The day the news broke that Yahoo was acquired by Verizon Inc., my heart fell. I was sad for several reasons, the most important being that Yahoo was my first symbol of tech success. Before I fell in love with Facebook and Twitter, there was Yahoo. And because it is always a sad thing to see a giant fall. The third reason is rather funny but as someone aptly put it, “It sounds better to say Yahoo Yahoo than Verizon Verizon!” So what lessons can we learn from the demise of Yahoo? The first is that nothing lasts forever. Failure is not permanent; neither is success. Nobody is immune to downfall. If it could happen to Yahoo and Nokia, it could happen to you. To stay up, you have to stay ahead all the time. The rest of the lessons I outline in this article. Here goes…
1. Customer Focus
Yahoo started off as a search engine but quickly lost focus of its core service and wanted to be everything to everyone on the internet. Just take a look at Yahoo’s home page even today (on July 24, 2016) and you can see why. Home page is cluttered with so many competing services trying to catch our attention and lost on the page is core functionality customers want – web search. Compare it with Google’s home page and focus on the core service of web search – Source: Two Important Lessons From Yahoo’s Decline and Downfall
2. Success Management
The big question, what is your business doing to stay relevant in the next 40 years? You must learn to manage success. The danger in achieving tremendous success is that it makes one lose sight of what is ahead. It creates a certain complacency and this ultimately leads to downfall. Yahoo was once the largest name on the internet; today they are no more. Nokia was once that biggest deal in telecommunication; Tecno took the market right under their nose. PDP was once the largest political party in Africa; today they are the opposition. Nigeria was once the biggest economy in Africa; well, the jury is still out on that.
All of these names have one thing in common: at the peak of success they lost sight of the future and by the time they came around to it, it was too late. When you gain success, do not relax. Keep your eyes on the future. There is a story in the Bible about a man who gathered up his wealth and wanted to relax and enjoy for the rest of his life. God called him a fool!
3. Know when to close shop and sell
There is one more important lesson in Yahoo that investors need to know, which is don’t fall in love with your investments and know when to sell.
Back in 2008, Microsoft offered to buy YHOO stock for $31 per share, which at that time came to $44.6 billion. This included the stake in Alibaba, as well as in Yahoo Japan. Yahoo rejected the offer as too low. Verizon is coming in at one-tenth that figure, and even with the Alibaba stake included, Yahoo’s market cap today is under $38 billion.
When someone offers you more than you’re worth, take it. Cuban knew that when he sold Broadcast.com, his Internet radio company, to Yahoo in 1999 for $5.7 billion. Cuban then sold his Yahoo stake for even more and remains a billionaire, and celebrity, to this day. Broadcast.com disappeared and is now part of Yahoo’s radio operation – Source: Four Lessons We Learn From Yahoo’s Fall
4. User or Customer Experience Management
While trying to be everything to everyone on the internet, Yahoo failed to focus on the user experience – quality and speed of search results. And it quickly lost ground to the “newcomer” Google in early 2000s. Yahoo had some great services like Yahoo messenger etc. and it failed to capitalize on those strengths, especially when social media took off in a major way in 2008 and in 2009. As a result, Facebook and WhatsApp capitalized on the opportunity and have become so dominate in the market – Source: Two Important Lessons From Yahoo’s Decline and Downfall
In the future, only a handful of people will remember Yahoo as anything other than from a story in Gulliver’s Travel. It is sad but we have to move on. May your success be permanent. Cheers!