A Yahoo Google Analysis Which Misses One Obviously Irrelevant Fact
March 1, 2016
I love it when with it universities analyze businesses. Universities are loan factories, have some exciting management methods in their athletic departments, and dabble in foundations plays to generate some financial loyalty.
Why would a university not be a source of expertise in the analysis of digital businesses?
I read “A Tale of Two Brands: yahoo’s Mistakes vs Google’s Mastery.” The write up is clear and marches through the analysis like General Sherman on his way to Atlanta. Like General Sherman, the march was not exactly what it seemed.
I learned that Google is just a lot better than Yahoo. No disagreement from me. Yahoo’s former chief technology officer complained that I did not have enough appreciation for the work flowing from Yahoo’s research and development units. He was right. I didn’t. I don’t hear from that Yahooligan since he got a job at Google. There is apparently no need to be defensive when one is a Googler.
The write up points out these flaws in Yahoo’s management which look really awful when compared to the wonderfulness of Google’s management:
- Google operates with clarity; Yahoo has an identity crisis
- Google anticipates; Yahoo reacts
- Google has substance; Yahoo is a fashion week poster child.
The problem is that the write up misses one probably irrelevant fact about the Google and its performance.
When Google did not have a revenue business model, the Googlers looked around for a way to make money from search. The answer it found was online advertising. Prior to the IPO, the Googlers settled Yahoo’s patent suit. Yahoo took the money and found itself struggling to serve ads from its ageing infrastructure. The Google had a brand new, nifty infrastructure courtesy of some of the hires from AltaVista’s outfit.
Google’s system served ads more effectively. With more traffic, the Google ad system became a money trickle and then a money gusher.
Poor Yahoo watched as its methods were put to good use on a more efficient ad serving system. End of Yahoo. The company almost immediately began its death march to irrelevancy.
Google’s virtues are easy to see if one overlooks the one tiny fact of Google’s me-too approach to revenue. Clever seemed to be more effective than “management”, but that’s just my opinion.
The university analysis is okay, just not in line with the key event which made Google the one trick pony it is today. More significantly, that trick was someone else’s innovation via the Overture.com (GoTo.com) method.
Refresh your memory is this okay write up from 2004: “Google Settles Yahoo Patent Suit in Anticipation of IPO.”
In this context, the academic write up strikes me as baloney.
Stephen E Arnold, March 1, 2016
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