16 ms·

What happens after Yahoo acquires you

263 points by JacobAldridge 16y ago

earl 16y ago
Ouch. That's a pretty damning list Matt compiled.
JacobAldridge 16y ago
At the risk of preaching to the choir, here's some more input from another Yahoo acquiree - pg on 'What Happened to Yahoo' (Aug '10) http://www.paulgraham.com/yahoo.html http://www.paulgraham.com/yahoo.html
- mscarborough 16y ago
  Sigh. I work for Yahoo, after 6 years of ('failed') startup work. I respect YC and pg immensely. However, linking to this article that is written in 2010 that references the mid-1990s (except for a single mention of Facebook in 2007) seems a bit weak. It doesn't bother me that HN folks dismiss Yahoo as a company, so much as it does that HN folks ignore Yahoo engineering. Hadoop, WOEID, Pipes, etc. For me as an engineer that has worked for a few startups and companies that hoped to be acquired, working for Yahoo is great because we are exposed to a lot of engineering work that is optimized for large scale. I'm sure Google and others are doing a great job of this as well, but why is it an either/or situation?
  - jfager 16y ago
    I don't think anyone who would care ignores Hadoop. It and Yahoo's involvement with it are very well known and credited. WOEID seems pretty niche. I don't work with geo much, so I don't understand right away why I would want to use a WOEID over a simple lat/long. Who else uses WOEIDs, for instance? Pipes would be approximately a billion times more interesting if it didn't have the commercial use restrictions and had a version I could get some kind of SLA for. If Yahoo is so proud of Pipes, why won't you let people build businesses on it? And why did you only post 2 blog updates about it in 2010?
markszcz 16y ago
So what I’m getting out of this is that if your passionate about your company and its doing well, think twice before you decide to get bought out because its possible that life might not be better/greener for your company once your assimilated. Reminds me of Brew Masters when the owner of Dogfish Head, Sam Calagione, mentioned that he had an offer to sell off his company for a nice amount but in the end he would still obsess about the fate of his company, and the name he built up for it, that it wasnt worth selling.
gamble 16y ago
This article is mistitled. It should read 'What happens after anyone acquires you'. These anecdotes will sound familiar to many people who have been through an acquisition. Acquisitions are not something any company is naturally good at, and they inherently threaten the bureaucracy of the acquirer. Despite good intentions, the corporate immune system usually kills off the interloper before it becomes established. Not to mention that the founders and best employees usually bail within a couple of years.
- Yrlec 16y ago
  It all boils down to the fact that scalability of an organization often is harder than scalability of a web site. Yahoo just happens to be a very good example of that. As hackers we tend to focus a lot on technical scalability issues. We love to work on things like NoSQL, the CAP-theroem, large scale caching and whatnot. But I think that the organization often becomes the bottleneck quicker than the web site. This is especially true now when we have services like Amazon AWS and GAE which helps us with the technical scalability issues. So next time you work on that really cool memory optimization maybe you should ask yourself if you don't get better scalability as a whole if you focus your limited programming resources on features instead (so you don't have to hire that extra programmer to do that for you, since you work on your memory optimization).
- hsmyers 16y ago
  Not always. When Northrop Grumman bought TRW they did not realize that they were acquiring a new CEO in the process!
- alecco 16y ago
  Not. Zappos/Amazon. Reported by people in LV.
- ChuckMcM 16y ago
  Perhaps 'anyone but Cisco'. There is a company that has more successfully than most integrated a number of companies into its structucture. Perhaps the most amazing (for me at least) is Linksys, which I predicted would result in an epic failure and yet their market share, and competitiveness has recovered after the post acquisition noise. I'd love to hear a Cisco Exec's opinion on their secret.
SandB0x 16y ago
I once witnessed the moment when the messenger from the new management team comes over to explain to the brilliant engineers who built the company up from nothing about these "timesheets" they need to fill in, and how it's "really not a big deal". You could feel something dying over the course of the conversation. It was one of the most uncomfortable things I've ever seen, and I'm sure it's far worse if you are one of the original engineers. Is it something every acquired company has to go through? Is there a right way to do this?
