a programmer. Many opportunities to to confirm a bias. First, the world is not composed of productive hackers and politicians. In a media company, for example, there are writers, producers, actors, etc. Some of them brilliant. A good strategy for a media company could be to have the best of these. Second, it's not always obvious what business you are in. I think this is especially for startups because they don't have a big version of themselves to look at. If you are a budding fast food chain, you know what business you are in and you've got examples. Yahoo didn't. Not all internet companies turned out to be technology companies. Not all such companies in the future will either. I'm sceptical that Yahoo was ever a great media company either.

demodifier 16y ago

http://www.wired.com/wired/archive/15.02/yahoo.html http://www.wired.com/wired/archive/15.02/yahoo.html Anyone remember this article in Wired from way back in 2007? It goes into the details of the technology company vs a media enterprise dilemma of Yahoo as identified by Paul Graham in his piece and how then CEO Terry Semel messed it all up.

fleaflicker 16y ago

Very similar to AOL's situation except they went even further in becoming a media company. Dial-up access was their inflated source of revenue and their focus for much of the 2000s was on ad sales and not hacking.

hello_moto 16y ago

The definition of hackers back in the 90's is (and should be) different than the definition of hackers today.

kahawe 16y ago

PG: And without good programmers you won't get good software, no matter how many people you put on a task, or how many procedures you establish to ensure "quality" IMHO truer words have never been spoken.

jteo 16y ago

The interesting thing is that Yahoo could have solved their problems by buying Google for a pittance.

ljlolel 16y ago

Funny. I made a similar comparison with Facebook. PG said that Yahoo was a de facto pyramid scheme, although ponzi scheme is a better analogy: http://blog.jperla.com/facebook-is-a-ponzi-scheme-0 http://blog.jperla.com/facebook-is-a-ponzi-scheme-0 >> By 1998, Yahoo was the beneficiary of a de facto pyramid scheme. Investors were excited about the Internet. One reason they were excited was Yahoo's revenue growth. So they invested in new Internet startups. The startups then used the money to buy ads on Yahoo to get traffic. Which caused yet more revenue growth for Yahoo, and further convinced investors the Internet was worth investing in. When I realized this one day, sitting in my cubicle, I jumped up like Archimedes in his bathtub, except instead of "Eureka!" I was shouting "Sell!"

GFischer 16y ago

It's bad to nitpick, but I take issue with the quote "It's hard for anyone much younger than me to understand the fear Microsoft still inspired in 1995.": I was born in 1981 and I clearly remember the fear and awe Microsoft inspired in 1995 :) . There were articles about how Bill took things personally and crushed competition. I read the 1992 biography "Hard Drive" ( http://www.amazon.com/Hard-Drive-Making-Microsoft-Empire/dp/0887306292/ref=pd_sim_b_3 http://www.amazon.com/Hard-Drive-Making-Microsoft-Empire/dp/... ); Bill was kind of a role model back then (a successful and well-known technologist). Edit: See also ojbyrne's comment: http://news.ycombinator.com/item?id=1596737 http://news.ycombinator.com/item?id=1596737

HilbertSpace 16y ago

Sorry, PG, but I believe your post is an example of "dancing 'round and 'round and suppose while the secret sits in the middle and knows". The most important thing is, the CEO very much needs to know nearly everything important for his company. For a company heavily involved in software, the CEO needs to understand software in general and the software of his company in particular. In a startup, he needs to be able to understand all the software, in detail, from the 'architecture' down to line by line. So, for this he needs to have enough knowledge of computing to understand, evaluate, and construct the architecture and have good knowledge of all the crucial 'software tools'. So, if the software is in C++ and Apache, then the CEO needs to understand these two. Windows? He needs to understand some or all of .NET, the CLR, C#, Visual Basic .NET, ADO.NET, ASP.NET, etc. Now we come to a curious point: For the CEO to acquire that knowledge takes more of his time than writing the code, given the knowledge. So, really, once the CEO has learned to write the code, he can, for less than the time investment in learning the tools, just go ahead and write the code. He should. Since the CEO wrote the code, maybe that makes his company a 'hacker culture'? I hope not: There are things more important than ASP.NET, etc. While knowing ASP.NET might be necessary, it is not sufficient. Just because the CEO drives his car does not make him a chauffeur. Instead, the software is just part of his job. Next, my experience is that the best software developers and, in particular, the ones best at the most technical details of software, and the best at software 'architecture' are not 'hackers' and are not even 'computer scientists' but are mathematicians who took out a few afternoons to understand, say, AVL trees, extensible hashing, Cartesian trees, minimum spanning trees, DeRemer's LALR parsing, and monotone locking protocols but also understand dynamic programming, linear programming on networks, Lagrangian relaxation and non-linear duality, Poisson and Markov processes, and martingales. Sorry 'bout that! With that technical knowledge and work, he has to pay close attention to the product, customers, revenue, hiring, etc. Not so strange.

