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I worked at Yahoo! when this was going on, I’m amazed the share holders didn’t sue Jerry Yang and the board for avoiding this sale. Yahoo had very little of tec

I worked at Yahoo! when this was going on, I’m amazed the share holders didn’t sue Jerry Yang and the board for avoiding this sale. Yahoo had very little of technological value and was actively trying to destroy its own search business amongst other properties at the time. They really were in a prime position and bungled it extremely badly, I think they had maybe 20% of the search market at the time. Carol Bartz later came and told everyone it was pointless to be in the search business because Google were too big and impossible to compete with on investment. She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place. Pure Harvard Business School spreadsheet stuff. It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better.

chalst 6y ago
The answer to the puzzle is that the rule about fiduciary duty really is only relevant to who the beneficiaries are of financial transactions; it pretty much does not have anything to say about regular business decisions. No doubt some shareholders contacted their lawyers and were gently dissuaded by a legal reality check.
- cbsmith 6y ago
  Shareholders did sue, and the threat of the lawsuit meant the board had to devote a lot of energy towards the Microsoft acquisition offer, which was unfortunately why the offer was a win-win for Microsoft.
  - chalst 6y ago
    I checked, and not only did they sue but they reached a settlement, in Delaware of all places, the state least friendly to these kinds of claims. But the settlement had nothing to do with Yahoo failing to reach an agreement with Microsoft; it was to weaken a poison pill Yahoo had put into place that meant employees would get expensive severances in the event of a takeover. This kind of financial measure is bread-and-butter for corporate fiduciary law, and it doesn't contradict what I said. https://www.zdnet.com/article/yahoo-settles-shareholder-suit-partially-removes-severance-roadblock/ https://www.zdnet.com/article/yahoo-settles-shareholder-suit...
    - cbsmith 6y ago
      In fairness, that was the legal claim that they thought had the best chance of succeeding. That option for a poison pill had been in the arsenal pretty much since the company was formed. They sued because Yahoo failed to accept the agreement.
hkmurakami 6y ago
Shareholders did great holding onto Yahoo! stock, as it’s Alibaba holdings would perform magnificently.
- jsight 6y ago
  I could be wrong, but I don't think that was enough to push it back above the 44.6B valuation.
  - oefrha 6y ago
    Yahoo used to have a 15% stake in Alibaba. Alibaba’s market cap today is ~643B according to (ironically) Yahoo Finance. Edit: Apparently they used to hold 30%, but sold half of that for peanuts in 2012.
    - mbesto 6y ago
      Also, IIRC, Yahoo Japan is basically another entity and way bigger than all of Yahoo global, in which Yahoo had a stake in as well.
    - 1024core 6y ago
      Jack Ma refused to take Alibaba public until Yahoo sold half of its stake back to him (for peanuts). Carol Bartz really screwed Yahoo over in its dealing with Alibaba. Yahoo had 2 seats on the 5-seat board of directors and Bartz couldn't be bothered to appoint directors to those. When she became CEO, Jack came to meet her and she dressed him down in front of his underlings: a big slap in the face to Jack. These two incidents made sure that he was as uncooperative as could be. He took Alipay out from under Yahoo and never informed Bartz. Whatever you may say about Marissa Mayer, when she became CEO her first priority was to fix the broken relationship between Alibaba and Yahoo. She smoothed things over, and Jack let Yahoo keep the 15% stake, instead of asking for all of it back. She made Yahoo many billions with her moves.
  - skinnymuch 6y ago
    The Alibaba and Yahoo Japan stakes Yahoo got were selling half of Alibaba stake for $8B in 2012 and $40B remaining in 2019. They sold Yahoo Japan shares for $4B in 2019. Microsoft would have had no need to sell the 2012 stake at the time. They could have possibly doubled their money.
bazooka_penguin 6y ago
Pure Harvard Business School spreadsheet stuff. Business degrees might be destroying the nation.
- wyre 6y ago
  All we need is a peer reviewed study proving it.
- ihsw 6y ago
  > The road to hell is paved with Ivy League degrees. Source: Thomas Sowell on "Intellectuals and Society"
- trenchgun 6y ago
  https://www.reddit.com/r/space/comments/l7n33v/my_dad_has_taught_tech_writing_to_engineering/ https://www.reddit.com/r/space/comments/l7n33v/my_dad_has_ta...
wpietri 6y ago
