Yahoo and Reality

August 8, 2009

I scanned the SEO crowds’ view on the top Yahooliganette’s view that Yahoo is not a search engine company. You can read Search Engine Land’s view with a video link in its story “Revisionist History: Bartz Claims Yahoo Was Never A Search Engine.” The journalist who gave the story prominence was Ashlee Vance, writing for the venerable but struggling New York Times. That article “Yahoo Chief: We Have Never Been a Search Company” reported:

The company’s strength has been in collecting information, not producing it.

The write up contains some memorable quotations, and I urge you to read these first hand, not from the webbed feet of the addled goose.

Now the view from Harrod’s Creek:

Yahoo Chose a Path of Knee Jerk Adaptation

Yahoo lacked a vision. The company had money and it had quite a few individuals who operated as each was running a separate company. The result was that by 2004, Yahoo was a crazy quite patchwork of unrelated businesses. Often each had a separate technical infrastructure and not much enthusiasm for playing well with other units of the Yahoo empire. This became and remains a huge drag on Yahoo’s businesses. Reaction time is slow and costs are high and tough to control. In these knee jerks, Yahoo created great public relations but lacked a strategy. By 2005, advertisers could not buy ads that would be in front of a demographic across the range of Yahoo properties; for example, 18 to 24 year old males across Flicker, Sports, Groups, and other Yahoo properties. Knee jerk reactions are land mines for online information companies.

Yahoo’s View of Search Was Different from Google’s View of Search

I have had run ins with the wizards from Google and Yahoo. Believe me, the squabbles I have had with Google have been about search. Larry Page snapped at me when I chided him about his refusal in Year 2000 to support truncation. But that disagreement was 100 percent about search. I did not agree with Mr. Page, but we both knew we were talking about what was the defining application for the Internet in the post Year 2000 period. My squabbles with Yahoo were never about search. I would point out a search issue, and I would be met with a haughty, uninformed response in most cases. One example concerned the implementation of semantic functions via smart software. Yahoo’s super wizards insisted that Yahoo’s approach was better and smarter than Google’s. I didn’t think so because Google was ** using ** semantics as an embedded function, and Yahoo was trying to convince me that its engineers were smarter than Google’s. Yahooligans, it is not about IQ and college connections. The subject is the implementation of core technology about search in a cohesive manner. Yahoo’s view of search was not in line with my view of search.

Yahoo Had Many Search Systems, Not One Search System

In one briefing I did when I was a rental for an outfit called Gerson Lehrman, I recall talking with a couple of superstars from a New York big name investment banking firm. This outfit somehow ended up with me in a conference room talking about my cost analysis of Yahoo’s many search systems. I had a PowerPoint slide in 2007 that listed these search systems: [a] a license for InQuira natural language processing system for customer support, [b] Flickr search which ran on the tough-to-scale home brew system that Yahoo purchased, [c] the Stata Labs’s email search system, [d] the search system, [e] whatever was left of the Inktomi search system which I used for the original search system in September 2000, [f] the search system for Yahoo News, [g] the Yahoo shopping search systems (note the plural), and a couple of others. The point on the slide is that it is really expensive to maintain, scale, and innovate across different and complex search systems. I recall vividly that these 25-year-old MBAs from colleges with great PR programs told me that the costs of search were irrelevant. Wow! That was stupid then and it is stupid now. Yahoo’s promiscuity in search doomed it to be a loser in findability. Forget the customers. Think about the expense and opportunity cost the Yahoo view of search created. Microsoft has “inherited” this problem, and it has left Yahoo the company it is today—a portal.

Wrap Up

I can understand why the Yahooligan top management team does not see Yahoo as a search company. Yahoo was a human-built directory. A directory is about “findability”. Search is one component in findability. Most people—including the management of Yahoo—don’t understand what Google has done in the last 11 years. As a result, the Yahoo logic is to say, “We don’t do what Google does.”

Since Google is essentially a search company, the Yahoo logic makes it clear to them I suppose that Yahoo has never been a Google. That is a valid observation.

In short, I care about search. I don’t care about Yahoo’s version of the portal approach to information. I think the Yahoo presentation of its new positioning is quite significant:

  1. Yahoo has essentially conceded vast amounts of conceptual territory to Google. Google is search and it is now Microsoft’s problem to figure out how to deal with Googzilla
  2. Yahoo may be able to develop a sustainable business for the consumer user of the Internet who wants to navigate to one place and get information about television, sports, the weather, and finance. AOL could pose a threat to Yahoo and I ask myself, “Why do we need both AOL and Yahoo?”
  3. Yahoo’s cost problem is going to have lasting repercussions. Stepping away from some engineering costs, operational costs, R&D investments in search, and the administrative and management drag of search will help some. But the expense of the search system legacy at Yahoo will hamper the company going forward unless more stringent steps are taken and taken quickly.

In Harrod’s Creek, we see the new Yahoo as the same old Yahoo with a management team that has to control costs while keeping pace with the changes perturbing the datasphere. Was passing on that Microsoft buy out offer evidence of how Yahoo’s interprets its world?

Stephen Arnold, August 8, 2009


One Response to “Yahoo and Reality”

  1. Jeff Pemberton on August 8th, 2009 5:28 pm

    Nice piece on Yahoo, Steve. My bottom line: as human beings, the people there are yahoos – in the old sense of the word.
    Best regards,

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