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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 millio

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.
kscaldef 16y ago
The article ignores the stories that turn out differently. For example, I noticed whereonearth in the list of acquisitions. I happen to know that their technology was nearly immediately used to start making money for Yahoo (because I integrated it into parts of the ad serving systems). It also was probably behind the "platform technology that enabled things like geolocation open API" that Upcoming enjoyed. The time cutoff also leaves out the Overture, Inktomi, Altavista trio which made a ton of money for Yahoo, let them build a search engine on par with Google, and fueled significant growth of the company. Finally, the article also ignores the fact than many, many internally developed products (of any internet company) have a lifespan of under 5 years.
- neilk 16y ago
  I am quoted in this article and I totally agree with you. It has to do with the nature of the acquisition. As you say, WhereOnEarth was killer technology, easy to integrate into everything that Yahoo did. The "Class of 2005" startups that Yahoo acquired were not about technology, they were about having a different relationship with the users and creating common resources (photo library, tagged URLs, event information...). That's a much more problematic kind of innovation for a company like Yahoo. It was alien to how Yahoo worked, and for many groups it was even a kind of threat.
cletus 16y ago
> So why does Yahoo buy these properties? Why does Yahoo do anything? It's clearly a company without a vision or purpose that is simply shuffling money and paper around in the hopes that onlookers mistake activity for achievement as the executives hope the kick the can down the street just past the next executive pay review and/or contract extension.
qeorge 16y ago
Without "growth" the stock tanks.
fleaflicker 16y ago
A lot of these are a function of management changes. One regime excitedly acquires a startup. Shortly after, the large company's CEO is canned. The new CEO cleans house and brings in a new management team with a different vision. Startup's product is no longer a priority.
mattm 16y ago
It's all about the "deal." Some people in business (esp. management/marketing types) just love making deals. It doesn't matter whether the deal makes sense or even works out in the long run. They just want to put the pieces together to make the deal and say "I did that."

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.

kscaldef 16y ago

The article ignores the stories that turn out differently. For example, I noticed whereonearth in the list of acquisitions. I happen to know that their technology was nearly immediately used to start making money for Yahoo (because I integrated it into parts of the ad serving systems). It also was probably behind the "platform technology that enabled things like geolocation open API" that Upcoming enjoyed. The time cutoff also leaves out the Overture, Inktomi, Altavista trio which made a ton of money for Yahoo, let them build a search engine on par with Google, and fueled significant growth of the company. Finally, the article also ignores the fact than many, many internally developed products (of any internet company) have a lifespan of under 5 years.

neilk 16y ago
I am quoted in this article and I totally agree with you. It has to do with the nature of the acquisition. As you say, WhereOnEarth was killer technology, easy to integrate into everything that Yahoo did. The "Class of 2005" startups that Yahoo acquired were not about technology, they were about having a different relationship with the users and creating common resources (photo library, tagged URLs, event information...). That's a much more problematic kind of innovation for a company like Yahoo. It was alien to how Yahoo worked, and for many groups it was even a kind of threat.

cletus 16y ago

> So why does Yahoo buy these properties? Why does Yahoo do anything? It's clearly a company without a vision or purpose that is simply shuffling money and paper around in the hopes that onlookers mistake activity for achievement as the executives hope the kick the can down the street just past the next executive pay review and/or contract extension.

qeorge 16y ago

Without "growth" the stock tanks.

fleaflicker 16y ago

A lot of these are a function of management changes. One regime excitedly acquires a startup. Shortly after, the large company's CEO is canned. The new CEO cleans house and brings in a new management team with a different vision. Startup's product is no longer a priority.

mattm 16y ago

It's all about the "deal." Some people in business (esp. management/marketing types) just love making deals. It doesn't matter whether the deal makes sense or even works out in the long run. They just want to put the pieces together to make the deal and say "I did that."