I'm with you on almost all of this, but can you explain why you think it's incorrect that Yahoo wouldn't have to spend a lot of money to keep up with Google? Google's origin story doesn't seem relevant to me, in that Google won because they made radical leaps forward in search quality, compute cost, and and compute scale. As well as company culture around innovation/continuous improvement, I suspect. All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%. [1] It seems to me that by 2008, there were fewer easy innovations lying around to make. Or if there were, Google was well prepared to match them. That, plus the way the size of the web had exploded [2] in the decade since Google's launch suggests to me that competing with Google would have been extremely expensive. The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008. [1] See https://www.statista.com/statistics/185700/percentage-of-adult-internet-users-in-the-united-states-since-2000/ https://www.statista.com/statistics/185700/percentage-of-adu... and https://www.statista.com/statistics/214662/household-adoption-rate-of-internet-access-in-the-us-since-1997/ https://www.statista.com/statistics/214662/household-adoptio... [2] From 1997 to 2008, there were more than 100x more websites, and I expect those websites got larger both in number of pages and per-page size. https://www.internetlivestats.com/total-number-of-websites/ https://www.internetlivestats.com/total-number-of-websites/
- cbsmith 6y ago
  > Google's origin story doesn't seem relevant to me, in that Google won because they made radical leaps forward in search quality, compute cost, and and compute scale. That's the myth, but it's pretty far from the reality. Long before Google became such a dominant player, competing search engines had matched or exceeded its quality, compute cost, and ability to scale. > All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%. Bingo. You nailed it. It turns out the search market was largely a distribution game. You wanted to be the search engine distributed to that massively growing audience, and Google did a great job of establishing itself as the first search engine presented to people. > It seems to me that by 2008, there were fewer easy innovations lying around to make. There's certainly been a lot of innovations in search since 2008, but nothing that was "disruptive". It's very hard to get more than a small percentage of people to change what search engine they use, and advertisers are not particularly interested in chasing that segment of the population. > The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008. Yeah, I really have to scratch my head at how people look at the empirical evidence and think that in 2008 it was a mistake to recognize the losing position competitors were in.
skinnymuch 6y ago
I agree it was stupid for Yahoo to not go to Microsoft at the time. Maybe Microsoft and Yahoo search and ads would be stronger today. Pushing against Google and FB more. But it doesn’t appear bad enough for a valid lawsuit considering Yahoo got more than $45B back since 2008. Yahoo sold half of the Alibaba stake for $8B and $40B in 2012 and 2019. Yahoo Japan stake for $4B in 2019. And Yahoo itself for $4-5B around that time. Of course the people who would have taken Microsoft stock would’ve made a lot if they held on through 2013, 2014. Microsoft stock was 10x less in 2008 and rose 50% before the end of 2014. The shareholders who would’ve taken cash wouldn’t have been better off without knowing how that cash would be used.
duxup 6y ago
Was there an understanding in 2008 that Yahoo... couldn't just "be Yahoo" going forward without falling behind / fading away and would have to really change dramaticly? I ask because it seemed like there were attempts but they were sort of fits and starts and meanwhile most of Yahoo still seemed like just old Yahoo... It does seem like a continuous failure in leadership at Yahoo to really change much at all. There were sort of psudo attempts to do other things (be a media company I guess) but they never came to much.
- eloisant 6y ago
  No, in 2008 Yahoo was already seen as a failed company. The biggest mistake they did in the late 90's is to stop being a tech company and be a "media company" instead. So in 2008 they were still big but mostly running on momentum they built during the 90's and a couple acquisitions. They had Yahoo!Mail that was popular, their homepage was still popular because some people forgot to try something different, Flickr that they bought and was the most successful photo sharing website until the got overtaken by general purpose social networks, and Yahoo!Japan that was hugely popular but was a joint venture with Softbank. Maybe some other stuff I'm forgetting... But they didn't have anything that made people dream. Right before 2008 they tried to join the social bandwagon with a horizontal social network across their properties, but it failed just like when Google tried to do the same a couple of years later with Google+. However, as much as Yahoo was seen as a failed company, Microsoft didn't get their Nadella rebirth yet. It was still an old evil outdated company, run by Balmer, mocking the iPhone and claiming their Windows CE phones with their tiny start button and stylus were better. So Microsoft didn't look super sexy either. It really looked like 2 losers trying to band together to fight the cool winner that Google was.
  - duxup 6y ago
    Yeah that's a valid point about MS, they were healthier as far as having products and income but ... weren't at that point yet reborn / looking for their own way forward.
  - deleted 6y ago
    [deleted]
kreeben 6y ago
If you are flabbergasted by the fact Yahoo, and everyone else for that matter, thought it absolutely impossible to disrupt Google (except for perhaps a handful of hubris-riddled people at MS), please remember the general sentiment HN used to have towards Google who according to us, at that time, could do no wrong. They were infallible. They were the brightest people in the world. They were The Good Guy (TM). They were so good that when they launched a browser later that year, no one blinked before installing it. You didn't blink. I didn't blink. We just drank the cool aid and clicked "install".
