HMS Yahoo Needs More Than Tweaks In The Engine Room

‘To Google’ is an accepted verb. And ‘to tweet’ is evenly split between its original avian meaning and its new web application. Yahoo is a metaphor for metaphor for the a once-great company sliding into obscurity. Institutional Investor editor William H. Inman looks at why.


Dear Yahoo Chairman Roy Bostock,

I read with curiosity your delight at the “clear plan” presented to shareholders to turn Yahoo into the “world’s premier digital media company.” You singled out tinkering done by CEO Carol Bartz to “fix the engine room.”

Forgive my ignorance of things nautical, but what’s the point of tweaking an engine on a ship that’s spiraling down that big hole faster than a tidy bowl cleaner. The HMS Yahoo needs a lot more than a few tightened wing nuts. It needs a corporate overhaul top to bottom, new thinking, new culture. The process should begin with hard look at how Yahoo has mismanaged so many good ideas.

And arguably no Internet business has had more good ideas to mismanage than Yahoo.

To begin with there was that earliest engine – the Big Search. Your founders, Jerry Yang and David Filo, two brilliant kids at Stanford, were the first to conceive an easy to use and powerful map to the Internet. They gave it a cool name: “David and Jerry’s Guide to the World Wide Web.” The program rested on smart algorithms that allowed users to navigate a tangled web universe with the speed of a mouse click. By March 1995, the guide was incorporated under the name Yahoo, an acronym said to mean “Yet Another Hierarchical Officious Oracle.” That was four full years before another set of bright geeks from Stanford, Larry Page and Sergey Brin, dubbing themselves up as the “Google Guys,” (from the mathematical term “googol” meaning the number 10 followed by a gaggle of zeroes) raided Yahoo’s best ideas and smartest engineers and went on to become the world’s go-to search engine.


Sad to say that in 2000, Yahoo, the original guide to the web universe, was forced to hire Google’s engineers to upgrade its by-then obsolete search engine.

Then there is that other huge missed opportunity – social networking. Yahoo was first. Long before Facebook and Twitter, Yahoo! conceived products that allowed friends to share personal information – photos, recollections, data, gossip and much more. There was Yahoo Buzz and Yahoo Flickr and Yahoo 360 degrees and Yahoo Delicious and Yahoo MyBlogLog. Yahoo! even came up with a robust messaging service (Yahoo Mail) predating by years Google’s Gmail.

Unfortunately many of these innovations were shut down and folded into other products before they had a chance to succeed, leaving an open field to better executing rivals.

So the problem has never been a lack of good ideas. Yahoo has had plenty. The problem has been managing those ideas, converting them into profitable enterprises. Call it the AOL syndrome, the tendency to stop moving forward after a few early wins, to freeze operations, cut research and avoid risks in the name of profit. Instead of a massive re-engineering and rethinking, you urged tweaks in the engine room.

Meanwhile your stock value has dropped like a lead Zeppelin and thousands of future-making nerds were laid off.

Let’s face it, there’s no time to waste. Nobody Yahoo-texts buddies these days to check out a hottie on a Yahoo face page. Nobody has lost a seat in Congress because they Yahooed inappropriate messages to young girls or porn stars. Nobody Yahoos to find definitions of obscure words such as “stultus” meaning epic stupidity.

Yahoo is no verb as tweet (from Twitter) and Google have become, and may never be.

But Yahoo is a metaphor for the art of turning a great company, a leader in the creation of the all-encompassing Internet, into a side-swiped Titanic whose corporate captains seemed convinced that nasty scraping noise came from the engine room.