Yahoo recently announced that it is selling its core core assets to Verizon for $ 4.8 billion. This is just a little more than Verizon paid last year for AOL, another failed company in the Internet take-off era.

Yahoo’s market capitalization in 2000 was $ 125 billion. For the next 16 years, it has steadily declined, mainly due to inaction and missed opportunities.
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You can compose a whole MBA course by exploring all the strategically blunders that Yahoo has made. I will save you a certain amount of tuition and I will give a brief certificate right here in 5 minutes.

Mistake # 1: The Yahoo management decided that being in the right place at the right time means being smart.

If Yahoo started a year or two later, then, most likely, nothing came of it. The company grew, began to dominate the market, largely on the fact that Paul Graham, co-founder of the company Y-Combinator, who worked at Yahoo, called the “pyramid after the fact”:

“Investors were inspired by the Internet. One of the reasons that inspired them was Yahoo's revenue growth. Therefore, they invested in new Internet startups. Startups used this money to purchase ads on Yahoo to get traffic. This led to even greater revenue growth for Yahoo and further convinced investors of the value of investing in the Internet. ”

The growing revenues from this unwinding feedback loop supported the opinion of Yahoo’s executives that they act intelligently and competently, when in fact they were just lucky.

Since Yahoo was the dominant web portal, the company got the money easily. The company never bothered to create a strong technical environment like Facebook and Google did. After all, why should Yahoo invest in basic technology when you can simply hire more sales representatives to sell more banner advertising?

The initial success of Yahoo gave management a high self-esteem and pushed to acquire other companies on the assumption that Yahoo could manage these companies better than companies did it themselves.

The following are the companies that Yahoo acquired:

• Geocities ($ 3.6 billion)

• Tumblr (1.1 billion dollars)

• Broadcast.com Mark Kyubana ($ 5.7 billion)


Radio. On. The internet. That's right - founded by Mark Kyuban.

Broadcast.com and Tumblr were widely known as the two worst acquisitions of all time and were mostly written off at a loss. In less than 10 years, Geocities has gone from the third most visited site in the world to stopping work everywhere except Japan.


What remains of Geocities, acquired for $ 3.6 billion ...

Mistake number 2: Yahoo has forgotten what led her to take off.

The Yahoo leadership, distracted by all these acquisitions, neglected its viable core products. Here are a few multibillion-dollar industries that went to new entrants:

• Yahoo Mail lost to GMail

• Yahoo Answers lost to Quora

• Flickr lost Instagram

And the most humiliating of all - Yahoo Search lost Google Search - to such an extent that in 2009 Yahoo eliminated its 13-year search engine in favor of the licensing of Bing Search, which Microsoft had just released.

In all of these services, Yahoo had a multi-year prevailing leadership with millions of active users. There were funds. There was traffic. They could experiment and improve these services. But they did not take the initiative. Instead, they avoided new developments and projects at every step.

Mistake number 3: Yahoo slaughtered its goose that laid golden eggs, although it still carried them

In 2005, Mr. Jerry Yang, co-founder of Yahoo, made one of the most outstanding investments in the history of the economy - he acquired 40% of the Chinese e-commerce site Alibaba for $ 1 billion.

Now Alibaba is estimated at more than 200 billion dollars and continues to grow. This means that the share of Yahoo in Alibaba should be about 80 billion dollars!


Alibaba founder and CEO of this company Mr. Jack Ma is ready to correct me

But wait. In 2012, Yahoo sold a significant portion of its shares to Alibaba. In 2014, more were sold.

Yahoo executives thought it was very reasonable at the time, because the profit from the sale was several billion dollars.

Currently, Yahoo has a 15% stake in Alibaba, but this asset alone is $ 30 billion — six times more than Yahoo’s core business.

But, of course, a mixed feeling of regret for 50 billion dollars, which were simply given away for nothing.

Mistake number 4: Yahoo overestimated executives who were professionals among professionals

One might think that Marissa Meier was a bad CEO. She did, after all, lead the catastrophic acquisition of Tumblr in 2013 and the sale of Alibaba shares in 2014. And she did little to slow the fall of Yahoo.



But Ms. Mayer looks just like a business genius if you compare her with the managers who preceded her.

Instead of promoting executives from within, Yahoo decided to hire them from a circle of "professional CEOs." And this was not done reasonably well.



Scott Thompson began his tenure as CEO, sacking 2,000 people. Then he sold many Alibaba shares (which, as mentioned above, would cost tens of billions of dollars today).

He was so worried about appearing competent enough to manage an information technology company that he lied about having a degree in computer science.

At first, Yahoo’s board had doubts about this accusation, because it came from an activist shareholder.

But then the university, which Thompson attended, publicly announced that they did not even have a computer science program at that time.

A public hearing followed, and Yahoo quickly fired Thompson. He worked only 130 days. However, despite all this, Yahoo ultimately paid $ 7.3 million during this time.

And then there is Mr. Terry Semel, who is considered the worst CEO ever.


Probably, I would not like to see such a face expression with the general director of your company ...

Semel has not acquired Google when Yahoo got a second opportunity to do this. Then he did nothing to stop Google, which destroyed Yahoo's search engine for many years.

Semel also ineptly worked on the acquisition of Facebook and DoubleClick (specifically those technologies that have become central elements of the Google advertising empire).

And after all these blunders, Mr. Semel made his own contribution to the "rescue": he rejected Microsoft’s offer of $ 40 billion to sell Yahoo entirely.

The bitter comedy of the situation is that in the 7 years that Mr. Semel was driving the company to the ground, Yahoo paid him half a billion dollars.

Mistake # 5: Yahoo management has allowed their life and business attitudes to blind themselves in relation to new opportunities.

Larry Page and Sergey Brin tried to sell Google on Yahoo in 1998. They wanted to get 1 million dollars

The Yahoo management rejected the offer because it preferred that users spend more time on the Yahoo directories where banner ads will act on them. Improved search - the type suggested by Google - could quickly lead users away from Yahoo sites.

It didn’t occur to Yahoo’s executives that an improvement for users could ultimately provide better results for the company itself. It also did not occur to them that Google could use this technology to compete with Yahoo (which is what happened, as you know).


Yahoo co-founder Mr. Jerry Young met once with Google founders Sergey Brin and Larry Page. The posture of Mr. Young, with all the rest in mind, is quite characteristic.

Of course, we all know the end of this story - Google worth $ 500 billion and ripped off by Yahoo, sold to some secondary company for a hundredth of its former opportunities.

Those who run the company or plan to launch a new business - learn from the mistakes of Yahoo. Take these lessons seriously:

1. Do not take luck - to be in the right place at the right time - for intellectual abilities.

2. Do not forget what brought you to the position you are in today.

3. Do not cut the goose that lays the golden eggs while it is still doing it.

4. Do not overestimate people from a professional environment.

5. And - most importantly - do not let your life and business attitudes make you blind to new opportunities.