Welcome back to the Deep Dive. We've got a stack
of research on the desk today that is, frankly,
a little overwhelming. We're not just looking
at a company. We're looking at the digital equivalent
of, I don't know, the Roman Empire. That is a
very, very apt comparison. We are looking at
massive expansion, absolute dominance, and then
a collapse that was just as spectacular and,
you know. perhaps just as inevitable as the rise.
We are talking, of course, about Yahoo. And for
anyone listening who might be on the younger
side, say under 30, you might know Yahoo as what
that finance site or the email address my dad
uses. It feels like a legacy brand, something
that's just always been there in the background.
But the documents we have here, they paint a
picture of a company that was, for a specific
generation, the absolute ruler of the internet.
It wasn't just a website. It was the front door
to the entire online world. It really was. In
the mid -90s, if you were going online, you were
starting at Yahoo. There was no Googling something.
You Yahoo'd it. And the trajectory we're going
to trace today from a hobby in a trailer at Stanford
to a $125 billion behemoth and then to a cautionary
tale of lost identity is honestly one of the
most complex business stories of the last 30
years. And we're going to cover all of it. The
meteoric rise, the billions of dollars left on
the table. And let me tell you, the What ifs
in this story are going to physically hurt to
hear? Oh, they are painful. And then there's
the identity crisis that just tore the company
apart from the inside. But we're also going to
spend some serious time on the darker chapters,
the human rights violations in China. and the
security breaches that exposed 3 billion people.
3 billion. The China files are particularly heavy.
It's a side of the story that often gets buried
under the business failure narrative, but it's
crucial to understanding the ethical drift that
happened as the company grew desperate to, you
know, maintain its footing. So let's start at
the very beginning. It's January 1994, the dawn
of the consumer web. We have two electrical engineering
grad students at Stanford University, Jerry Yang,
And David Filo. And they're supposed to be writing
their dissertations. Supposed to be. Right, supposedly.
But like all great tech founders, they are procrastinating.
They're spending all their time surfing this
new thing called the World Wide Web. And you
have to remember, the web back then was tiny.
It was disorganized. It was like a library where
all the books had been dumped in a pile on the
floor. There was no rhyme or reason to it. It
was the Wild West. You'd click a link and it
would be dead. Or it would lead to something
completely random. Exactly. So they decided to
build a card catalog. They wanted to make sense
of the mess. They started a list. Initially,
it was called Jerry and David's Guide to the
World Wide Web. Catchy. Rolls right off the tongue.
Very nostalgic. But they quickly realized they
needed a better name. They settled on Yahoo.
Now, there's a bit of a debate in the sources
about the origin here, and it actually tells
you a lot about the dual nature of the company
right from the start. I saw that. There's the
engineering explanation, and then there's the
literary explanation. The engineering one is
a classic backronym, an acronym made up after
the fact to sound clever. Yet another hierarchically
organized oracle. Which is incredibly nerdy.
Just peak Stanford engineering student. Oh, completely.
But that phrase, hierarchically organized, that's
the key. We have to come back. to that because
it defines their entire technology, their whole
worldview. It really does. But they didn't really
like that explanation, did they? No. Yang and
Philo insist the real inspiration came from Jonathan
Swift's Gulliver's Travels. In the book, a yahoo
is this rude, unsophisticated, uncouth creature.
A brute. A brute. And apparently Philo was from
Louisiana and the term was used as slang there
for a sort of rural, rowdy southerner. They liked
the rebellious, anti -corporate vibe of it. Which
is so ironic considering they were at Stanford,
the epicenter of what would become the most corporate
environment on earth. But it fits the 90s web
aesthetic. It was playful. It wasn't sterile
yet. Not at all. And that hierarchically organized
part you mentioned, that is the single most important
thing to understand about early Yahoo. It wasn't
a search engine. Not really. It was a directory.