bhellman1 16y ago

As a former yahoo I can relate.

bl4k 16y ago

Relevant question on Quora: Why did the web services (Web 2.0) group at Yahoo faill after acquiring Flickr, delicious, upcoming, mybloglog et al: http://www.quora.com/Why-did-the-web-services-group-at-Yahoo-fail-after-acquiring-Flickr-Delicious-Upcoming-MyBlogLog-and-others http://www.quora.com/Why-did-the-web-services-group-at-Yahoo...

dougb 16y ago

Excellent Essay PG! I was at Lycos about the same time, and what was going on there was very similar to what you describe at Yahoo. Search was considered a commodity and out sourced to FAST. Lycos wanted to be considered a "Media Company" too.

stcredzero 16y ago

So which companies need to have a hacker-centric culture? Which companies are "in the software business" in this respect? As Yahoo discovered, the area covered by this rule is bigger than most people realize. The answer is: any company that needs to have good software. In my time, I've heard and seen an number of non-software companies choke, stumble, and even become acquisition targets because of bad software. Budget car rentals was one that immediately comes to mind that I can actually talk about. For awhile I had a spate of bad customer service experiences where the reps explained that "our system crashed." If PG is right, all companies are going to need a hacker-centric culture! Another takeaway from the article: Bogosity kinda works, but only on shorter timescales and for a minority of participants.

Aegean 16y ago

I loved the last sentence on hacker culture: "But there are worse things than seeming irresponsible. Losing, for example."

5teev 16y ago

I would remind people that PG's credibility as a successful "big thinker" is largely based on the cash he made winning the dot-com lottery by selling his first company to people who, as he says, had little idea of, and less interest in, what they were buying.

ruang 16y ago

Difference is the focus: Business people -> ROI,IRR -> fast profits Hackers -> hard-to-do -> sustainable profits

huhtenberg 16y ago

> The prices seemed cheap... cheap -> low

huhtenberg 16y ago
Why is this down-modded? "Cheap" is a property of having a relatively low price. Therefore it's either low prices or cheap products, but not cheap prices.

shalmanese 16y ago

From Quora: http://www.quora.com/How-valid-are-the-reasons-for-Yahoo-problems-mentioned-in-Paul-Grahams-new-article-What-Happened-to-Yahoo-Are-they-still-valid-in-current-Yahoo http://www.quora.com/How-valid-are-the-reasons-for-Yahoo-pro... The main point of Graham's article is that Yahoo! didn't have a hacker-centric culture. If there was a time when that was true, it must have been before I joined. A company without a hacker-centric culture doesn't encourage the kind of risk-taking and experimentation I saw when I was at Yahoo! Search. As an engineer, I had direct input into product features at every level, from ideation to design to implementation to launch. If I had a crazy idea, I was encouraged not just to tell people about it (up to and including executives), but to implement it and see if it tested well with users. I was able to add my own personal touch to parts of the product (sometimes big parts) without needing to ask permission or wade through excessive red tape. This may not sound impressive to someone who's used to the way things work at startups or small companies. But this was at one of the largest Internet companies in the world, on one of the most visited websites in the world. For Yahoo! to give me and other engineers the kind of freedom and power we had is not normal for a company or a product that operates at this scale.

toddh 16y ago

They hired many very good programmers. That's just crazy to say otherwise. But if you lead programmers into a dessert you can't blame the troops when you die of thirst.