Yahoo: Failures

Jonathan | Naveen | Durga | Saloni

 WHAT A MESS !

“ I just try to ship products that I’m not ashamed of ” – Jeff Bonforte, Senior Vice
President, Communication Products, Yahoo. (Dec. 1, 2015, New York Times)
What is Yahoo’s business model today?

“ Portal for customer’s needs (search engine,

Value email, news, weather, etc.)
Proposition Creates value for advertisers with a
streamlined, simple advertising technology ”

Revenue Revenues come from display and search

Model advertising (pay-per-click and banner ads)
Why is Yahoo failing?
1. Lack of Strategic 2. Poor acquisitions
Focus and deals
•No business line focus
Search vs advertising vs
media vs investments
•No market segment
focus
attempted to serve all
demographics
•Didn’t play to win
in a winners-take-all
market
3. Poor Corporate
Governance
•Excessive reliance on •Incompetent board
acquisitions as pointed out by
instead of organic activist shareholders
growth
•Excessive CEO changes
•Poor Acquisition 8 CEOs in the past 10
Decisions years
lack of synergies,
integration, and
strategic fit + paid too
much
•Poor Deals
Partnerships failed to
maximize Yahoo’s
interests (eg. Alipay,
Mozilla)
Timeline: GROWTH (1994 – 2000)
Acquires Stock
Acquires many reaches
Broadcast Yahoo’s
Raised Acquires other all time
.com human
$2MM Geocities companies high of
editors
in $475
couldn’t
venture keep up
Yang capital with the
and search
Filo Went engine
created Yahoo public “Spider Bot”
search is born
engine
1994

1999

1999

1999

2000
1996

2000
1995
Timeline: COMPLACENCY (2000 – 2010)

2005

2007

2008

2008
2004
2001

2009
2002

Yahoo Yahoo co- Microsoft

invested Microsoft founder & and Yahoo
Stock
Yahoo $1Bn in tries to buy CEO Jerry agree to
closes at
tries to Yahoo Alibaba Yahoo for Yang steps search
an all Yahoo
buy launches $44.6Bn down after partnership
time low acquires
Google its own Yahoo 18 months
$8.11 many
for $3Bn. search denied
media
Google engine offer
companies
denied technology
the offer
Timeline: FAILURE (2011 – 2016)

2013

2014

2014

2015
2012
2012

2016
2012

Levinsohn
Acquires States
Scott (interim Acquired Acquires
Sells half Tumblr for Acquired that
Thompson CEO) Flurry Polyvore
of its $1.1Bn, Wander current
appointed leaves; (mobile ad (online
Alibaba Summly, (social strategy
as CEO Marissa company) shopping
stake for and diary is to
following Mayer for site) for
$7.1Bn others website) focus on
dismissal appointed $200MM $230MM
of Carol “Search,
as CEO
Bartz Mail,
Tumbler”
The decline of Yahoo
% Global Search Market Share (%)
Yahoo vs Google
100

80

60 Google
40

20
Yahoo
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

“ … the core Yahoo business is actually destroying value.

It's possible that Marissa Mayer (Yahoo’s CEO) could increase her stock price by simply announcing
that she was shutting down all of Yahoo's websites and laying off all of its employees. ”
– VOX Technology analysis
Recommendations for the future
1. Focus only on 2. Only make 3. Improve
key strengths acquisitions that Corporate
make strategic Governance
sense
•Decide on strategic •Have discipline •Make Board fully
focus: when pursuing accountable
Technology vs acquisitions for CEO
media vs Venture appointments
Capital
•Don’t overpay for •Choose the right
acquisitions CEO
•Play to win
Set goals, motivate who has the
people •Ensure integration necessary skills
of acquisitions
•Move into adjacent •Shareholder
markets later •Make sure synergies activism
can be achieved serves as a check-
through the and-balance against
acquisition Board of Directors
 Thank you!

Jonathan | Naveen | Durga | Saloni

 References
Yahoo Financial Report 2015, files.shareholder.com, 2015

Timothy B. Lee ,Yahoo is laying off 1,700 and putting itself up for sale, Vox,February 2, 2016, 5:50 p.m. ET

Wkipedia Yahoo, https://en.wikipedia.org/wiki/Yahoo!

Timeline of Yahoo!, https://en.wikipedia.org/wiki/Timeline_of_Yahoo!

Krishna G Palepu and others, HBR case study, Strategy and Governance at Yahoo! Inc , October 31st 2011

Tony Hannidies, 12 Yahoo Services That Will Shut Down by September ,Lazy Tech Guyz, June 29th 2013

Motley fool staff, Google stock: Buy it and hold it for life, fool.com,May 21st 2013

Margarit Reliv, Yahoo logos from 1994 till now, logoblink.com, May 11th 2012

Walter Frisk , The decline of Yahoo in its own words, HBR.org, June 2nd 2016