Lessons Learned From The Decline Of Yahoo

Whatever happened to Yahoo? At one point, it was the most popular website in the world, a dominant force in the world of the internet. In recent years, it has languished, falling far behind Google and Facebook in terms of influence…and profitability.

Now it's hit rock bottom, laying off hundreds of employees, shutting down once popular services, and paying its CEO Carol Bartz tens of millions of dollars for making a bad situation even worse.

A few weeks ago, I stumbled upon a pretty cool infographic that showed the rise and fall of Yahoo over the last 16 years. It's really good, so I'll just let it do the talking for me =).

The Brutal Decline of Yahoo!

Research by Scores.org

It's a sad story, but as I read through this, I realized that there was a lot to be learned, not just in running a business, but also in how we lead our day to day lives. Here are some of my biggest takeaways:

Be Cautious

Like most companies, Yahoo got completely caught up in the dot-com frenzy. In the heat of the moment, it made a series of really bad acquisitions (notably Geocities and Broadcast.com), that ended up hurting the company after the bubble burst.

This is human nature; when times are good, we tend to think they will be good forever. Instead, we should do the opposite and exercise caution when things seem to good to be true. 

As Warren Buffett says, "When people are greedy, be fearful. That way, when they are fearful, you can be greedy."

Focus Is Important

As Yahoo expanded, it tried to be everything to everyone. They started dabbling in e-mail, video, social networking, auctions, lead generation, content production, and dozens of other business opportunities. 

The problem was that Yahoo lacked focus. On the other hand, companies like Google, Facebook, and Ebay aimed to completely dominate one or two core offerings. Google owned search and e-mail, Facebook took over social networking, and Ebay is killing it in the auctions market. 

It's easy to get distracted. One of my own weaknesses is that I tend to focus on too many business opportunities, which dilutes my chances of success. Lately, I've realized that it makes more sense to focus. Maximize value in one area before you expand to others.

Build It, Don't Buy It

To me, the key difference between Google and Yahoo is that Google focused on doing things themselves, while Yahoo tried to solve it's problems by buying companies. 

The same principle applies in our own lives. I know lots of people who spend lots of money on marketing or equipment before they even have anything to sell. 

Instead, focus on building something valuable yourself. Google didn't spend a single dollar on advertising for the first 10 years of their existence, and yet grew far faster than Yahoo could have ever imagined. This is because they dedicated their energy to creating value, rather than on spewing money in search of a band-aid.

What do you think we can learn from Yahoo? 

3 Responses to “Lessons Learned From The Decline Of Yahoo”

  1. Gordie says:

    Isn't Google starting to head down the same path with some of their recent attempts at getting into social media?

  2. Matt says:

    What I learned from that infographic is this: if you're going to spend a ton of time making an awesome infographic, proofread the freaking content.  After all the hours that must have gone into that, to think they were only 3 and a half minutes away from taking it from good but amateurish to professional and awesome.

Leave a Response