- darkwizard42 6y ago
  Chrome was an excellent browser when it launched... It might not be able to compete with such a wide gap against all the Chromium based clones out there now, but it was rightfully an amazing experience. Initially its only competition felt like Firefox
  - agumonkey 6y ago
    a list of shockers - streamed install process (download a shim of 300kB which will stream the rest) - obviously the chromeless ui - the dynamic status bar (ok that was the point above) - downloads shown below (as cute as the status bar, actually I miss that thing) - something about tab closing that was more regular (no need to move your mouse) - option / printing lean and fast
    - DaiPlusPlus 6y ago
      Counter-points: 1. At the time, Firefox’ total installer size was ~4-5MB. 2. Much lighter than the contemporaneous IE8 and default Firefox skin, but it just came down to removing the menu-bar and status bar. Chrome’s lack of a traditional menu-bar put me off for a while, I’ll admit. I also disagreed with Chrome having its own visual-style on Windows instead of using the system theme. I know Chrome integrated with Aero Glass on Vista-and-later, but I was an XP hold-out until 2013 when I jumped to Windows 8.1. 3. “Dynamic” is overselling it. Internet Explorer had an auto-hiding status bar since version 4, albeit only in full-screen mode. 4. How is that a good thing? It wastes a thick line of screen space if you downloaded a single file. I preferred Firefox’s separate download manager window. 5. IIRC, Chrome’s “close-everything-without-moving-the-mouse” feature wasn’t in its earlier releases - and I had that functionality in Firefox (back when Firefox had a single close-current-tab button on the far-right instead of close buttons on each tab) 6. Who prints web-pages? Even in 2008. - But yeah, Chrome’s attempt at cutting down unnecessary UI was bold - and prompted Microsoft to redo IE9’s UI to look like Chrome’s in 2011 (despite that, they never fixed the “snappy” feel that Chrome has - why does IE still freeze briefly for 1-2 frames every time you switch tabs? Why is the address bar still so fiddly? Oh well, IE is dead now so we’ll never know...)
riemannzeta 6y ago
Even if you worked there, you may not have been aware of the fact that Yahoo already had an investment in a still small, but exponentially growing ecommerce startup in China, or that part of the reason the deal fell apart was because of a difference in opinion over how to value that asset.
- andy_ppp 6y ago
  I seem to remember the stake in Alibaba was worth a huge proportion of the valuation at the time. I didn’t know the deal fell apart because of that, I was just under the impression Yahoo’s board and Jerry didn’t want to sell to 2008 Microsoft.
cbsmith 6y ago
> I worked at Yahoo! when this was going on As did I > I'm amazed share holders didn't sure Jerry Yang and the board for avoiding the sale. There was a lawsuit: https://www.seattletimes.com/business/yahoo-settles-lawsuits-over-microsoft-bid/ https://www.seattletimes.com/business/yahoo-settles-lawsuits... > Yahoo had very little of technological value and was actively trying to destroy its own search business amongst other properties at the time. I'm not sure what you are referring to there. There was a lot of investment going on in search at the time. Certainly, critics (including me) felt it was maybe not the right investment, but "actively trying to destroy its own search business" doesn't ring true. > They really were in a prime position and bungled it extremely badly, I think they had maybe 20% of the search market at the time. 20% market share was unfortunately, a very weak position that was deteriorating pretty rapidly. The network effect ensured that the search business would continue to reward the dominant player dramatically more so than the smaller players, even if the smaller players had a technically superior product, which was what Bartz was getting at. "She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place." That's not ignoring how Google came into being, and the "money spent === great search engine results" isn't exactly what she said either. There's a reality that the business had evolved (not accidentally) to the point where barriers to entry were increasingly higher and more costly and the rewards disproportionately went to the dominant players. It is typical Harvard Business School stuff, because it's not at all an unusual circumstance in business. > It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better. If you'll recall, they made the engine better; it didn't matter. Less than a quarter of the market would switch to another engine even if you gave them absolutely the worst results, and smaller differences in search quality impacted the behaviour of less than 10% of the market. Hell, there was still a ton of traffic going to Alta Vista despite that engine no longer being different from Yahoo's. Meanwhile the advertisers hugely favoured larger market share, and the consequently more efficient market yielded huge marginal rewards in terms of quality and profit. The search engine battle had largely already been lost by then; it was largely lost several years prior (arguably as far back as Google's AOL deal). The opportunity wasn't "wasted": they'd thrown pretty much everything at it, and come up short. To this day, Google still has a dominant market share, despite a plethora of would be competitors. Sure, there is a possibility for a market disruption to change the game, but in a decade and a half, that has yet to emerge, so if you'd bet on game changing disruption in 2008 (and many investors did), from an investor's perspective, you'd have lost that bet.
