That Sinking Yahoo Feeling
Getting a handle on all of that content was no easy trick. America Online tried, as did Lycos, Excite and a few other long-forgotten names. Of the early birds, none succeeded quite as handily as Yahoo, which quickly ascended to become the search engine king. The techie company with the typically quirky internet name rose above all others, culminating in its going public at an unheard of pre-bubble valuation.
Yahoo's rise typified the high tech soar-and-crash arc that soon became all too familiar. Except in Yahoo's case, they didn't crash. They survived. They struggled through the bubble burst, emerging from the digital Armageddon with a fairly firm grip on their title as the king of all search engines.
Yahoo stock, as battered as anyone's, slowly regained its health, but it never recovered to be the company it once was. But the reason it didn't recover isn't because of the rise of Google. And it isn't because Yahoo's technology was laggard. In fact, Yahoo had the most to gain and the least to lose in its post-bubble resurrection.
And yet, today, the company is struggling to catch its breath. Its stock languishes as insiders dump whatever they still hold. A fickle public has abandoned whatever allegiance it once had, preferring brands that are more responsive to their needs, while Yahoo's management desperately tries to pull more rabbits out its tattered top hat.
Of course, if you've been reading my stuff, you would have read years ago how it was pretty much over for Yahoo back then. It began with the hiring of Terry Semel, a man seemingly bent on converting Yahoo into the world's first internet television network. There's an old saying in the tech world: "When all you have to sell is hammers, everything looks like a nail." To Terry, a seasoned and successful entertainment executive, the internet must have looked like one big TV, just waiting to be programmed.
Anyone who knows now - or knew then - about the internet, also knew that the web was never destined to become an entertainment medium. Sure, you can find entertainment media on the web. But it doesn't take the memory of an elephant to recall the dismal days of WebTV, when even the wizards of Microsoft finally figured out that our PC's were never going to be televisions - and vice versa.
That's why they call it the digital convergence. It means that everything digital can exist here, not just one, overriding medium.
Yahoo and its crack team never did get that. They still don't. When Semel came aboard, the first thing he did was completely overlook the on asset that Yahoo had going for it: the preferred search engine. Asleep at the switch, his team let everything from paid ads to pay per click to paid inclusion all go to seed. That Google overtook Yahoo is no big deal. Anyone with the right resources could have taken it away from Yahoo. They were practically giving it away.
You know why Yahoo moved its corporate headquarters to Santa Monica, California? Because the studios at Paramount were already leased. Yahoo is not an entertainment company, no matter how much Semel wants to believe it is. The market doesn't believe it, if you go by Yahoo's stock performance over the last five years. See anything you like from January 2006 onward? Bear in mind that at this writing, the Dow Jones Industrial Average is at its record all-time high. And where's Yahoo? In the digital toilet, having lost half its value in the first ten months of 2006.
Adding to that sinking feeling is the fact that most of the rats are deserting the Yahoo ship. Insiders, including Jerry Yang, can't dump this stuff fast enough.
Why is this happening? For the same reason it happened earlier: no brand strategy at Yahoo. You have the captain of the ship setting his course for Hollywood, while the boat was built for the internet. Clearly, nobody is at the helm of this rudderless ship, which means it's only a matter of time before it runs up on the rocks. While overblown, overvalued stocks like Google continue to beguile and amaze the Wall Street know-nothings, Yahoo can't even muster the strength to do that.
Then again, maybe Semel and Company have something up their sleeves. Maybe they have a plan to finally focus on what Yahoo's real brand strategy is. Or maybe they have a plan to stick to a plan that the public can perceive as something other than a quirky name.
Or maybe they're just taking swimming lessons.