Yahoo is one of the pioneers of the internet. Initially, it was established as one of the innovative business that was expected to yield a lot of profit as well. However, not every business can analyze the external factors very well and Yahoo proved to be one of them. Despite some early success, the Yahoo mistakes were beyond imagination and the end result is what we see. Let us have a brief look over the story of Yahoo and see how many mistakes were actually made by the company.
Brief Introduction about Yahoo:
The company was incorporated in California in 1994. Jerry Yang and David Filo are the founders who have been trying to incorporate internet into the lives of the people. The major services of the company include the provision of the search engine, email services, Yahoo groups, Yahoo news and other such services relating to the web.
For the 6 whole years, the company was prospering. The other companies becoming the part of the industry looked up to Yahoo for guidance. One of the interesting facts that will definitely amaze you is that even today’s web services Giant Google had Yahoo as its role model. The statistics of Alexa and SimilarWeb showed Yahoo to have the viewership of 7 billion views when it was at its maximum popularity. 7 billion views, that’s a lot of them.
But then in 2000, the things started to change and a decline in the viewership, acceptance and ranking was observed. Gradually, it lost its original position and the other competitors got dominance over it. According to the current statistics, Yahoo is the 10th largest website according to the third party analysts.
But what led Yahoo to decline?
Apart from the lack of continuous innovation, the other players of the industry excelled at a greater pace. Both these factors were responsible for the decline of Yahoo. Additionally, there were some serious mistakes that Yahoo made in the early years. These mistakes are not only severe but they are definitely a source of regret for the administration and the shareholder of Yahoo now.
Would you like to know these Yahoo mistakes? You are really going to feel that yahoo has lost this race of success with its own hands. Keep reading to know how. We’ll be sharing the different mistakes of Yahoo with respect to years, so you’ll be able to keep an account of how many chances did Yahoo lost for success.
In 1998, Larry Page and Sergei Brin who were the owners of a small startup offered Yahoo (one of the largest companies in the world), to buy that company in $1 million. The reason of this deal was to resume their studies but at that time, Yahoo did not feel that the company could prosper or was worth something, so it declined the offer.
Additionally, another reason of declining the offer was that Yahoo wanted its users to spend most of the time on their own website rather than sending them to any other website. So, the new startup that was being offered did not actually comply with the overall policy of the company.
However, in 1998, Yahoo did not realize that the internet was going to transform and the company that was being offered by the students was soon to be a successful venture. We are sure that looking into the future would have made the company to buy the successful package.
In 2002, when Yahoo started losing the monopolistic hold of the market, it realized that a mistake has been made. Additionally, the progress of the parent company of Google was also highlighting the Yahoo mistake. So, to rectify this mistake, Yahoo approached the owners of the Alphabet Inc. This time, the company was willing to make a deal at $3 billion. But the owners of Alphabet did not agree at the amount. They wanted $5 billion for their business.
At this point, Yahoo made a mistake again. It actually did not analyze the potential it had and refused to make a deal at $5 billion. This was again a lost opportunity but Yahoo did not realize it even then.
After six years of this offer, Yahoo was nowhere to be seen with more than 70% of the share of the internet search acquired by Google. The regret of being defeated by a company that could have been yours’ is definitely something unbearable but it is important that timely decisions are made.
In 2008, Microsoft made an offer to purchase Yahoo for $40 billion. At that point, the standing of the company in the industry and the assets it had were being given high importance and this is why such an offer was made.
But the list of Yahoo mistakes continued and the management could not realize that this offer was good. So, it refused this offer of sales as well.
In 2016, when the entire internet world was dominated by Google and Yahoo realized that there is no chance of coming back in the industry, it sold its business to Verizon. July 25 was the day when this confirmation was done by Verizon. The core business of internet was the only thing that Yahoo sold. But that was for $4.83 billion only. Some of the stakes of the company were transferred to the parent company of Yahoo. So, overall $4.6 billion can be considered as the total worth of the deal.
Even that Yahoo did not had its share in the internet market, but still it was a brand name that ruled the industry for years, so being sold at $4.6 billion was not exactly worth it (associating the history that the brand had).
The entire downfall of the company should be attributed more to these mistakes made by Yahoo. These mistakes were not simple at all. Even they weren’t strategic ones that would have put the company in a loss of a few billion. The mistakes that the company actually made were more than that.
The administration of the company did not actually realize how the internet market would transform in the future. Otherwise, today, Google would have been the part of yahoo and it would have been the only big company serving the customers.
Even if the management of the company would have sold it timely, the shareholders should have remained at a benefit $40 billion offer was a pretty decent offer for a brand that wasn’t in any way at the top of the industry. But the lack of vision and timely decision-making actually resulted in what Yahoo had to face.
Key Learning for you:
You as a small business owner can actually learn from the Yahoo mistakes. It is important to know the worth of your business. You cannot expect your business to be worth billions of dollars when it actually isn’t.
Moreover, you should make sure that you must be visionary enough. You should be constantly looking for innovation in the industry even when you know that there is no competition near you. Because, a new player could actually be making ore effort and entering in the market with a better offer. This would actually take you out of business within weeks.
Thirdly, the analysis of the environment must be given due importance. You should keep a constant eye on the changing factors. A closer look on these factors can ensure that you capitalize on the opportunities and manage the threats in a timely manner.
Yahoo mistakes should be a source of learning for you. A total loss of $831.3 Billion is something that you should also take seriously (despite you aren’t being affected by it). Learn from these mistakes and make sure that you don’t repeat them in any case.
What else do you think could be learnt from this case? Share your understanding in the comment section, so we all can benefit from it.