Yahoo Bafflement
May 26, 2010
Yahoo fired up its purple rainstorm in 1995. As Internet ventures go, Yahoo is the example of what happens when a technology company goes consumer. The next phase of Yahoo’s evolution took place when the Google ad system débuted and Yahoo settled out of court regarding an alleged action by Google related to Yahoo’s ad system. At that point, the company, a technical Australopitecus afarensis, watched the emergence of a ripped Homo sapiens.
I read “Carol Bartz to Mike Arrignton” article and found it quite revealing and a source of useful information about corporate development. Mr. Arrington has a knack for getting high profile people to provide useful information. The venue was a “disrupt” conference and I expected fireworks. I was not disappointed.
For me, the key passage was this exchange between Mr. Arrington and Ms. Bartz:
MA: Are you a search company or not?
CB: Half of our revenue is from search. The fact that you can crawl the web is a commodity. We’re about search, but we’re not a search company. We do a lot of things.
“A lot of things” is the key point. In the beginning, Yahoo was a directory. In the intervening years, the company has become a lot of things. The trajectory in business school would be one of those nifty –ism’s: entrepreneurialism, opportunism, etc. In reality, Yahoo has become America Online, and we see the perils that that case example illustrates.
Is Yahoo a search company? No. It never was a search company. It was a directory company. Somehow the baloney about search has morphed into interesting and sometimes horrific forms that confuse and frighten me. The whole privacy, conversation, and collaboration thing has been the “buzz” (no pun intended for several years). The ad thing is not new, but technology permits monopolization in a way that would have made the marketing fellow for Pears’ Soap fall to his knees stupefied.
Yahoo is a company with traffic. That traffic is the point, and the actions the company is taking are dependent upon and related to traffic. In short, whether Yahoo cuts a deal with a flickering candle like Nokia or buys a content mill, Yahoo is doing what leverages its traffic.
So, forget the generalizations about search. Yahoo is following the trajectory of AOL which followed the trajectory of the Source before it. The recent announcements from Google suggest that its management team is packing the station wagon and getting the camping gear together to take a similar trip.
The notion of a commodity is an important one, but I don’t think a Web index is a commodity. The overall diffusion of the technology for what the phrase “the Internet” refers is seeping into other methods. The boundaries are exciting, but once the boundary has been passed, the new world is like a three day camping adventure—fun for a day and then agony until everyone heads back to home. The discomfort, work, and insects are not worth the “adventure”.
Yahoo, therefore, is not going to find it slow going as the company tries to make changes that really matter. From my vantage point, Yahoo is following its predecessors in the consumer online space.
Stephen E Arnold, May 26, 2010
Freebie
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