« Cave Man Programmer | Main | Yahoo World Explorer: geosurf hyperlocal with photos »

Speculative Fiction

Fred Vogelstein of Wired has a fascinating account about Yahoo's decision not to buy Google, and their choice to purchase Inktomi/Overture instead and go it themselves:

"Five billion dollars, 7 billion, 10 billion. I don't know what they're really worth -- and you don't either," he told his staff. "There's no fucking way we're going to do this!"

Semel could talk tough because he had a backup plan. Yahoo would go out and buy its own top-notch search engine and its own search-advertising technology, and it would beat Google in the emerging arena of little text ads that pop up next to search results.
    -- "How Yahoo Blew It", by Fred Vogelstein

Office discussion ensues...


Of course, if Yahoo had bought Google, they would have killed it. Google wouldn't be Google today in that scenario, they'd look more like Intkomi or Overture.


Yes, the tyranny of the linear time continuum. We can never really know what things would have looked like if they had paid the $5B. But, since most big acquisitions wreck both companies, it probably wouldn't have come out too well.

Chris joins in. Paraphrasing:

The $5B meeting that Semel rejected is a journalistic device. Someone needs to be to blame for Yahoo's mess; it might as well be the CEO. And if you can find a smoking gun meeting, so much the better -- regardless of whether that particular choice really was an actual decision point for them. The overall truth that we valley techies believe -- that culturally Yahoo chose the wrong road, pursuing media over technology, is still true.

Chris, not finished, cranked up the what-if ray further:

Although, if Yahoo had bought Google, thus killing it, there would be no Google today to make Yahoo look so bad by comparison. There would just be the regular industry mess we had before. People would still think Yahoo was cool. They should have bought Google, not to capitalize on its potential growth or technology, but to take out a dangerous competitor. The move would have succeeded, regardless of whether they integrated it well, or completely fucked it up.

The thing is, the real mistake here was not buying Google sooner. Yahoo was seriously late to the party in 2002. Heck, I tried to buy Google for AOL in 1999. I had no authority, having only been at AOL 2 months after the acquisition of NewHoo. Dave Beckwith, VP of Search at Netscape and I visited Larry and Sergey in their Menlo Park garage headquarters. Dave was being cagey so I asked Larry flat out -- how much? Larry's reply: "You don't understand. We don't want to just get rich ourselves. We want to make our family and friends rich too." Cool. Of course AOL would have killed them.

Jim Lanzone of Ask Jeeves also tried to buy Google, but the $1B ask was too high. Overture tried to buy them and was rebuffed. There seems to have been a long line of folks in 1999-2000 who recognized Google's value, but couldn't justify the price then.

Yahoo's stock was higher in 1999-2000, and Google only cost $1B. Two years later, Yahoo was down and Google's price had shot up. It was too late.


Listed below are links to weblogs that reference Speculative Fiction:

» Yahoo Singing News from Skrentablog
I thought this was a joke when I first heard it a while ago. I'd been making wisecracks about Yahoo News doing a sock puppet version for a while and figured I was confusing myself with some kind of meme-echo.... [Read More]

» yahoo.msn.com from Skrentablog
My first reaction on seeing the Techmeme headline about msft-yhoo was "pretty please!" Although I would rather Google tried to do a giant acquisition deal and threw themselves into the tar pit. But then I felt kind of sad, because... [Read More]

Comments (1)


it is okay to blame terry, he has been paid very well, by any standard in corporate america. including his stock grants, semel has certainly extracted hundreds of millions of dollars in compensation. for that much money it is fair to expect results. while he doesn't strike one as the type of person to grasp the viability of search, he has surrounded himself with advisors who certainly should have been able to make this assessment.

one can also turn some blame on jerry yang, who was instrumental in attracting terry. jerry should have known that such a technophobe would have problems dealing with the inevitable semi-technical issues that a yahoo ceo would have to grasp on some meaningful level. it was those senior yahoos who were engaged in the ceo search who incorrectly assumed that yahoo was simply "another media company", and their search was predicated on this. had they understood that this generalization was meaningless, they would have directed their search elsewhere.

but to be fair, the winds of the internet have shifted. no one cares about "integrated networks" like yahoo and aol anymore because they have failed to deliver more utility than the rest of the web. google is a rest-of-the-web company...its search and advertizing products leverage the entire web instead of trying to fight it. i'm not sure anyone at yahoo saw this coming.

p.s. i have a double-digit employee number at yahoo. that doesn't make me right, but some of what i cite is based on observation, not speculation.

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)


This page contains a single entry from the blog posted on January 17, 2007 2:19 PM.

The previous post in this blog was Cave Man Programmer.

The next post in this blog is Yahoo World Explorer: geosurf hyperlocal with photos.

Many more can be found on the main index page or by looking through the archives.

Powered by
Movable Type 3.33