Let's break that down for the listener. Because
the distinction between a directory and a search
engine is arguably the seed of why Yahoo eventually
lost the war. Think of it this way. A search
engine, like what Google is today, uses a crawler,
a bot to scan billions of pages automatically,
and uses an algorithm to rank them based on keywords
and links. It's automated. It scales infinitely.
A directory is manual. Jerry and David were literally
sitting in a trailer reading websites and deciding,
okay, this goes under arts humanities literature.
So it was a curated experience. It was human
editorial judgment. Someone actually looked at
the site and said, yes, this is a good site about
basketball. Precisely. And in 1994 and 1995,
that was actually superior. The web was full
of junk and broken links. You didn't want an
algorithm giving you 10 ,000 random results.
You wanted a human to tell you, these are the
five cool basketball sites that actually work.
That human touch was their value proposition.
And the market went crazy for it. They incorporated
in March 1995. They went public in April 1996.
And the stock chart looks like a vertical line.
It's the definition of the dot -com boom. It's
the poster child. The stock rose 600 % in two
years. By January 2000, at the peak of the bubble,
it hit an all -time high of $118 .75 a share.
And the valuation? They were valued at roughly
$125 billion. $125 billion. Put that in perspective
for the time. That was larger than Ford, Chrysler,
and GM combined. For a company that made lists.
It's just unbelievable. Well, by then they had
morphed, and this is the first major strategic
pivot. They stopped just being a directory and
decided to become a portal. The portal strategy.
This was the buzzword of the late 90s. Everyone
wanted to be a portal. AOL, excite Lycos. Everyone.
The idea was simple. We don't want you to just
search and leave. We want you to live here. They
wanted to be the operating system of your life.
They bought rocket mail to give you email. They
built Yahoo Finance, Yahoo Sports, Yahoo News.
The goal was to maximize time on site. Stickiness.
That was the metric everyone was obsessed with.
How long can we keep a user on our pages? Right.
Because if you are looking at ads on Yahoo pages,
they make money. If you search for something
and leave to go to another website, they don't.
This economic incentive, keeping people trapped
in the Yahoo garden, is what eventually blinded
them to the next revolution. They were building
a walled city while the rest of the world was
building highways. That's a perfect way to put
it. Which brings us to section two, the what
-ifs, the missed opportunities. I looked at the
numbers in the outline and I actually winced.
It's painful to read. Okay, let's start with
the big one, the one that everyone knows, but
the details are even worse than you remember.
Let's talk about Google. It is brutal. It's a
masterclass in how success can make you risk
-averse and blind to disruption. So it's 1998.
Two other Stanford students, Larry Page and Sergey
Brin, have a project called BackRub, which they
eventually rename Google. Right. And their technology
is fundamentally different. It's not a directory.
It's an algorithm that ranks pages based on citations,
how many other pages link to it. It's like a
peer review system for the web. And they know
it's better. So they go to Yahoo to pitch it.
They essentially said, hey, we have this algorithm.
It's better technology. Do you want to buy it?
A price tag. One million dollars. One million
dollars for Google. And Yahoo said no. Why? I
mean, even in 1998, a million dollars for a tech
acquisition was not huge money for a company
like Yahoo. It was a rounding error. It wasn't
about the money. It was about the philosophy
we just discussed. The Yahoo executives looked
at Google and said, wait, this engine works too
well. It gives people the answer they want instantly,
and then it sends them away to that website.
It violated the portal strategy, the stickiness
metric. Exactly. Why would we pay a million dollars
for a tool that reduces our user retention time?
They saw efficient search as a bug, not a feature.
They wanted you to browse the directory, maybe
check your stocks, maybe read a headline. They
didn't want you to leave. That is a staggering
misreading of human behavior. People wanted answers,
not a trap. They wanted the highway. not the
walled city. It's one of the great strategic
errors in corporate history. But it gets worse.
