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Q4 financial results have hit us hard this week, from all directions.

Yes it's ridiculous that Apple’s quarterly net profit was larger than Google's Q4 gross revenue ($13bn versus £10.6bn), and yes it's sad to see Nintendo almost triple its estimated losses.

But what of Yahoo? It's still hanging on in there, with control of millions of Yahoo mail accounts and a chunk of display thrown in good measure.

Yahoo's worldwide traffic might be up 12% - plus page views for Yahoo’s media properties rose 7% - but as AllThingsD’s Kara Swisher predicted, this was the 13th quarter in which the Silicon Valley giant has done worse that the previous year.

Sales restructuring aside, Yahoo’s new CEO Scott Thompson has some serious making up to do. Currently his plans involve fixing the “big mess” the company has got itself into in Asia, saving declining ad sales and filling some of the businesses technology gaps.

Though he won't reveal specifics yet, that last point sounds like the precursor to an acquisiton spree to me. Before he joined, the business had already announced back in November that it ‘plans’ to acquire online-advertising technology company Interclick in a deal valued at roughly $270m.

But we’ve been here before.

While it’s unfair to dismiss Thompson’s plans barely a few weeks into his role, we’d like to see him learn from some of the company’s mistakes of the past and have compiled the top five times Yahoo wasted a really good opportunity. 

A quick note before we begin. ‘Not selling to Microsoft’ doesn’t count, because in that case it  turned down an acquisition offer instead of engaging in one. Time will tell how that holy trinity partnership between AOL, Yahoo and Microsoft, in which they sell each other's leftover inventory (announced November 2011), will turn out. But that's another story.

Delicious

Bought for a rumoured $30m in 2005, sold for a suspected £1m in 2011.

Delicious had such promise. It was one of the first ‘web 2.0’ companies to become popular, with social bookmarking setting it apart from Digg and Reddit.

When Yahoo bought it, many predicted that the injection of funding and support could make it excel as a service. Yahoo said it wanted to introduce people to the idea of ‘social search’ because the tool’s data would allow people to view which sites and posts were most popular. That was way before 'social search' became the buzzphrase it is today. 

Sadly that idea never came to fruition. Sure, it remained a solid bookmarking tool, but neither its API nor RSS were ever charged for. In fact, it remained free to use, and the subsequent things that smart developers did with the site were never supported nor incubated by Yahoo. 

Eventually, with a total lack of focus on developing the massive potential Delicious held, it was earmarked to be ‘sunset’ – and sold to YouTube’s founders (who had previously sold up to Google for $1.76bn).  

The duo’s company Avos has since attempted to revitalise the site by turning it into a kind of news discovery service. But it sadly remains stagnant, having lost all of its powerusers and providing nothing different or interesting enough for them to return.

For further reading, Ruder Finn's Ged Carroll wrote a great piece on this before the sale to Avos.

Flickr

Bought for a suspected $35m in 2005, still owned by Yahoo.

Oh Flickr. When Yahoo bought the photo sharing site, it said that it understood the nature of the community and promised to retain the feeling, feel, and management team.

Shortly after that however, the co-founders left, and much of the engineering team. Yahoo implemented forced linking between Flickr and Yahoo accounts, while Facebook’s share of the photography space quietly continued to snowball.

Former Flickr architect, now CTO at Etsy Kellan Elliott-McCrea sums it up nicely in a post on Quora from 2010. He says that he worked out that roughly 15% of any of the large projects tackled over the last few years he was at Flickr (internationalisation, video, various growth strategies etc.) went into building the feature. 85% was spent dealing with Yahoo.

I recently pulled up a worklog I was keeping in 2008-2009, and I found 18 meetings scheduled over a 9 month period discussing why Flickr's API was poorly designed and when we'd be shutting it down and migrating it to the YOS Web Services Standard. That kind of stuff slows you down.  Especially when you're being starved for resources."

MyBlogLog

Bought by Yahoo in 2007 for $10m and closed in May 2011.

Another example of an acquisition that could have provided first-mover advantage. As was also the case with Upcoming (bought by Yahoo in 2005) which allowed people to share plans and attendance at events, with group features and sharing that came before Eventful, Meetup, and Google-launched Schemer (which went live just this month). 

But back to MyBlogLog. Again the business merged Yahoo and MyBlogLog accounts, but co-founder Eric Marcoullier explained that the technology was under-used. 37signals' Marc Gayle highlights Marcouillier's comment at the time that:

The site was so long neglected, so far behind from Facebook, Twitter and other social networking sites. Thus, the only way is to close this site." 

RWW’s Marshall Kirkpatrick said of the closure: "Imagine getting a feed of the LinkedIn job titles of all your recent readers and presenting that to a blog’s advertisers. Both analytically and financially, there was so much potential in MyBlogLog.” 