trimbo 6y ago
IIRC, Yahoo didn't have search tech until they bought Inktomi. They outsourced their search to Inktomi in the 90s, then to Google in 2000. It was only after Yahoo bought Inktomi that they brought it in house (can't remember timeline of switching off Google). https://www.cnet.com/news/yahoo-to-acquire-inktomi/ https://www.cnet.com/news/yahoo-to-acquire-inktomi/ Yahoo was also a major shareholder in Google because of those agreements/investments and cross-licensing Overture patents. https://www.nytimes.com/2004/08/10/business/technology-google-and-yahoo-settle-dispute-over-search-patent.html https://www.nytimes.com/2004/08/10/business/technology-googl...
fiftyfifty 6y ago
I never understood why Yahoo got so wrapped around the axle with the search engine business. I used to use Yahoo a lot to start my web browsing and I liked the fact that it wasn't a search engine. They provided broad categories that you could click on and you could keep drilling down to more specific categories until you found relevant websites. Not always the best way to search the web but it was great when you didn't know exactly what you are looking for. They could have easily continued to categorize and curate the web that way and provided a nice alternative to search engines, especially for non-power users. In addition to that Yahoo had so many successful components back in the day that had they spent even a modicum of money and development effort they would have continued to be a significant force on the web. Things like Yahoo Travel and Yahoo Groups still don't have a decent alternative these days. I still mourn the loss of some Yahoo Groups I used to participate in. Yahoo Finance was once one of the best places on the internet to research stocks and investments. Yahoo Mail was ahead of Gmail for many years and only through years of neglect finally let everyone else catch up, their lack of spam filtering was what finally killed my Yahoo mail account for me. Yahoo Briefcase could've been Dropbox or Google Drive 10 years before Dropbox existed. Heck Yahoo even had news aggregation years before Google did. Yahoo dominated fantasy football for many years. The fact that they couldn't grow and monetize any or all of these successful components was simply due to a complete lack of vision and leadership.
- r00fus 6y ago
  It's even in their original acronym "Yahoo = yet another hierarchical officious oracle". Hierarchical is exactly what you're describing and I remember using that a lot in the early days.
- duped 6y ago
  One sad niche they missed was fantasy sports. Yahoo fantasy leagues were great, with configurable rules and such. Now fantasy is a big business and deeply tied to legalized sports gambling. That could have been worth hundreds of millions in revenue for Yahoo.
  - edmundsauto 6y ago
lazyjeff 6y ago
I also worked at Yahoo at that time, and I remember the feelings internally were more mixed. It was known that nearly all (or even more than 100%) of Yahoo's market value was the investment in Alibaba. Microsoft's offer basically valued all of Yahoo minus Alibaba and minus Yahoo Japan basically at nothing. And I'm perplexed by your blame on Jerry Yang, as out of the entire history of Yahoo, his Alibaba investment was the most financially successful act, worth more than anything any CEO at Yahoo had ever done combined. Also remember at that time that Google, MSN, and Yahoo were the three major search engines at that time. It wasn't clear why Yahoo couldn't close on the #1 spot. It had the clear #1 search engine spot in Japan already. The Yahoo properties (combination of all their websites) was the most popular websites on the internet. They had a much stronger machine learning and data mining research lab, one year bragging that they swept all the best paper awards at the ML/DM computer science conferences.
- pezezin 6y ago
  > It wasn't clear why Yahoo couldn't close on the #1 spot. It had the clear #1 search engine spot in Japan already. Yahoo is still huge in Japan. According to the statistics I found, Google is #1 with 75% market share and Yahoo is #2 with 19%, but everybody I know around me uses Yahoo.
WalterBright 6y ago
Having 20% of a gazillion dollar business is still zillions of dollars. I bought some Yahoo stock thinking Meyers was going to turn it around, but nope.
addicted 6y ago
> She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place. There's nothing inconsistent with the idea that a decade after Google established its extremely strong monopoly position in the search market, the barriers to entry, and the way to achieve success in the now established market are completely different than they were before Google achieved that monopoly and the market was as mature.
- andy_ppp 6y ago
  That might be true except everyone thought the results were the as good as Google if you rebranded Bing or Yahoo! SERPs with Google branding, layout and style. So might be worth thinking about how marketing affected Google’s success.