- edw519 16y ago
  Is there a right way to do this? Yes. a. Make it a fully owned subsidiary. b. Don't fuck with it.
  - petervandijck 16y ago
    That's what Google did with YouTube, right?
    - barredo 16y ago
      Well, sort-of. I prefer the Amazon-IMDb example
  - eps 16y ago
    Didn't work for Nullsoft, did it?
    - tptacek 16y ago
      Case in point for "don't fuck with it".
      - huhtenberg 16y ago
        From what I gather AOL didn't really "fuck" with Nullsoft, they kept working on what they wanted. Justin & Co. got bored being a big corp subsidiary and needing to work on WinAmp (which is what they were acquired for). And so it just didn't really whip llama's ass for them anymore, they escalated and quit. Effectively it was them fucking with AOL, not the other way around.
randall 16y ago
So what do we do? Obviously this sucks, but how do we build a company and get investors liquidity without Sarbanes-Oxley-riddled IPOs or Yahoo-level-incompetent acquisitions? Do we just keep being regular companies? Is there an alternative? How do we build things that matter (and require outside investment) and end in real change instead of just getting rich?
- paulbaumgart 16y ago
  Apparently the very creative people at Goldman Sachs have some ideas.
vegashacker 16y ago
I'm surprised this is a common scenario. I would think, due to the pervasiveness of the sunk-cost fallacy, that companies would stand behind their aquisitions to a fault even--just cause they spent so much money on them.
- jfm3 16y ago
  A buyer might think they're buying your users, or your technology. In either case, the possibility that these things can become devalued if not further invested in might (wrongly) never enter the thinking. If you don't change anything, how could the value of a user or a technology depreciate? (This is obviously wrong, I'm just trying to paint a possible line of reasoning.)
- steveklabnik 16y ago
  No, no, you've got it all wrong. If the startup just takes advantage of all of the institutional process and knowledge that the acquirer has to offer, they'll do _even better_ than before they were acquired! (This post is a good example of Poe's law...)
- jleader 16y ago
  As long as the VP who championed the purchase remains in charge of the aquisition...
jfm3 16y ago
It's all true, and Yahoo is probably one of the better companies that could acquire you.
bengebre 16y ago
It kinda makes you long for the days where the exit was a speculative IPO. At least some of the resources went to founders that way and they often retained a sizable chunk of equity (i.e. control of the product). Related (Why Ten Million Dollar IPOs Matter): http://www.urgentspeed.com/applied_disruption/2010/04/why-ten-million-dollar-ipos-matter.html http://www.urgentspeed.com/applied_disruption/2010/04/why-te...
kenjackson 16y ago
So why does Yahoo buy these properties? While I'm sure we'd all like to think the decision makers at Yahoo since day 1 were all idiots who like to spend millions of dollars on companies and then let them die, but is there actually a rational reason? Were they trying to keep them out of the hands of Google? Did they do it purely for the eyeballs and thought with no additional spending they'd get their money back out of the property in X months? I just find it hard to believe they'd do the same thing over and over again for no reason, but to lose money.
- AlexMuir 16y ago
  Perhaps it's exactly the same equation as VCs use. You can have 9 acquisitions that crater, as long as your tenth is a Doubleclick/Overture/Alibaba [1]. [1] Although this seems to be bombing somewhat at the moment.
- johnrob 16y ago
  I'd love to read a book/blog exposing "the mind" of the corporate acquirer, much like the book "Men are from Mars, Women are from Venus" supposedly does for the sexes.
  - mattm 16y ago
    You should read "Barbarians at the Gates" if you haven't already. It's a fascinating read about the takeover of RJR Nabisco and gives a good insight into how large corporations can act in schizophrenic ways.
- diego 16y ago
