Yahoo! case: the fall

In the early days of Internet search engines and email pages, Yahoo! was one of the giants. From the beginning, it was outlined to achieve a great future, but due to bad decisions made throughout its history, the company, today, does not have much weight on the Internet and has been sold for much fewer dollars than in a time had been offered.

In this case study, we are going to talk about the history of Yahoo! and what were the key decisions that led this company to its decline instead of leading it to the success that it seemed it was going to have.

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What is the history of Yahoo!?

The company was born in 1994, like most companies in the United States, in a small office or shed of some university, from the idea of university classmates. In this case, it was in a small office at Stanford University that Jerry Yang and David Filo created a directory of Internet pages to facilitate the search for information and websites. We must bear in mind that we are talking about the first half of the 90s when the Internet was not yet so installed in our lives and a few years ago web pages began to emerge.

In 1995, the yahoo.com domain was created, having exceeded 100,000 daily visits in 1994. In this way, its founders managed to get a venture capital company to invest a million dollars in them and from there venture into novelties that were not yet so exploited in the virtual world. In 1996 Yahoo went public.

From that moment, the company began to grow abysmally. Incorporated Yahoo! mail, games, pagers, and yahoo messenger, among other actions that led it to position itself as one of the companies of the moment. For a long period, Yahoo! was growing, increasing its numbers and employees. It was part of the boom of internet pages that occurred between 1997 and 2001.

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When did their mistakes start?

In 1998 Google emerged, the company that years later would be one of the main nightmares of Yahoo!. In its beginnings, today's giant Google asked for financing from Yahoo! and it refused to give it. We could say that this was one of the first mistakes.

During the first years of development, both companies coexisted, but as Google gained ground, Yahoo! went from being a provider of services on the web to being an advertising portal that was increasingly relegated to what the competition allowed it to access.

In 2007, one of the most serious mistakes of the company Yahoo! is committed. The owners of Google do not rule out selling their company, and Yahoo! offered 3,000 million dollars, but unfortunately, they could not acquire it because the amount that Page and Brin asked for was 5,000 million. Yahoo! did not make any other offer and lost one of the great opportunities that it would have had to gain much more ground in virtuality.

Another of the mistakes that condemned this company was the missed opportunity to buy Doubleclick, an online advertising company, which was later bought by Google and through which it was able to take a big step in terms of online advertising. What also unseated Yahoo! in this area of development.

Later, Yahoo! also had the opportunity to buy Facebook. In 2006, the social media company did not have the weight it has today, but its imminent growth could be seen coming. Zuckerberg was asking for something like $1 billion, but Yahoo! decided to offer 850 million and did not agree to buy it.

Microsoft, another technology giant, in 2008, offered the owners of Yahoo! to buy the company for more than 44,000 million dollars, much more money than it was worth at the time. But, again, Yahoo! made the wrong decision and turned down the offer. Even more incredible is that years later, Microsoft asked them for permission to use their search engine (Bing), and Yahoo! allowed it. Let's say it gave them something for free that, years before, they had offered billions of dollars for.

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Other problems faced by the company

Cybersecurity today is one of the main issues that every technology company must guarantee, but in the case of Yahoo!, this has failed. Numerous times the company has acknowledged having suffered cyberattacks that generated data loss and leaks that involved user accounts. This took away the credibility of its security and, of course, caused many users to migrate to other offers. It has even admitted to creating software at the request of the US intelligence service, to obtain information from users' emails.

In addition to security problems, the company has suffered from organizational problems. In its years of history, it has had 7 different executive directors and almost none of them deviates from having made a significant mistake for the company. One of them even admitted having lied about the information on his CV.

In 2012 Marisa Mayer joined, who had previously worked at Google and came to Yahoo! hoping to revitalize the company but she didn't make it. It was she who in 2016 announced the sale of it to Verizon, for an amount of just over 4,000 million dollars, something that a few years before could have been much more.

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As we see, the company Yahoo! has been successful in its first years, due to not having too much competition in the market, but as soon as a company of the same weight arrived, it was completely overshadowed by it and did not have enough maturity to make strategic decisions correctly, which led to its decline. The role of executive directors is very important when making decisions and also organizing the company itself, but this is something that could not be achieved. Their high turnover is a point that did not contribute at all to their growth.