It doesn't end there. Oh, no. It gets much, much
worse. Okay, so fast forward to 2002. The dot
-com bubble has burst. A lot of their competitors
are dead, but Yahoo survived. Google is growing
fast. Yahoo's new CEO, Terry Simmel, he thinks,
okay, maybe we should buy them now. Right. He
realizes they might have made a mistake, so he
enters negotiations with Page and Brin. But the
price had gone up significantly. What were they
asking for? The Google wanted $5 billion. Okay,
still a steal considering Google's worth nearly
$2 trillion today. But $5 billion is a lot more
than $1 million. It is. But Yahoo was still a
giant. They could have done it. But Semmel, he
balked. Yahoo offered $3 billion. They haggled.
Over the company that would define the next two
decades of the Internet, they tried to save...
a couple billion dollars. They haggled. Semmel
thought $5 billion was too rich. He held firm
at $3 billion. And Google's founders, who frankly
weren't crazy about selling anyway because they
knew what they had, they just walked away. They
let Google go over a $2 billion difference. It's
hard to wrap your head around that level of short
-sightedness. It's the classic error of valuing
a company based on its current revenue rather
than its strategic threat. They didn't see that
Google wasn't just another website. It was a
utility that would underlie the entire digital
economy. They were looking at the balance sheet,
not the future. But the missed opportunities
weren't just about buying. They were about selling,
too. Oh, yes. The other side of the coin. Fast
forward again. It's 2008. Yahoo is struggling.
Google is absolutely dominant. And a different
giant comes knocking. Microsoft. Microsoft was
terrified of Google's dominance in search and
advertising. They saw it as an existential threat
to their whole business. They needed a weapon
to fight back. So in February 2008, Steve Ballmer,
the CEO of Microsoft, makes a hostile bid. And
the number? $44 .6 billion for Yahoo. Nearly
$45 billion. in cash and stock a massive premium
over their stock price at the time it was a lifeline
a golden parachute a chance to be part of something
huge and competitive again and yahoo said Jerry
Yang, who was CEO at the time, said it substantially
undervalues us. They rejected it. They said $45
billion wasn't enough. They held out for more.
Microsoft actually bumped the offer to around
$47 billion, but Yahoo wanted $50 billion plus.
They leaked memos. They tried to rally shareholders.
It was a soap opera. They got greedy or delusional.
They were delusional. They still believe they
were the ruler of the internet from 1999. They
didn't realize the market had moved on. Microsoft
got frustrated and walked away. And looking at
the notes here. The stock crashed immediately
after. It fell off a cliff. The shareholders
were furious. And as we'll see later, when they
finally did sell the core business, it was for
about 10 percent of that Microsoft offer. A tenth.
This is a perfect lead into the identity crisis.
You touched on it with the portal concept, but
the sources highlight this content internal war.
Is Yahoo a technology company or is it a media
company? This is the schizophrenia that killed
them. In Silicon Valley, engineering is king.
Google was an engineering company. They solved
hard computer science problems. Yahoo, especially
under Terry Semel, who came from Hollywood, he
was a Warner Bros. executive, started acting
like a media conglomerate. They thought content
is king. Let's buy content. Right. So they went
on these massive spending sprees to buy content
and platforms. In 1999, at the height of the
bubble, they bought Broadcast .com. This was
Mark Cuban's company. For $5 .7 billion. $5 .7
billion. Explain what Broadcast .com was for
context, because the price tag seemed insane
even by bubble standards. The idea was putting
radio and sports broadcasts on the Internet,
which sounds great today. We all stream Spotify
and watch live sports. But in 1999, most people
were on 56K dial -up modems. You couldn't stream
anything. You'd click play and then wait 10 minutes
for 30 seconds of scratchy audio. It was... Buffering
hell. Exactly. They paid nearly $6 billion for
a technology that the infrastructure of the internet
couldn't support yet. It's widely considered
one of the worst acquisitions in the history
of business. The service was eventually just
shut down and absorbed. And then there's GeoCities.
This one hits me right in the nostalgia. I had
a GeoCities page. I think it was dedicated to
Star Wars. It had the starry background and the
spinning under construction gif. Everyone had
one. It was part of the early web experience.