  Of course there are reasons, too many to count. I'm very close to one of the acquisitions on the list (as an early employee I made a modest profit). It comes down to a combination of: - Team: the acquirer likes the people and believes they will add value if convinced to stay on board. - Product: they like what they see, and they believe they can incorporate it into something they have in a relatively painless way. They think about what it would take to build it and it's mostly a time thing. They can spend the money but generating the momentum to build it would take too long. - Traction: this basically determines the price, because a company like Yahoo believes they can plug something they like into their properties and get traction. Having traction already is proof that the product is great, and it commands a premium. - Keeping it out of the wrong hands: yes, it's scary to imagine what would happen if a one-of-a-kind company fell into the hands of your competitor and they executed perfectly with it. - Need to spend M/A budget: if you are the M/A person at a big company, your job is to buy what you can't build or hire. You can't say "there's nothing out there worth buying" because other people are buying companies (herd mentality if you will). There are more factors, and there isn't a single one that determines a decision. A lot of people need to feel good about it and agree on the perceived risk and reward of the investment.
neworbit 16y ago
An awful lot of acquisitions end up this way, though. Consider the firms acquired by Amazon or Google or Microsoft. People remember IMDB and Alexa; Android and Youtube; Hotmail and Bungie... past that not so much.
ojbyrne 16y ago
I think, once you're in the VC system, you have to compare an acquisition to what happens if you go through more funding rounds and lose control over your company that way. Many of the same symptoms.
davidw 16y ago
The founders get to cash out is what I'm seeing. That's pretty nice, and may allow some of them to go on to better things. For instance, I think YC is far cooler than Viaweb.
bigbang 16y ago
There are 2 companies which Yahoo! acquired: 1) Overture. If you look at the financial reports, nearly 50% of Yahoo's revenue is from search. They acquired Overture for ~1B 2) They acquired RocketMail (essentially Yahoo! mail). Most people I know, when they think of Yahoo, they think of Yahoo! mail. So, while its easy to say they messed up many acquisitions (esp the infamous 3B offer for Broadcast.com), the 2 acquisitions they made is what keeps them "in the game" today. You win some acquisitions, you lose some. Just like investing, if you make few smart ones, it can easily pay off and create more value than the money spent on many failed ones. Same with Google - Youtube was handled very well, but many acquisitions are essentially just shut down or never integrated into other products(Dodgeball,Jaiku etc)
- contol-m 16y ago
  Actually Broadcast.com was a 5.7B deal, believe it or not.
ChuckMcM 16y ago
They forgot MusicMatch in 2007, there was a company that was on track to be iTunes became, except it ended up not going there.
joshu 16y ago
When Delicious was acquired, we desperately needed inverted indexes, which yahoo (eventually, slowly, painfully) did actually provide. I do find the "there's no business model" talk in the comments pretty annoying. Of course we had one.
mscarborough 16y ago
I can't speak to the examples from 2005 or 2007 (or any others really), but I was part of the Associated Content acquisition process and am an engineer with Yahoo now. For our group it has been a good thing and we are happy where we are. Our group's culture is the same, we are engaged in the larger company strategy, and are excited about the upcoming year. We have had a couple integration points take longer than expected but that's what happens when you go from 50 people to a company of thousands. YMMV I guess.
zavulon 16y ago
The article missed a pretty significant counterpoint, which I'm surprised wasn't mentioned here so far: Viaweb. As Yahoo Stores, it went to become a de-facto leader in online stores, which it's still is to this day.
omeega 16y ago
If you're an employee it sucks. If you're the initial owner you'll be happy to let Yahoo buy your product for multi-millions of dollars, and you'll be even happier to leave the company as quick as possible to start up your next app. Its a pattern: sell, get out ASAP, start next project, (allude to what could have been).
gojomo 16y ago
Denial, Anger, Bargaining, Depression, Acceptance.
wheels 16y ago
Hmm, for some reason they forgot to include: You sell your company for $50 million in Yahoo stock, which over the course of your two year tenure at Yahoo will see a tenfold increase in value up to $500 million and your team will use that wealth to go on to create a disruptive seed-stage funding group called Y Combinator. Must have been an oversight. I can't imagine 37signals only telling half of these stories to make it better fit with their mantras.