Kelkoo 

Acquired in 2007 for $672m, sold in 2008 for ‘less than $100m’

Yahoo acquired Kelkoo to boost its e-commerce and search-related marketing services in Europe. The plan was for Yahoo use its own search technology and the commercial search capabilities (which it acquired through its purchase of Overture) to take advantage of the growth of online comparison shopping. 

However, yet more waiting around meant that the company lost much of its momentum after the acquisition in the face of significant competition.

Founder and ex-CEO of Kelkoo Pierre Chappaz refused to name the price it was eventually sold for the second time around, but said it was “below £100m”.

The difference is the price of management incompetence that led Yahoo’s (stock price to fall) below $9.”

Luckily for Kelkoo, the break has done the company well. It relaunched in October 2011 with an affiliate model that includes 40 new partners, including Ebookers.com, LateRooms.com and Booking.com. 

Current CMO Chris Simpson said: “The Kelkoo you see today is the result of a huge amount of research and development over the last 18 months.”

Broadcast.com 

Acquired for a reported $5.7bn back in 1999, in one of the biggest deals in internet history, even now.

Broadcast.com was integrated into Yahoo's global network as Yahoo Broadcast, while an internal divison operated as Yahoo Broadcast Services.

Once again (see a pattern?) Broadcast.com was the first mover in consumer-focused video streaming via the web. Had the integration been more successful, many analysts speculate that YouTube would not have gained mass traction.

With this, Yahoo moved first in video, but failed to make it work due to bad management. Broadcast.com founder Mark Cuban recognised this early on and sold his holdings before it was too late. 

Neil Kandalgaonkar, a former engineer at Upcoming, says acquired companies like Upcoming were: “parcelled out to different parts of Yahoo where they were subordinate to the existing hierarchy and agenda.”

The Yahoo model is to think of their sites as media properties with audiences, and bolder ideas like one social network encompassing them all was never a priority. Even if top executives wanted to see revolutionary change at Yahoo, most of the organisation was set up to do deals with Purina Puppy Chow and to ask if Flickr wanted to create a special site for dog photos.”

So there we have it. As with many huge companies, it would appear that internal process, hierarchy, politics and too much talking has historically been Yahoo’s downfall.

We’ve seen it fail so many times; is Thompson finally going to be the one to change its culture forever?

Those that almost made it: GeoCities (which also gave Yahoo first-mover advantage within the social communities space), Associated Content (retired in 2011 and replaced with Yahoo Voices), Right Media (all but wiped out by Google’s ad exchange). Plus plenty more, but a post can only be so long.

Vikki Chowney

Published 26 January, 2012 by Vikki Chowney

Vikki is head of community at TMW. You can follow her on Twitter or Google+

249 more posts from this author

Comments (6)

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Ellaine

Yahoo has the capacity to make it big but it seems that they couldn't get it right, they keep on making the same mistakes. Yahoo has this 'almost there' vibe. Time is of essence they need to move fast.

over 4 years ago

Michelle Goodall

Michelle Goodall, Online PR/Social Media Consultant at EconsultancySmall Business Multi-user

Can't help feeling sad about the demise of Yahoo!

Still love and use Delicious and Flickr. In fact, I think that Delicious is better than Evernote,...well, for my needs anyhow.

Anyone else remember Yahoo! auctions? For a while it was nip and tuck with eBay and QXL....

over 4 years ago

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Anonymous Coward

They effectively and finally threw in the towel when they outsourced search to Microsoft.

over 4 years ago

Terry Chisholm

Terry Chisholm, Manager of Digital Services at Pulse Group

As soon as Yahoo had it's IPO way back in the day, all the "experts" changed it to an editorial site more like a publication - with buzzwords like 'portal'. There was no established business model, but lots of excitement... so the "experts" slapped a traditional "publication" style business model in place, filled it up with banner ads, the usual mainstream mix of editorial and it lost ground to google - as back then everyone was on dial-up and it took ages to do a search.

Weird now though, as tons have broadband and it's editorial pages are busy... and mail services are busy.

They would benefit from hiring a few apple employees to help them focus on user experience between their brands - and integrate them more. Why have so many usernames for all their sites? Really???

I wish them luck though. I always liked them! Hope it comes together and they find a way to get their "cool on" again. But as an old brand that is loosing it's cool, they are going to have to do something really innovate and different to get their cool back...

over 4 years ago

Eric Layland

Eric Layland, President at Canna Ventures

The devil is in the details and Yahoo has had great vision but hasn't been able execute operationally. Recall also that Yahoo bought Goto.com and had the first PPC platform but lost it to Google's superior execution & technology.

over 4 years ago

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James R.C. Smith - Puregenie Digital Recruitment

'Yahoo!’ used to be the name brand name of the internet. Before Google and Facebook, it led the way as a search engine with extras such as an email service and instant messenger alongside their competitor, MSN.

However, with the unstoppable Google now thoroughly in top position, the company has been having some tough times.

http://www.puregenie.com/blog/the-demise-of-yahoo/

about 4 years ago

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