Two thousand people losing their jobs is just the worst kind of news and for Yahoo, it’s a culmination of years of decline. The company is not decimated. As of Q3 2011, it employed over 14,000 full-timers. 12,000 or so is still a very significant workforce and this could be beginning of a big turnaround for the online portal that provides services across a wide variety of categories including news, entertainment, business, business services, finance and multimedia. It’s home to one of my favorite online services: Flickr.
At this moment, I have no idea where the cuts are coming from. Like any company in its position, Yahoo positions the layoffs as making the company smaller (obvious) and nimbler (I guess we’ll take your word for it, Yahoo).
New CEO Scott Thompson will be painted as the bad guy here. He’s the one making the cuts. But he could also be seen as the guy making the tough choices. Yahoo has not been on solid strategic footing for years. It just never – or at least since the mid 1990s — seemed to know what it wanted to be and its revolving door CEOs, and lost-boy founder Jerry Yang, didn’t help things much.
I’ve been watching Yahoo for over 15 years. Back in the 1990s it seemed unstoppable. There was no Google and though many other sites were offering indexed searches of the Web, Yahoo’s approach, which was more of a directory (they actually used AltaVista’s index at one time), seemed to get that the Web is more than just a gigantic bucket of words, it’s content.
How did Yahoo get here? Why didn’t it become the Google of our generation? Yahoo had the head start, it understood more about the World Wide Web than anyone else way back in 1995. Is it because it followed AOL down the content/entertainment/media company path instead of upstart Google, which came along in 1999 and subsequently dominated search and uses that position to generate a raft of successful products (and some no-to-successful ones)?
As I was searching for evidence of what went wrong, I came across two interesting pieces of text, both of which shine a little light on what Yahoo was and what it is today.
Yahoo is kind enough to keep an entire history of company press releases online, going all the way back to 1996. The company was launched in 1994, so these are the early days. In each release, about everything from the introduction of “Yahooligans!” to Yahoo’s 1996 IPO (2.6M shares at $13 apiece), there’s a bit of text about Yahoo the company. This is the paragraph or so, crafted by Yahoo, to describe what it is and does. I’ve pasted one below from a 1996 press release:
About Yahoo! Inc.
Located in Sunnyvale, California, Yahoo! Inc., offers a globally-branded Internet navigational service that is among the most widely-used guides to information and discovery on the Web. Yahoo! provides a context-based directory structure for Internet resources, as well as a Web-wide search engine that is seamlessly integrated with the Yahoo! directory service. Yahoo! is one of the most visible and recognizable names associated with the Internet. The company is continuing to develop a family of Yahoo!-branded media properties in targeted subject matter (Yahoo! Computing, Yahoo! Internet Life), demographic (Yahooligans!, a Web guide for kids), and geographic areas (Yahoo! Japan, Yahoo! Canada). Yahoo! can be found on Web at http://www.yahoo.com.
It’s short, sweet and makes it clear in the first sentence Yahoo’s core business: “a globally-branded Internet navigational service that is among the most widely-used guides to information and discovery on the Web.” Yeah, there’s a bit of flag-waving: “Yahoo! is one of the most visible and recognizable names associated with the Internet,” but it was also true. Yahoo was probably the Internet’s first globally recognized brand.
Now let’s compare this with a company overview from today’s Yahoo:
Yahoo! is the premier digital media company.
Our vision is to deliver your world, your way. We do that by using technology, insights, and intuition to create deeply personal digital experiences that keep more than half a billion people connected to what matters the most to them – across devices, on every continent, in more than 30 languages. And we connect advertisers to the consumers who matter to them most – the ones who will build their businesses – through our unique combination of Science + Art + Scale.
Founded in 1994 by Stanford PhD candidates David Filo and Jerry Yang as a way for them to keep track of their personal interests on the Internet, Yahoo! has grown into a company that helps consumers find what they are looking for and discover wonders they didn’t expect. We keep consumers plugged into the topics and people they care about, helping them get more out of the digital world so that they can get more out of life.
Today, Yahoo! stands out as one of the most visited and most trusted Internet destinations because we uniquely pair innovative technology with a human touch to personalize the digital world. Our business focuses on creating a content, communications, and community platform that delivers rich consumer experiences and advertising solutions across the screens of people’s lives — from desktops to mobile devices, from tablets to connected TVs. Yahoo! is headquartered in Sunnyvale, Calif., and has more than 13,700 employees in 25 countries, provinces, and territories.
Yahoo now says it’s a media company. Many companies could describe themselves this way, but it doesn’t put a pin on what Yahoo actually does. The next sentence is downright inspiring. It’s also blissfully free of concrete information about what Yahoo is or does. The third sentence is longer, but no more illuminating. Yahoo uses “technology, insights, and intuition” to “create deeply personal digital experiences.” In fact the whole first paragraph does little to describe Yahoo’s myriad services.
Paragraph two is part history, part exposition on what Yahoo does, though it’s not very specific, “a company that helps consumers find what they are looking for and discover wonders they didn’t expect.” Okay, so that sort of indicates search — I think.
The third paragraph finally dives into what Yahoo is all about now. This is the money sentence, “Our business focuses on creating a content, communications, and community platform that delivers rich consumer experiences and advertising solutions across the screens of people’s lives — from desktops to mobile devices, from tablets to connected TVs.” So Yahoo is now a content company (they do create a fair amount of it). Still, I think the key word in there is “platform”. Yahoo! Now thinks it’s a platform, though no one else does. No one is building apps for Yahoo. Yahoo builds for itself and people use its services.
The thing that launched Yahoo, the browse-tree directory, which I admittedly never thought was scalable, is hidden. You can find it under the “more” button on Yahoo’s homepage. No one uses it. Yahoo today is really, primarily, a portal to content (its own and third-parties), information and tools. Yahoo won’t describe itself that way because “portals” is very late 1990s. “Platform” is so very 2012. Facebook is turning itself into a platform, Twitter was a platform, though it’s pulling all those third-party services back in, Google is a platform, though it tends to use its vast resources to build everything by itself.
Not knowing what you are is, obviously, a big problem, one that Thompson may be trying to address with this staff reduction so he can finally see the forest for the trees and shift Yahoo from content back to “innovation“. I would suggest however, that Thompson reread these two passages, it may help him understand where Yahoo got lost and how to find its way back.