- brisance 16y ago
  That was a really long time ago, at the beginning of the dot-com craze. On the contrary, in the last 5 years, YHOO share prices have declined about 50%. http://finance.yahoo.com/echarts?s=YHOO+Interactive#chart2:symbol=yhoo;range=5y;indicator=ke_it+ke_ud+ke_sd+volume+macd+rsi;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined http://finance.yahoo.com/echarts?s=YHOO+Interactive#chart2:s...
  - kscaldef 16y ago
    Sure, but there's also 2003-2005, where the stock increased several fold. It matters a lot where you pick your start and end points with tech companies in the last 15 years.
    - brisance 16y ago
      Yes, but if you read the article, all the acquisitions were done in 2005 onwards i.e. in the last 5 years. It was quite clear by then that the dot-com bubble had burst.
      - kscaldef 16y ago
        I did read the article. a) it's not as if Yahoo only started making acquisitions in 2005. b) 2003 was post-bubble.
- jackowayed 16y ago
  Wow, did their stock actually 10x between when they got there and when they sold it?
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cletus 16y ago
You seriously weigh up how much the earn out is really worth to you.
carlhu 16y ago
This is a very thorough analysis by 37signals. I wonder if they are being vetted by Yahoo, and decided to do some due diligence on the fate of prior acquisitions?
mkramlich 16y ago
summary: hear about goose laying golden eggs; buy that goose; then kill it, forget about it or let it starve to death
ajhit406 16y ago
I think google has done a much better job of targeting services they know they can integrate into their core. Yahoo has really just had a bunch of different silos operating (for the most part) on their own. When the founders lose their ability to control the product and their economic incentives, then they're really fked. Facebook has integrated their acquisitions' technology in some cases, but it seems they're mostly in it for talent acquisitions. They've done a good job so far in retaining (they're still pre-IPO) but we'll see what happens when they get old and some new hotness appears at school (might take 10 yrs) Scorecards: http://en.wikipedia.org/wiki/List_of_Yahoo!-owned_sites_and_services http://en.wikipedia.org/wiki/List_of_Yahoo!-owned_sites_and_... http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google
reubenyeah 16y ago
Do you start a startup incubator?
roel_v 16y ago
I've just joined Flickr but I'm finding it awkward in some places, and the 'community' (at least that of extension/tool developers) seems to have died in 2008 or so. The upload tools are atrocious, no reliable way to download stuff for backups, the UI is unpolished and doesn't seem to get updated much. So, where do I go for online photo hosting / backup? Picasa / Web Albums isn't better, plus it's very desktop focused. Are there any modern offerings that can step into Flickr's shoes?
- toadi 16y ago
  My Pro account expired and never prolonged it.Haven't uploaded pictures for a very long time now.
- rbanffy 16y ago
  I use Shotwell to upload to Flickr and Picasa. So far, I am very happy with it. It also keeps my photos happily organized.
renofwon 16y ago
New companies get acquired. Old philosophies stay the same. "But today it seems like the old is doing the plowing. Let’s stop that. Let’s build great companies that are here to fight, here to win, and here to stay until the next generation after us comes along and kicks all our asses. And again and again and again. That’s how better happens." http://37signals.com/svn/posts/1927-the-next-generation-bends-over http://37signals.com/svn/posts/1927-the-next-generation-bend... That quote is from nearly two years ago, but it's just as relevant today.
Jgrubb 16y ago
You know what this whole article sounds exactly like to me? This sounds exactly like the major label record system of yore. Replace the instances of "internal executive champion" with "A&R guy" and "web service" with "band". God knows how many absolutely awesome bands were signed to major labels over the decades by A&R that "got it" only to be left high and dry when that person was fired or moved somewhere else internally. Very little new under the sun, I suppose. Great read.
kamdar 16y ago
But Yahoo acquired these commpanies for cheap rate. I think other than flickr none of them had good model. Upcoming was aquired for only 1M? If it doesn't match the expectation, Yahoo will definitly won't sink millions more in it! Google aquired Youtube for more than 1.5 billion dollars so they paid attention. Someone should also research in to Google or Microsoft's small aquisitions.