Yahoo bought GeoCities in 1999 for $3. $3 .6
billion. At the time, it was the third most visited
site on the web. So pause here. They owned the
place where millions of people were building
profiles, uploading their own content, and forming
communities around shared interests. Yes. They
owned the precursor to social media. They had
Facebook before Facebook. They had MySpace before
MySpace. They had the users. They had the network
effects. But because they viewed themselves as
a media portal, they didn't know what to do with
user -generated content. How so? They tried to
wrap it in ads and restrict what users could
do. They treated it like digital real estate
that they own rather than a living social network
that the users owned. They failed to invest in
the tools, the community features. They just
saw it as a place to serve more banner ads. And
they let it rot. They did. It became a spam haven
filled with pop ups. It looked dated. And then
in 2009, they shut it down and deleted everything.
That's a digital tragedy. Just erasing millions
of pages of Internet history. People's first
websites. It is. And it proves they didn't understand
the shift from Web 1 .0. We talk at YouTube Web
2 .0. You talk to each other. They made the same
mistake with Flickr, the photo site. They bought
it, neglected the community, and let Instagram
eat their lunch. And even later, much later,
in 2013, they tried to buy their way back into
cool with Tumblr. This was under Marissa Mayer,
who we will definitely discuss shortly. They
dropped $1 .1 billion on Tumblr. The goal was
to get the young, hip demographic that had abandoned
Yahoo years ago. Did it work? Not even close.
It was a total culture clash. They tried to integrate
it into the Yahoo ad machine, and the user base
revolted. Tumblr's culture was very specific,
very RC, and very anti -corporate. Yahoo was
the ultimate suit. And Mayer famously promised
not to screw it up. And then they proceeded to
screw it up. They couldn't figure out how to
monetize it without alienating the users. They
had to write down $712 million of the value just
three years later. It was another failure. So
we have a pattern here. Buy something hot. Misunderstand
why it's hot. Force it into the portal model
and watch it die. Meanwhile, what was happening
with their search technology? You know, the thing
they were supposed to be doing. It capitulated.
This is the surrender. From 2000 to 2004, they
actually outsourced their search to Google. Wait,
I think a lot of people don't know this. So if
I went to Yahoo .com and searched for something
during that period, I was seeing Google results.
Yes. It said powered by Google in small print
at the bottom of the page. Yahoo was effectively
paying its biggest rival and training its own
users that Google provided the best answers.
That is strategic suicide. You're literally advertising
for the company that's killing you. It's unbelievable.
By the time they tried to build their own engine
again, buying companies like Inktomai and Overture,
the brand war was over. Google was a verb. Yahoo
was a dinosaur. In 2009, they gave up entirely
and signed a 10 -year deal with Microsoft to
use Bing's engine. So Yahoo became a zombie search
engine, a Yahoo skin. On a Bing body. Correct.
They became an ad sales team. The technology
company had ceased to do the technology. Their
engineers were just maintaining old systems.
All the talent left. This brings us to the savior
era, section four. The board realizes they're
in deep, deep trouble. They need a visionary.
In 2012, they hire Marissa Mayer. And this was
huge news. I mean, front page of every paper.
Mayer was employee number 20 at Google. She was
a geek celebrity. She was young. She was a brilliant
engineer. She was obsessed with user experience.
The hope was she would turn Yahoo back into a
tech company. She would bring the Google magic.
But the cultural transplant didn't take. It was
a violent organ rejection. She tried to impose
Google's intense, high performance, data driven
culture on Yahoo's sleepy, bureaucratic nine
to five workforce. And the first. Big controversy
was the remote work ban in 2013. Right. At the
time, tech was moving toward more flexibility.
Mayer went the other way. She revoked work from
home privileges for everyone. The memo leaked
and the Internet just exploded. What was her
justification? She argued that innovation happens
in the hallways, in the cafeteria. You need serendipitous
collaboration. Some of the best decisions and
insights come from hallway and cafeteria discussions,
is what the memo said. And frankly, she wasn't
entirely wrong. The reporting suggests Yahoo
had a lot of ghost employees who were technically
working from home but not doing much actual work.