chalst 6y ago

The answer to the puzzle is that the rule about fiduciary duty really is only relevant to who the beneficiaries are of financial transactions; it pretty much does not have anything to say about regular business decisions. No doubt some shareholders contacted their lawyers and were gently dissuaded by a legal reality check.

cbsmith 6y ago
Shareholders did sue, and the threat of the lawsuit meant the board had to devote a lot of energy towards the Microsoft acquisition offer, which was unfortunately why the offer was a win-win for Microsoft.
- chalst 6y ago
  I checked, and not only did they sue but they reached a settlement, in Delaware of all places, the state least friendly to these kinds of claims. But the settlement had nothing to do with Yahoo failing to reach an agreement with Microsoft; it was to weaken a poison pill Yahoo had put into place that meant employees would get expensive severances in the event of a takeover. This kind of financial measure is bread-and-butter for corporate fiduciary law, and it doesn't contradict what I said. https://www.zdnet.com/article/yahoo-settles-shareholder-suit-partially-removes-severance-roadblock/ https://www.zdnet.com/article/yahoo-settles-shareholder-suit...
  - cbsmith 6y ago
    In fairness, that was the legal claim that they thought had the best chance of succeeding. That option for a poison pill had been in the arsenal pretty much since the company was formed. They sued because Yahoo failed to accept the agreement.

hkmurakami 6y ago

Shareholders did great holding onto Yahoo! stock, as it’s Alibaba holdings would perform magnificently.

jsight 6y ago
I could be wrong, but I don't think that was enough to push it back above the 44.6B valuation.
- oefrha 6y ago
  Yahoo used to have a 15% stake in Alibaba. Alibaba’s market cap today is ~643B according to (ironically) Yahoo Finance. Edit: Apparently they used to hold 30%, but sold half of that for peanuts in 2012.
  - mbesto 6y ago
    Also, IIRC, Yahoo Japan is basically another entity and way bigger than all of Yahoo global, in which Yahoo had a stake in as well.
  - 1024core 6y ago
    Jack Ma refused to take Alibaba public until Yahoo sold half of its stake back to him (for peanuts). Carol Bartz really screwed Yahoo over in its dealing with Alibaba. Yahoo had 2 seats on the 5-seat board of directors and Bartz couldn't be bothered to appoint directors to those. When she became CEO, Jack came to meet her and she dressed him down in front of his underlings: a big slap in the face to Jack. These two incidents made sure that he was as uncooperative as could be. He took Alipay out from under Yahoo and never informed Bartz. Whatever you may say about Marissa Mayer, when she became CEO her first priority was to fix the broken relationship between Alibaba and Yahoo. She smoothed things over, and Jack let Yahoo keep the 15% stake, instead of asking for all of it back. She made Yahoo many billions with her moves.
- skinnymuch 6y ago
  The Alibaba and Yahoo Japan stakes Yahoo got were selling half of Alibaba stake for $8B in 2012 and $40B remaining in 2019. They sold Yahoo Japan shares for $4B in 2019. Microsoft would have had no need to sell the 2012 stake at the time. They could have possibly doubled their money.

bazooka_penguin 6y ago

Pure Harvard Business School spreadsheet stuff. Business degrees might be destroying the nation.

wyre 6y ago
All we need is a peer reviewed study proving it.
ihsw 6y ago
> The road to hell is paved with Ivy League degrees. Source: Thomas Sowell on "Intellectuals and Society"
trenchgun 6y ago
https://www.reddit.com/r/space/comments/l7n33v/my_dad_has_taught_tech_writing_to_engineering/ https://www.reddit.com/r/space/comments/l7n33v/my_dad_has_ta...

