Yahoo Essay Sets a Record Straight
August 31, 2010
Anyone interested in the pay to play angle for search will want to read “Bubble Blinders: The Untold Story of the Search Business Model.” In addition to correcting some factual errors from high profile search wizards, the write up underscores how tough it is for one company to see that a big opportunity exists. More about this point in a moment.
I am not going to beat up on Yahoo. The company has suffered enough, and it is probably going to become a hit in the business school case study comic books. I noted one key passage. Here it is:
From 1997 to 2000, we visited Yahoo more than a dozen times to pitch the Keywords idea: pay-for-placement, keyword-targeted text ads on the side of search results. Despite repeated rejection, we pitched every member of Yahoo’s executive team multiple times, each time finding new ways to present the concept and new data to support how profitable and huge the opportunity might be, all in vain. Like Paul Graham’s reaction when he first pitched them “Revenue Loop,” my initial sentiment was that perhaps we were doing a terrible job explaining the idea. But soon I realized that Yahoo simply didn’t see the value of search. They were sitting on one of the most strategic assets in the world, yet apparently didn’t even know it.
I am not convinced this is an “innovator’s dilemma. I think it is standard human behavior. A current example is the Yahooing of Google. Multiple acquisitions in a short period of time requires top notch management methods. Does Google have these? With the rapid fire failures this summer, I think Google’s management skills are on display. Then there are the twin and now pretty well known Google antagonists: Apple and Facebook. Android looks like a winner, but Google has to monetize that open source play. Facebook is running mostly unchecked.
Net net: Great write up. For me the subtext was information germane to how I think about Google.
Stephen E Arnold, August 31, 2010
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