She was trying to shake things up. She was trying
to shock the system back to life. But the execution
seemed punitive and out of touch. It was. But
the bigger, more controversial issue was the
QPR system, quarterly performance review. The
stack ranking. Or the bell curve. Yeah, this
sounds brutal. It's a system where managers were
forced to distribute their team members across
a curve. A certain percentage had to be at the
top, a certain percentage in the middle, and
a certain percentage had to be at the bottom,
labeled misses. Even if you have a team of five
superstars, one of them has to be labeled a miss.
Someone has to be the loser. And if you were
at the bottom for a couple of quarters, you were
often fired. It was a way to manage out the bottom
5, 10 % of the company every year. That completely
destroys morale. It means I'm not competing against
Google. I'm competing against the guy sitting
next to me. Exactly. It kills collaboration.
Why would I help you if your success pushes me
down the curve? It led to massive internal politics,
managers trading employees like baseball cards
to fit their curves. And eventually it led to
lawsuits. The discrimination lawsuits. This was
unexpected. Usually in tech, we hear about discrimination
against women. But in 2016, a prominent editor
named Scott Ard sued, claiming Mayer was systematically
purging male employees. What was the basis of
that claim? He argued the QPR system was subjective
and manipulated. He has stellar reviews for years.
Then, suddenly, under the new regime, he's rated
as a miss and fired, and his role is given to
a recent female hire he had managed. Another
employee, Gregory Anderson, filed a similar suit,
claiming he was fired because of his gender.
And the lawsuit alleged this was a pattern. Yes,
that the rating system was being used as a cover
for illegal mass layoffs and that Mayer's personal
preferences were influencing who got fired. Whether
the bias was real or not, it paints a picture
of a toxic cutthroat environment. It sounds like
chaos. But while the employees were fighting
each other, a much darker storm was brewing regarding
user safety and ethics. This brings us to the
most disturbing part of the Yahoo story. It really
is. Section five, the dark side. I think a lot
of people know about the business failures, but
the human rights stuff, this is heavy. Let's
talk about China. This is where the identity
crisis became genuinely dangerous. Yahoo wanted
to do business in China. It was a huge growing
market. But to do that, you have to play by the
Chinese Communist Party's rules. And the extent
to which they played along is startling. Enter
the Xitao case. Shi Tao was a Chinese journalist.
In 2004, the Chinese government sent out a secret
order to media outlets telling them not to cover
the 15th anniversary of the Tiananmen Square
massacre. Standard censorship. Right. Shi Tao
used his personal Yahoo email account to send
a summary of that government order to a pro -democracy
website based in New York. He was blowing the
whistle on censorship. Thinking he was anonymous.
He thought. The Chinese police went to Yahoo
Holdings in Hong Kong and demanded the user details
for the account. And Yahoo. And he wasn't the
only one. There was Wang Shoning, a dissident
writing pro -democracy essays. Yahoo handed over
his data to another 10 year sentence. How did
Yahoo defend this? What could they possibly say?
At first, they played dumb. They issued statements
saying. We just complied with a lawful request
from a government. We didn't know the nature
of the case. Is that true? It didn't hold up
under scrutiny. Later, during congressional hearings
in the US, it came out that the police paperwork,
the warrant itself, actually cited inquiry into
suspected illegalities of inciting subversion.
The state secrets element was right there. So
they knew. Or they should have known. Human rights
groups were furious. Jerry Yang was hauled in
front of Congress and berated. One congressman,
Tom Lantos, told him, while technologically and
financially you are giants, morally you are pygmies.
The committee concluded Yahoo was either inexcusably
negligent or deceptive in their testimony. They
eventually settled a civil suit with the families
of the dissidents. But it was a profound moral
failure. It showed that they were willing to
trade their users' freedom for market access.
It destroyed the reputation of the tech community.