wpietri 6y ago

I'm with you on almost all of this, but can you explain why you think it's incorrect that Yahoo wouldn't have to spend a lot of money to keep up with Google? Google's origin story doesn't seem relevant to me, in that Google won because they made radical leaps forward in search quality, compute cost, and and compute scale. As well as company culture around innovation/continuous improvement, I suspect. All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%. [1] It seems to me that by 2008, there were fewer easy innovations lying around to make. Or if there were, Google was well prepared to match them. That, plus the way the size of the web had exploded [2] in the decade since Google's launch suggests to me that competing with Google would have been extremely expensive. The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008. [1] See https://www.statista.com/statistics/185700/percentage-of-adult-internet-users-in-the-united-states-since-2000/ https://www.statista.com/statistics/185700/percentage-of-adu... and https://www.statista.com/statistics/214662/household-adoption-rate-of-internet-access-in-the-us-since-1997/ https://www.statista.com/statistics/214662/household-adoptio... [2] From 1997 to 2008, there were more than 100x more websites, and I expect those websites got larger both in number of pages and per-page size. https://www.internetlivestats.com/total-number-of-websites/ https://www.internetlivestats.com/total-number-of-websites/

cbsmith 6y ago
> Google's origin story doesn't seem relevant to me, in that Google won because they made radical leaps forward in search quality, compute cost, and and compute scale. That's the myth, but it's pretty far from the reality. Long before Google became such a dominant player, competing search engines had matched or exceeded its quality, compute cost, and ability to scale. > All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%. Bingo. You nailed it. It turns out the search market was largely a distribution game. You wanted to be the search engine distributed to that massively growing audience, and Google did a great job of establishing itself as the first search engine presented to people. > It seems to me that by 2008, there were fewer easy innovations lying around to make. There's certainly been a lot of innovations in search since 2008, but nothing that was "disruptive". It's very hard to get more than a small percentage of people to change what search engine they use, and advertisers are not particularly interested in chasing that segment of the population. > The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008. Yeah, I really have to scratch my head at how people look at the empirical evidence and think that in 2008 it was a mistake to recognize the losing position competitors were in.

skinnymuch 6y ago

I agree it was stupid for Yahoo to not go to Microsoft at the time. Maybe Microsoft and Yahoo search and ads would be stronger today. Pushing against Google and FB more. But it doesn’t appear bad enough for a valid lawsuit considering Yahoo got more than $45B back since 2008. Yahoo sold half of the Alibaba stake for $8B and $40B in 2012 and 2019. Yahoo Japan stake for $4B in 2019. And Yahoo itself for $4-5B around that time. Of course the people who would have taken Microsoft stock would’ve made a lot if they held on through 2013, 2014. Microsoft stock was 10x less in 2008 and rose 50% before the end of 2014. The shareholders who would’ve taken cash wouldn’t have been better off without knowing how that cash would be used.

duxup 6y ago

Was there an understanding in 2008 that Yahoo... couldn't just "be Yahoo" going forward without falling behind / fading away and would have to really change dramaticly? I ask because it seemed like there were attempts but they were sort of fits and starts and meanwhile most of Yahoo still seemed like just old Yahoo... It does seem like a continuous failure in leadership at Yahoo to really change much at all. There were sort of psudo attempts to do other things (be a media company I guess) but they never came to much.

eloisant 6y ago
No, in 2008 Yahoo was already seen as a failed company. The biggest mistake they did in the late 90's is to stop being a tech company and be a "media company" instead. So in 2008 they were still big but mostly running on momentum they built during the 90's and a couple acquisitions. They had Yahoo!Mail that was popular, their homepage was still popular because some people forgot to try something different, Flickr that they bought and was the most successful photo sharing website until the got overtaken by general purpose social networks, and Yahoo!Japan that was hugely popular but was a joint venture with Softbank. Maybe some other stuff I'm forgetting... But they didn't have anything that made people dream. Right before 2008 they tried to join the social bandwagon with a horizontal social network across their properties, but it failed just like when Google tried to do the same a couple of years later with Google+. However, as much as Yahoo was seen as a failed company, Microsoft didn't get their Nadella rebirth yet. It was still an old evil outdated company, run by Balmer, mocking the iPhone and claiming their Windows CE phones with their tiny start button and stylus were better. So Microsoft didn't look super sexy either. It really looked like 2 losers trying to band together to fight the cool winner that Google was.
- duxup 6y ago
  Yeah that's a valid point about MS, they were healthier as far as having products and income but ... weren't at that point yet reborn / looking for their own way forward.
- deleted 6y ago
  [deleted]

kreeben 6y ago

If you are flabbergasted by the fact Yahoo, and everyone else for that matter, thought it absolutely impossible to disrupt Google (except for perhaps a handful of hubris-riddled people at MS), please remember the general sentiment HN used to have towards Google who according to us, at that time, could do no wrong. They were infallible. They were the brightest people in the world. They were The Good Guy (TM). They were so good that when they launched a browser later that year, no one blinked before installing it. You didn't blink. I didn't blink. We just drank the cool aid and clicked "install".