263 points by JacobAldridge 16y ago

earl 16y ago

Ouch. That's a pretty damning list Matt compiled.

At the risk of preaching to the choir, here's some more input from another Yahoo acquiree - pg on 'What Happened to Yahoo' (Aug '10) http://www.paulgraham.com/yahoo.html http://www.paulgraham.com/yahoo.html

mscarborough 16y ago
Sigh. I work for Yahoo, after 6 years of ('failed') startup work. I respect YC and pg immensely. However, linking to this article that is written in 2010 that references the mid-1990s (except for a single mention of Facebook in 2007) seems a bit weak. It doesn't bother me that HN folks dismiss Yahoo as a company, so much as it does that HN folks ignore Yahoo engineering. Hadoop, WOEID, Pipes, etc. For me as an engineer that has worked for a few startups and companies that hoped to be acquired, working for Yahoo is great because we are exposed to a lot of engineering work that is optimized for large scale. I'm sure Google and others are doing a great job of this as well, but why is it an either/or situation?
- jfager 16y ago
  I don't think anyone who would care ignores Hadoop. It and Yahoo's involvement with it are very well known and credited. WOEID seems pretty niche. I don't work with geo much, so I don't understand right away why I would want to use a WOEID over a simple lat/long. Who else uses WOEIDs, for instance? Pipes would be approximately a billion times more interesting if it didn't have the commercial use restrictions and had a version I could get some kind of SLA for. If Yahoo is so proud of Pipes, why won't you let people build businesses on it? And why did you only post 2 blog updates about it in 2010?

markszcz 16y ago

So what I’m getting out of this is that if your passionate about your company and its doing well, think twice before you decide to get bought out because its possible that life might not be better/greener for your company once your assimilated. Reminds me of Brew Masters when the owner of Dogfish Head, Sam Calagione, mentioned that he had an offer to sell off his company for a nice amount but in the end he would still obsess about the fate of his company, and the name he built up for it, that it wasnt worth selling.

gamble 16y ago

This article is mistitled. It should read 'What happens after anyone acquires you'. These anecdotes will sound familiar to many people who have been through an acquisition. Acquisitions are not something any company is naturally good at, and they inherently threaten the bureaucracy of the acquirer. Despite good intentions, the corporate immune system usually kills off the interloper before it becomes established. Not to mention that the founders and best employees usually bail within a couple of years.

Yrlec 16y ago
It all boils down to the fact that scalability of an organization often is harder than scalability of a web site. Yahoo just happens to be a very good example of that. As hackers we tend to focus a lot on technical scalability issues. We love to work on things like NoSQL, the CAP-theroem, large scale caching and whatnot. But I think that the organization often becomes the bottleneck quicker than the web site. This is especially true now when we have services like Amazon AWS and GAE which helps us with the technical scalability issues. So next time you work on that really cool memory optimization maybe you should ask yourself if you don't get better scalability as a whole if you focus your limited programming resources on features instead (so you don't have to hire that extra programmer to do that for you, since you work on your memory optimization).
hsmyers 16y ago
Not always. When Northrop Grumman bought TRW they did not realize that they were acquiring a new CEO in the process!
alecco 16y ago
Not. Zappos/Amazon. Reported by people in LV.
ChuckMcM 16y ago
Perhaps 'anyone but Cisco'. There is a company that has more successfully than most integrated a number of companies into its structucture. Perhaps the most amazing (for me at least) is Linksys, which I predicted would result in an epic failure and yet their market share, and competitiveness has recovered after the post acquisition noise. I'd love to hear a Cisco Exec's opinion on their secret.

