Thursday, January 18, 2007

Yahoo blew it

Fred Vogelstein at Wired writes about "How Yahoo Blew It". Some excerpts:
Yahoo's long-delayed push to aggressively compete in the search-driven advertising business is only now getting off the ground, arguably two years behind schedule.

Semel bought a search engine in 2002 and a search-driven ad firm in 2003. All that was left to do was to put the pieces together.

They planned an overhaul of Overture's technology, a project code-named Panama. It was a disaster.

With no clear delineations, Yahoo and Overture executives fought over turf. Yahoo hired and fired a half-dozen engineering chiefs at Overture during the first year. Overture salespeople competed for business with Yahoo salespeople.

And Meisel, Overture's CEO, was ineffective -- either inept or hamstrung by bureaucracy, depending on whom you ask. Decisions big and small, from trying out new features to agreeing on budgets, had to be cleared by committee after committee in Sunnyvale.

"It was a clusterfuck," one of the participants says.
The article goes on to lay much of the blame for the mess on Terry Semel.

A few others have some insightful commentary on this piece. Barry Schwartz at Search Engine Land highlights the last line in the article:
At Yahoo, the marketers rule, and at Google the engineers rule. And for that, Yahoo is finally paying the price.
While this is phrased as a technology vs. media/marketing split, I think there may be just as much of a short-term vs. long-term split here. While Yahoo focused on quick marketing deals, Google built a technology infrastructure that acted as a force multiplier.

Rich Skrenta posted some interesting thoughts on whether a 2002 acquisition of Google by Yahoo would have helped Yahoo, concluding no, probably not. I also enjoyed hearing about the other bidders for Google during their early days, including AOL and Ask:
Heck, I tried to buy Google for AOL in 1999 .... 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.
For more on Yahoo and their problems with their advertising platform, see also my Oct 2006 post, "Yahoo's troubles".

Update: Three months later, Yahoo again releases disappointing numbers, causing BusinessWeek to ask, "Yahoo's Next Search: A New CEO?" [Found via Search Engine Land]

1 comment:

Anonymous said...

I love this quote by Semel:

"Sure, our timeline for Project Panama took longer than we had anticipated, but it's live now and we're very excited about it and the early feedback we're receiving."

It seems to miss the point that a company is more than just a sum of features and functionality. What you're also betting on is the team running the ship. And when you're constantly and grossly late in shipping software, you're really showing that the team behind the product isn't up to snuff. So congratulations for finally rolling out functionality that your competitor has had for the past 4 years. High fives all around!