darkwizard42 6y ago
Chrome was an excellent browser when it launched... It might not be able to compete with such a wide gap against all the Chromium based clones out there now, but it was rightfully an amazing experience. Initially its only competition felt like Firefox
- agumonkey 6y ago
  a list of shockers - streamed install process (download a shim of 300kB which will stream the rest) - obviously the chromeless ui - the dynamic status bar (ok that was the point above) - downloads shown below (as cute as the status bar, actually I miss that thing) - something about tab closing that was more regular (no need to move your mouse) - option / printing lean and fast
  - DaiPlusPlus 6y ago
    Counter-points: 1. At the time, Firefox’ total installer size was ~4-5MB. 2. Much lighter than the contemporaneous IE8 and default Firefox skin, but it just came down to removing the menu-bar and status bar. Chrome’s lack of a traditional menu-bar put me off for a while, I’ll admit. I also disagreed with Chrome having its own visual-style on Windows instead of using the system theme. I know Chrome integrated with Aero Glass on Vista-and-later, but I was an XP hold-out until 2013 when I jumped to Windows 8.1. 3. “Dynamic” is overselling it. Internet Explorer had an auto-hiding status bar since version 4, albeit only in full-screen mode. 4. How is that a good thing? It wastes a thick line of screen space if you downloaded a single file. I preferred Firefox’s separate download manager window. 5. IIRC, Chrome’s “close-everything-without-moving-the-mouse” feature wasn’t in its earlier releases - and I had that functionality in Firefox (back when Firefox had a single close-current-tab button on the far-right instead of close buttons on each tab) 6. Who prints web-pages? Even in 2008. - But yeah, Chrome’s attempt at cutting down unnecessary UI was bold - and prompted Microsoft to redo IE9’s UI to look like Chrome’s in 2011 (despite that, they never fixed the “snappy” feel that Chrome has - why does IE still freeze briefly for 1-2 frames every time you switch tabs? Why is the address bar still so fiddly? Oh well, IE is dead now so we’ll never know...)

riemannzeta 6y ago

Even if you worked there, you may not have been aware of the fact that Yahoo already had an investment in a still small, but exponentially growing ecommerce startup in China, or that part of the reason the deal fell apart was because of a difference in opinion over how to value that asset.

andy_ppp 6y ago
I seem to remember the stake in Alibaba was worth a huge proportion of the valuation at the time. I didn’t know the deal fell apart because of that, I was just under the impression Yahoo’s board and Jerry didn’t want to sell to 2008 Microsoft.

cbsmith 6y ago

> I worked at Yahoo! when this was going on As did I > I'm amazed share holders didn't sure Jerry Yang and the board for avoiding the sale. There was a lawsuit: https://www.seattletimes.com/business/yahoo-settles-lawsuits-over-microsoft-bid/ https://www.seattletimes.com/business/yahoo-settles-lawsuits... > Yahoo had very little of technological value and was actively trying to destroy its own search business amongst other properties at the time. I'm not sure what you are referring to there. There was a lot of investment going on in search at the time. Certainly, critics (including me) felt it was maybe not the right investment, but "actively trying to destroy its own search business" doesn't ring true. > They really were in a prime position and bungled it extremely badly, I think they had maybe 20% of the search market at the time. 20% market share was unfortunately, a very weak position that was deteriorating pretty rapidly. The network effect ensured that the search business would continue to reward the dominant player dramatically more so than the smaller players, even if the smaller players had a technically superior product, which was what Bartz was getting at. "She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place." That's not ignoring how Google came into being, and the "money spent === great search engine results" isn't exactly what she said either. There's a reality that the business had evolved (not accidentally) to the point where barriers to entry were increasingly higher and more costly and the rewards disproportionately went to the dominant players. It is typical Harvard Business School stuff, because it's not at all an unusual circumstance in business. > It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better. If you'll recall, they made the engine better; it didn't matter. Less than a quarter of the market would switch to another engine even if you gave them absolutely the worst results, and smaller differences in search quality impacted the behaviour of less than 10% of the market. Hell, there was still a ton of traffic going to Alta Vista despite that engine no longer being different from Yahoo's. Meanwhile the advertisers hugely favoured larger market share, and the consequently more efficient market yielded huge marginal rewards in terms of quality and profit. The search engine battle had largely already been lost by then; it was largely lost several years prior (arguably as far back as Google's AOL deal). The opportunity wasn't "wasted": they'd thrown pretty much everything at it, and come up short. To this day, Google still has a dominant market share, despite a plethora of would be competitors. Sure, there is a possibility for a market disruption to change the game, but in a decade and a half, that has yet to emerge, so if you'd bet on game changing disruption in 2008 (and many investors did), from an investor's perspective, you'd have lost that bet.