SandB0x 16y ago

I once witnessed the moment when the messenger from the new management team comes over to explain to the brilliant engineers who built the company up from nothing about these "timesheets" they need to fill in, and how it's "really not a big deal". You could feel something dying over the course of the conversation. It was one of the most uncomfortable things I've ever seen, and I'm sure it's far worse if you are one of the original engineers. Is it something every acquired company has to go through? Is there a right way to do this?

edw519 16y ago
Is there a right way to do this? Yes. a. Make it a fully owned subsidiary. b. Don't fuck with it.
- petervandijck 16y ago
  That's what Google did with YouTube, right?
  - barredo 16y ago
    Well, sort-of. I prefer the Amazon-IMDb example
- eps 16y ago
  Didn't work for Nullsoft, did it?
  - tptacek 16y ago
    Case in point for "don't fuck with it".
    - huhtenberg 16y ago
      From what I gather AOL didn't really "fuck" with Nullsoft, they kept working on what they wanted. Justin & Co. got bored being a big corp subsidiary and needing to work on WinAmp (which is what they were acquired for). And so it just didn't really whip llama's ass for them anymore, they escalated and quit. Effectively it was them fucking with AOL, not the other way around.

randall 16y ago

So what do we do? Obviously this sucks, but how do we build a company and get investors liquidity without Sarbanes-Oxley-riddled IPOs or Yahoo-level-incompetent acquisitions? Do we just keep being regular companies? Is there an alternative? How do we build things that matter (and require outside investment) and end in real change instead of just getting rich?

paulbaumgart 16y ago
Apparently the very creative people at Goldman Sachs have some ideas.

vegashacker 16y ago

I'm surprised this is a common scenario. I would think, due to the pervasiveness of the sunk-cost fallacy, that companies would stand behind their aquisitions to a fault even--just cause they spent so much money on them.

jfm3 16y ago
A buyer might think they're buying your users, or your technology. In either case, the possibility that these things can become devalued if not further invested in might (wrongly) never enter the thinking. If you don't change anything, how could the value of a user or a technology depreciate? (This is obviously wrong, I'm just trying to paint a possible line of reasoning.)
steveklabnik 16y ago
No, no, you've got it all wrong. If the startup just takes advantage of all of the institutional process and knowledge that the acquirer has to offer, they'll do _even better_ than before they were acquired! (This post is a good example of Poe's law...)
jleader 16y ago
As long as the VP who championed the purchase remains in charge of the aquisition...

jfm3 16y ago

It's all true, and Yahoo is probably one of the better companies that could acquire you.

bengebre 16y ago

It kinda makes you long for the days where the exit was a speculative IPO. At least some of the resources went to founders that way and they often retained a sizable chunk of equity (i.e. control of the product). Related (Why Ten Million Dollar IPOs Matter): http://www.urgentspeed.com/applied_disruption/2010/04/why-ten-million-dollar-ipos-matter.html http://www.urgentspeed.com/applied_disruption/2010/04/why-te...

kenjackson 16y ago

So why does Yahoo buy these properties? While I'm sure we'd all like to think the decision makers at Yahoo since day 1 were all idiots who like to spend millions of dollars on companies and then let them die, but is there actually a rational reason? Were they trying to keep them out of the hands of Google? Did they do it purely for the eyeballs and thought with no additional spending they'd get their money back out of the property in X months? I just find it hard to believe they'd do the same thing over and over again for no reason, but to lose money.

AlexMuir 16y ago
Perhaps it's exactly the same equation as VCs use. You can have 9 acquisitions that crater, as long as your tenth is a Doubleclick/Overture/Alibaba [1]. [1] Although this seems to be bombing somewhat at the moment.
johnrob 16y ago
I'd love to read a book/blog exposing "the mind" of the corporate acquirer, much like the book "Men are from Mars, Women are from Venus" supposedly does for the sexes.
- mattm 16y ago
  You should read "Barbarians at the Gates" if you haven't already. It's a fascinating read about the takeover of RJR Nabisco and gives a good insight into how large corporations can act in schizophrenic ways.
diego 16y ago
Of course there are reasons, too many to count. I'm very close to one of the acquisitions on the list (as an early employee I made a modest profit). It comes down to a combination of: - Team: the acquirer likes the people and believes they will add value if convinced to stay on board. - Product: they like what they see, and they believe they can incorporate it into something they have in a relatively painless way. They think about what it would take to build it and it's mostly a time thing. They can spend the money but generating the momentum to build it would take too long. - Traction: this basically determines the price, because a company like Yahoo believes they can plug something they like into their properties and get traction. Having traction already is proof that the product is great, and it commands a premium. - Keeping it out of the wrong hands: yes, it's scary to imagine what would happen if a one-of-a-kind company fell into the hands of your competitor and they executed perfectly with it. - Need to spend M/A budget: if you are the M/A person at a big company, your job is to buy what you can't build or hire. You can't say "there's nothing out there worth buying" because other people are buying companies (herd mentality if you will). There are more factors, and there isn't a single one that determines a decision. A lot of people need to feel good about it and agree on the perceived risk and reward of the investment.

