Well, Carol Bartz is done at Yahoo, and that’s a truth that has mixed implications for the market. Yes, it’s true that Yahoo has continued on its downward slide since Bartz took control. But there’s a bigger question here, which is whether there is/was anything that could be done to stop that. That question has implications for the broader web marketplace.
Yahoo was once a darling of the web (but then so was AOL). It was one of the literati of the Silicon Valley culture, a firm that prided itself as being one of the new model of American business. Like most such companies, it sprung out of venture funding and grew in a glamour period when having an “I” anywhere in your mission made you a hit. The company is widely seen as having lost to Google, which from the perspective of search was surely true, but Yahoo had an enormous number of loyal fans who made it one of (and often THE) top portals on the web. What happened?
Part of the problem was the VC genesis. Companies who start their lives as venture-funded startups are evolving in a fool’s paradise. There’s no accountability in a classic business sense; the goal is to create buzz that will result in somebody buying you. Worst-case, you puff yourself up somehow and do an IPO. I’ve said a million times that the whole VC process is a glorified pyramid swindle, and I stand by that. You don’t learn to be a real business by learning to be what the VC community calls a “burger”; born to be “flipped” or sold.
Another factor was the whole Silicon-Valley-culture thing. There’s a general lack of understanding of business reality in the Valley. Part of it is from the VC genesis of most companies, but another part is from a kind of cultural superiority. We are the new age, you are the old. Prepare to die off and have us take over! Tell that to IBM, the most successfully venerable of all tech companies.
Starting about five years ago, I saw this mindset contaminate Yahoo’s appreciation of what might have been the greatest opportunity of all time. In that period, the big telcos and even cable companies were getting very interested in things like advertising and OTT-like services. They had no real way of getting into that space quickly, and they were eager to partner with somebody. Google was quick to say “No!” to that; they were at the time embroiled in a Vint-Cerf-sponsored war with the telecom establishment. Yahoo could have said “Yes” and become the poster child for synergy between the network operators and the OTTs. Instead, they dismissed the notion with at least as much dripping disdain as Google did. And with that they threw away the keys to the kingdom.
Yes, ads are important; for one thing, they fund content. But they can’t fund everything. We’re seeing players like Groupon, one of the latest wrinkles in what’s still essentially an ad space, first employ creative accounting to justify its IPO, then get into controversy over statements made during what was supposed to be a quiet period, and finally pull its IPO plans, ostensibly because of the economic conditions. Too many consumers at any level of the food chain tend to kill off the prey, and eventually each other. Yahoo could have been the apex predator. Now it’s probably prey too.