Talento | Employers

Learning from Yahoo: Important Lessons for Startups

by Carlos A. Vázquez    |    January 24, 2019    |      5 min read


learning from yahoo

We remember the yodeling. It was the trademark of a company on the rise, in an industry that had yet to be fully defined. Many have looked back at Yahoo’s Shakespearean tragedy—its rise to prominence, the wacky-new-millenium -flip-flop-wearing approach to office work, its brilliance and inventiveness, a series of bad decisions, and ultimately its slow decline. Many reduce Yahoo’s decline to a simple lack of foresight, but the story is more complicated than that and it can really serve as a lesson to startups today about what is necessary to be a leader of industry and to be truly innovative without missing the mark.

There are several theories cited as the main reason for the company’s downfall. So we thought we’d take a stab at it and see if we can’t extract some useful lessons. After all, Yahoo was at some point another startup company brimming with ideas, much like many small companies today.

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Its Contributions

Yahoo was the pioneer of several internet developments. They initiated the idea of cloud storage in what they called Yahoo Briefcase. This was way before Dropbox and certainly way before Google Drive. The company failed to capitalize on these. Before the year 2000, Yahoo added email, classifieds, travel, weather, maps, innovative ads, and was mucking around with what could be seen an early version of YouTube, Broadcast.com. Needless to say, the spirit of innovation and creation was not lacking. They seemed to be moving in the right direction on many different fronts. They had hit the nail on the head in their advertisement and in the creation of the Yahoo ethos, which was an exciting playful young company leading the way in uncharted territory.

So What Happened?

Some say there were some external circumstances outside of Yahoos control. The dotcom crash of 2000, meant the company lost a lot of its advertisers.  Yahoo also walked away from some pretty good deals including buying Google for $1 million. Harvard Business Review posits another theory. One of the main failings, they said, had to do with Yahoo’s lack of vision when it came to mobile and that they let the mobile revolution sweep them off their feet. Yahoo did, however, purchase Tumblr and Broadcast.com, acquisitions that did not amount to much in the end. Some argue if it had succeeded in acquiring Google or Facebook, it might have dropped the ball on that too.

In its final death throes, Yahoo went through four CEOs in five years and had had 25% of its staff quit. It was around this time that CEO Marissa Mayer took over and started looking for a way to turn the company around. She found a way to involve loyal Yahoo employees that knew the company and had ideas on how to revitalize it. She got the gears turning. How? The employees themselves became involved in the rescue operation and Yahoo started making money. She got employees to call out bad procedures and policies and had offered cash bonuses for ideas that made the company a certain amount of money in a year. She managed to slash away what she called PB&J—process bureaucracy and jams— and clear out unnecessary hurdles that stagnated creativity. She also green lit hundreds of new ideas. But they essentially ran out of time and could not manage to turn the ship around before it was already too late.

So What Is the Takeaway?

Capitalism spawns innovation because it is competitive. Technology moves quickly and leading a company that operates in that realm requires many assets and characteristics, but let’s talk about four major ones: talent, vision, foresight, and courage.

Talent comes in many forms but raw talent doesn’t steer a company forward. Many startups today begin with a great idea and fail to capitalize on it because they lack direction, organization, or perseverance. Failing to understand that a company needs more than just good ideas can stagnate a startup and leave openings for competition.

Clear vision takes you far. Some have observed that Yahoo’s failure lay in the fact that they tried to be everything for everyone. That as they went through many CEOs, each one had its different vision and they were never cohesive, never truly defined as to what they wanted to be. A startup must have a precise vision or they might spread themselves too thin.

Foresight certainly plays a role. Having a firm and attentive ear to the ground means a company is listening to what people need, to where the culture is headed, and it requires taking some risks but being immersed in your industry enough that you believe in our understanding of it. If you’re running a startup, read and watch everything. Pay attention to your competition but don’t emulate them.

If your an entrepreneur you already know a thing or two about courage. A lot of people in your life probably tried to talk you out of it. They told you to get a ‘real job’. Believe in your entrepreneurial instincts. A startup will take some risks, but if you have all of the above, it might just be the leap of faith that takes you to the next level.

The World is Out There For the Taking

Few young people today would guess that Yahoo was at its height worth $125 billion and

Today’s technology sector has so much potential and it’s growing by the second. As a hiring partner, CodersLink, sees the way more than Ford, Chrysler, and GM, combined, as  Jeremy Ring, a former top executive at the company, remembers. In 2016, the company was finally sold off to Verizon for a measly $5 billion. Perhaps that’s not even the worst of it. The worst part might be that Yahoo is remembered as a company that was on top of the world—that had all the creativity and potential to be king of the internet—and then it blew it.

companies take off once they get the right team together. Our mission is to help companies fill that very important position that will be the missing element to their ultimate success. Don’t blow it.

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