neworbit 16y ago

An awful lot of acquisitions end up this way, though. Consider the firms acquired by Amazon or Google or Microsoft. People remember IMDB and Alexa; Android and Youtube; Hotmail and Bungie... past that not so much.

ojbyrne 16y ago

I think, once you're in the VC system, you have to compare an acquisition to what happens if you go through more funding rounds and lose control over your company that way. Many of the same symptoms.

davidw 16y ago

The founders get to cash out is what I'm seeing. That's pretty nice, and may allow some of them to go on to better things. For instance, I think YC is far cooler than Viaweb.

bigbang 16y ago

There are 2 companies which Yahoo! acquired: 1) Overture. If you look at the financial reports, nearly 50% of Yahoo's revenue is from search. They acquired Overture for ~1B 2) They acquired RocketMail (essentially Yahoo! mail). Most people I know, when they think of Yahoo, they think of Yahoo! mail. So, while its easy to say they messed up many acquisitions (esp the infamous 3B offer for Broadcast.com), the 2 acquisitions they made is what keeps them "in the game" today. You win some acquisitions, you lose some. Just like investing, if you make few smart ones, it can easily pay off and create more value than the money spent on many failed ones. Same with Google - Youtube was handled very well, but many acquisitions are essentially just shut down or never integrated into other products(Dodgeball,Jaiku etc)

contol-m 16y ago
Actually Broadcast.com was a 5.7B deal, believe it or not.

ChuckMcM 16y ago

They forgot MusicMatch in 2007, there was a company that was on track to be iTunes became, except it ended up not going there.

joshu 16y ago

When Delicious was acquired, we desperately needed inverted indexes, which yahoo (eventually, slowly, painfully) did actually provide. I do find the "there's no business model" talk in the comments pretty annoying. Of course we had one.

mscarborough 16y ago

I can't speak to the examples from 2005 or 2007 (or any others really), but I was part of the Associated Content acquisition process and am an engineer with Yahoo now. For our group it has been a good thing and we are happy where we are. Our group's culture is the same, we are engaged in the larger company strategy, and are excited about the upcoming year. We have had a couple integration points take longer than expected but that's what happens when you go from 50 people to a company of thousands. YMMV I guess.

zavulon 16y ago

The article missed a pretty significant counterpoint, which I'm surprised wasn't mentioned here so far: Viaweb. As Yahoo Stores, it went to become a de-facto leader in online stores, which it's still is to this day.

omeega 16y ago

If you're an employee it sucks. If you're the initial owner you'll be happy to let Yahoo buy your product for multi-millions of dollars, and you'll be even happier to leave the company as quick as possible to start up your next app. Its a pattern: sell, get out ASAP, start next project, (allude to what could have been).

gojomo 16y ago

Denial, Anger, Bargaining, Depression, Acceptance.

wheels 16y ago

Hmm, for some reason they forgot to include: You sell your company for $50 million in Yahoo stock, which over the course of your two year tenure at Yahoo will see a tenfold increase in value up to $500 million and your team will use that wealth to go on to create a disruptive seed-stage funding group called Y Combinator. Must have been an oversight. I can't imagine 37signals only telling half of these stories to make it better fit with their mantras.