But in terms of damage to the average user, the
security breaches were even wider in scale. Oh,
absolutely. The hacks. We are talking about the
biggest data breaches in the history of the Internet.
By a long shot. There were two main events disclosed
in 2016, right when Yahoo was in the middle of
trying to sell itself to Verizon. Just the worst
possible timing. The worst. First, in September
2016, they admitted a 2014 breach affecting 500
million accounts, which was, at the time, the
biggest hack ever. And then? Then, a few months
later, they dropped the real bomb. They'd found
evidence of a different breach, one that happened
way back in 2013. Initially, they said it affected
1 billion accounts. But later, in 2017, after
the sale, they corrected the record. It affected
3 billion accounts. 3 billion. That is effectively
every single Yahoo, Flickr, and Tumblr account
that existed. Yes. If you had a Yahoo account,
you were hacked. Names, emails, phone numbers,
birthdates, hash passwords, and in some cases,
even unencrypted security questions and answers.
Who did it? Some kid in a basement? No. This
was not random. The 2014 breach was attributed
to state sponsored actors. The U .S. Department
of Justice indicted two officers from the Russian
FSB, their spy agency, and two criminal hackers
they hired to carry out the attack. So this was
espionage. They were targeting specific accounts.
They were journalists, dissidents, government
officials from the U .S. and other countries.
But to do that. They cast a net that caught everyone,
and the method was fascinatingly technical and
terrifying. They didn't just steal passwords.
They stole the proprietary code Yahoo used to
create cookies. Explain that. We all know cookies
are the things we click accept on, but what do
they actually do in this context? A cookie is
like a temporary ID badge. When you type your
password, Yahoo's server gives your browser a
cookie that says, this is the host, he's logged
in, and he's allowed to be here. That way, you
don't have to type your password every single
time you click on a new email. It remembers you
for that session. Okay, that makes sense. The
hackers stole the cookie minting machine. They
could forge their own ID badges for any account
they wanted. They didn't need your password.
They just showed up to Yahoo's servers with a
forged badge, and Yahoo said, welcome back, come
right in. That is terrifying. It's like stealing
the master key to the hotel. You can get into
any room you want, and the front desk thinks
you belong there. It effectively stripped all
security from the system for the accounts they
targeted. And because they hid it, or more likely
because Yahoo's security was so bad they didn't
even know about it, for years the damage was
compounded. This must have impacted the sale
price to Verizon. Massively. Verizon was in the
process of buying them for about $4 .8 billion.
When this news broke, Verizon almost walked.
They eventually renegotiated and shaved $350
million off the purchase price. A $350 million
penalty for bad security. And honestly, they
were lucky the deal went through at all. The
reputational damage was immense. It seems like
every time we turn a page in this research, there's
another controversy. The outline mentions shark
fin soup. What is this? Locks. I know. It sounds
so random. But it ties back to their investment
in Alibaba. Yahoo owned a huge chunk of Alibaba,
the Chinese e -commerce giant. It was actually
the smartest financial move Jerry Yang ever made.
That stake kept the stock price up for years
when the core business was failing. But Alibaba
was selling shark fins on its platform. Right,
which is an environmental disaster. Shark finning
is brutal and has decimated shark populations.
When environmental groups called this out, Yahoo
executives initially shrugged. They called it
a cultural practice and said they couldn't interfere
with Alibaba's business. Which, again, just sounds
incredibly tone -deaf and cynical. It goes back
to that lack of a moral compass. Eventually,
under huge pressure, Alibaba did ban the sales,
but Yahoo looked like they just didn't care about
anything but the bottom line of their investment.
And there's also paid inclusion. What was this
about? This was earlier, 2004. Yahoo started
letting companies pay to be included in the search
index, not just ads on the side, but in the actual
organic search results. That breaks the cardinal
rule of search. It's supposed to be church and
state. The results are supposed to be the best
results, the most relevant, not the ones who
paid you. Exactly. It completely undermined user
trust. If I can't trust that the link you're
showing me is actually relevant, why am I using
your engine? They were so desperate for revenue,
so obsessed with hitting quarterly numbers, that
they sold their integrity. They eventually discontinued
it, but the damage was done. And lastly on this
grim list, we have spyware. There are allegations
that Yahoo partnered with adware companies to
serve pop -ups and install software on users'
computers. Former employees claim they would
literally dial up the pop -up frequency at the
end of the quarter just to hit revenue targets.