trimbo 6y ago

IIRC, Yahoo didn't have search tech until they bought Inktomi. They outsourced their search to Inktomi in the 90s, then to Google in 2000. It was only after Yahoo bought Inktomi that they brought it in house (can't remember timeline of switching off Google). https://www.cnet.com/news/yahoo-to-acquire-inktomi/ https://www.cnet.com/news/yahoo-to-acquire-inktomi/ Yahoo was also a major shareholder in Google because of those agreements/investments and cross-licensing Overture patents. https://www.nytimes.com/2004/08/10/business/technology-google-and-yahoo-settle-dispute-over-search-patent.html https://www.nytimes.com/2004/08/10/business/technology-googl...

fiftyfifty 6y ago

I never understood why Yahoo got so wrapped around the axle with the search engine business. I used to use Yahoo a lot to start my web browsing and I liked the fact that it wasn't a search engine. They provided broad categories that you could click on and you could keep drilling down to more specific categories until you found relevant websites. Not always the best way to search the web but it was great when you didn't know exactly what you are looking for. They could have easily continued to categorize and curate the web that way and provided a nice alternative to search engines, especially for non-power users. In addition to that Yahoo had so many successful components back in the day that had they spent even a modicum of money and development effort they would have continued to be a significant force on the web. Things like Yahoo Travel and Yahoo Groups still don't have a decent alternative these days. I still mourn the loss of some Yahoo Groups I used to participate in. Yahoo Finance was once one of the best places on the internet to research stocks and investments. Yahoo Mail was ahead of Gmail for many years and only through years of neglect finally let everyone else catch up, their lack of spam filtering was what finally killed my Yahoo mail account for me. Yahoo Briefcase could've been Dropbox or Google Drive 10 years before Dropbox existed. Heck Yahoo even had news aggregation years before Google did. Yahoo dominated fantasy football for many years. The fact that they couldn't grow and monetize any or all of these successful components was simply due to a complete lack of vision and leadership.

r00fus 6y ago
It's even in their original acronym "Yahoo = yet another hierarchical officious oracle". Hierarchical is exactly what you're describing and I remember using that a lot in the early days.
duped 6y ago
One sad niche they missed was fantasy sports. Yahoo fantasy leagues were great, with configurable rules and such. Now fantasy is a big business and deeply tied to legalized sports gambling. That could have been worth hundreds of millions in revenue for Yahoo.
- edmundsauto 6y ago

lazyjeff 6y ago

I also worked at Yahoo at that time, and I remember the feelings internally were more mixed. It was known that nearly all (or even more than 100%) of Yahoo's market value was the investment in Alibaba. Microsoft's offer basically valued all of Yahoo minus Alibaba and minus Yahoo Japan basically at nothing. And I'm perplexed by your blame on Jerry Yang, as out of the entire history of Yahoo, his Alibaba investment was the most financially successful act, worth more than anything any CEO at Yahoo had ever done combined. Also remember at that time that Google, MSN, and Yahoo were the three major search engines at that time. It wasn't clear why Yahoo couldn't close on the #1 spot. It had the clear #1 search engine spot in Japan already. The Yahoo properties (combination of all their websites) was the most popular websites on the internet. They had a much stronger machine learning and data mining research lab, one year bragging that they swept all the best paper awards at the ML/DM computer science conferences.

pezezin 6y ago
> It wasn't clear why Yahoo couldn't close on the #1 spot. It had the clear #1 search engine spot in Japan already. Yahoo is still huge in Japan. According to the statistics I found, Google is #1 with 75% market share and Yahoo is #2 with 19%, but everybody I know around me uses Yahoo.

WalterBright 6y ago

Having 20% of a gazillion dollar business is still zillions of dollars. I bought some Yahoo stock thinking Meyers was going to turn it around, but nope.

addicted 6y ago

> She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place. There's nothing inconsistent with the idea that a decade after Google established its extremely strong monopoly position in the search market, the barriers to entry, and the way to achieve success in the now established market are completely different than they were before Google achieved that monopoly and the market was as mature.

andy_ppp 6y ago
That might be true except everyone thought the results were the as good as Google if you rebranded Bing or Yahoo! SERPs with Google branding, layout and style. So might be worth thinking about how marketing affected Google’s success.