brisance 16y ago
That was a really long time ago, at the beginning of the dot-com craze. On the contrary, in the last 5 years, YHOO share prices have declined about 50%. http://finance.yahoo.com/echarts?s=YHOO+Interactive#chart2:symbol=yhoo;range=5y;indicator=ke_it+ke_ud+ke_sd+volume+macd+rsi;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined http://finance.yahoo.com/echarts?s=YHOO+Interactive#chart2:s...
- kscaldef 16y ago
  Sure, but there's also 2003-2005, where the stock increased several fold. It matters a lot where you pick your start and end points with tech companies in the last 15 years.
  - brisance 16y ago
    Yes, but if you read the article, all the acquisitions were done in 2005 onwards i.e. in the last 5 years. It was quite clear by then that the dot-com bubble had burst.
    - kscaldef 16y ago
      I did read the article. a) it's not as if Yahoo only started making acquisitions in 2005. b) 2003 was post-bubble.
jackowayed 16y ago
Wow, did their stock actually 10x between when they got there and when they sold it?

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cletus 16y ago

You seriously weigh up how much the earn out is really worth to you.

carlhu 16y ago

This is a very thorough analysis by 37signals. I wonder if they are being vetted by Yahoo, and decided to do some due diligence on the fate of prior acquisitions?

mkramlich 16y ago

summary: hear about goose laying golden eggs; buy that goose; then kill it, forget about it or let it starve to death

ajhit406 16y ago

I think google has done a much better job of targeting services they know they can integrate into their core. Yahoo has really just had a bunch of different silos operating (for the most part) on their own. When the founders lose their ability to control the product and their economic incentives, then they're really fked. Facebook has integrated their acquisitions' technology in some cases, but it seems they're mostly in it for talent acquisitions. They've done a good job so far in retaining (they're still pre-IPO) but we'll see what happens when they get old and some new hotness appears at school (might take 10 yrs) Scorecards: http://en.wikipedia.org/wiki/List_of_Yahoo!-owned_sites_and_services http://en.wikipedia.org/wiki/List_of_Yahoo!-owned_sites_and_... http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google

reubenyeah 16y ago

Do you start a startup incubator?

roel_v 16y ago

I've just joined Flickr but I'm finding it awkward in some places, and the 'community' (at least that of extension/tool developers) seems to have died in 2008 or so. The upload tools are atrocious, no reliable way to download stuff for backups, the UI is unpolished and doesn't seem to get updated much. So, where do I go for online photo hosting / backup? Picasa / Web Albums isn't better, plus it's very desktop focused. Are there any modern offerings that can step into Flickr's shoes?

toadi 16y ago
My Pro account expired and never prolonged it.Haven't uploaded pictures for a very long time now.
rbanffy 16y ago
I use Shotwell to upload to Flickr and Picasa. So far, I am very happy with it. It also keeps my photos happily organized.

renofwon 16y ago

New companies get acquired. Old philosophies stay the same. "But today it seems like the old is doing the plowing. Let’s stop that. Let’s build great companies that are here to fight, here to win, and here to stay until the next generation after us comes along and kicks all our asses. And again and again and again. That’s how better happens." http://37signals.com/svn/posts/1927-the-next-generation-bends-over http://37signals.com/svn/posts/1927-the-next-generation-bend... That quote is from nearly two years ago, but it's just as relevant today.

Jgrubb 16y ago

You know what this whole article sounds exactly like to me? This sounds exactly like the major label record system of yore. Replace the instances of "internal executive champion" with "A&R guy" and "web service" with "band". God knows how many absolutely awesome bands were signed to major labels over the decades by A&R that "got it" only to be left high and dry when that person was fired or moved somewhere else internally. Very little new under the sun, I suppose. Great read.

kamdar 16y ago

But Yahoo acquired these commpanies for cheap rate. I think other than flickr none of them had good model. Upcoming was aquired for only 1M? If it doesn't match the expectation, Yahoo will definitly won't sink millions more in it! Google aquired Youtube for more than 1.5 billion dollars so they paid attention. Someone should also research in to Google or Microsoft's small aquisitions.