It's the same pattern over and over. treating
users like a resource to be mined rather than
customers to be served. It all leads to the end.
Section 7, The Fall. The sale to Verizon finally
closes in 2017. The price for the core internet
business, the mail, the sports, the finance,
the ad tech, was roughly $4 .48 billion. Let's
just pause on that number. $4 .48 billion. Microsoft
offered $44 .6 billion in 2008. They destroyed
90 % of their value in less than a decade. It
is one of the greatest destructions of shareholder
value in modern history. An absolute collapse.
And Verizon, bless their hearts, tried to save
it. They merged it with AOL. Which was like tying
two rocks together to see if they would float.
And they called the new entity Oath. Terrible
name. Just a truly awful name. Nobody knew what
it meant. It had no brand recognition. And it
didn't work. The synergies they hoped for never
materialized. Verizon eventually gave up, too.
In 2021, they sold 90 % of the media group to
Apollo Global Management, a private equity firm,
for $5 billion. They essentially got their money
back and washed their hands of it. Private equity
usually means one thing. Cots cutting and stripping
assets. And restructuring. We saw major layoffs
in 2023. They cut 20 % of the staff to streamline
the ad tech division. It's the classic private
equity playbook. They are still here. That's
the twist. We are talking about them like they're
dead. But I check Yahoo Finance multiple times
a day. And millions of people do. Yahoo Sports
is huge for fantasy leagues. Yahoo Mail still
has hundreds of millions of active users. They
aren't the ruler of the Internet anymore, not
even close. But they are a profitable kind of
zombie media company. And now they're pivoting.
Of course. Like everyone else, they're pivoting
to AI. They recently acquired an AI news app
called Artifact, which was created by the founders
of Instagram. They're trying to find relevance
again. So as we wrap this up, what is the lesson
here? Is it about bad leadership, bad technology?
What's the core takeaway? I think it's about
focus and identity. Yahoo never decided what
it was. Google knew it was search. Facebook knew
it was social. Apple knew it was hardware and
software integration. Yahoo tried to be everything,
a library, a newspaper, a TV station, a tech
lab, and ended up being nothing specific. They
were the jack of all trades, master of none on
a global scale. And they suffered from what you
could call the first mover disadvantage. They
built the first version of the web. But when
the web changed to algorithmic search, to social,
to mobile, they were too weighed down by their
old model to pivot. They were defending a castle
that no one wanted to conquer anymore because
everyone had moved to the city next door. It
raises a provocative question for me. In tech,
we worship the pioneers. the ones who get there
first. But maybe being first isn't the advantage
we think it is. Maybe it's better to be second.
Watch the first guy break his legs and make all
the mistakes and then build the better bridge.
I think history supports that. Google was the
second mover in search after AltaVista and Yahoo.
Facebook was the second mover in social after
MySpace and GeoCities. The Apple iPhone wasn't
the first smartphone by a long shot. History
suggests the fast follower often wins the war.
A sobering thought for all the innovators out
there. Well, that brings us to the end of the
Yahoo deep dive. What a wild ride from the top
of the world to a cautionary tale. It really
is. And I have a challenge for you, the listener.
If you are old enough to have one, try to log
into your old Yahoo mail account today. Treat
it like an archaeological dig. Read your emails
from 2006. See what you are up to. It's a time
capsule of your former self. It can be cringeworthy
but fascinating. For the love of God, change
your password. And turn on two -factor authentication.
Because as we learned today, your cookie might
already be forged. That is some solid advice.
Thanks for listening. We'll see you on the next
deep dive. Goodbye, everyone.