Contrary to popular opinion, the reason Yahoo’s metrics have been stagnant and its stock has lost half its value in the last two-and-a-half years isn’t because Google did search better than Yahoo. It’s because Yahoo turned its back on what it did well: Building the first online mass media content superstore. In doing so, it let the younger, sexier, faster-growing Google define what Yahoo wasn’t. It’s precisely the mistake that Jeff Bezos and Amazon didn’t make when eBay was the ecommerce, monkeys-could-run-this-train darling.
Yahoo was never going to win at search, just like Amazon never would have won at auctions. It wasn’t in the company’s DNA. Even after millions spent to build better search and search monetization systems (PANAMA!) there were obvious gaffes. Vinny Lingham, who used to have a business running massive offshore keyword campaigns for US companies, hated buying them on Yahoo because he had to separately purchase keywords for each international territory, but with Google, the purchase experience was all unified on one screen.
That’s because Yahoo was a company built on department-store like fiefdoms, with each country and division enjoying its own silo, vying for a slice of the front page with one another. When Yahoo was in the throws of its Microsoft take-over drama, I asked the head of one of Yahoo’s largest and most successful verticals what he thought about it. He answered, “It doesn’t really affect me, my division is basically a small business, and we can be the same small business inside of Microsoft.”
You could see this approach mirrored in Yahoo’s always cluttered front page vs. Google’s stubbornly Spartan one. Google as an organization was almost allergic to the idea of giving people anything else to do to keep them on its site, while Yahoo’s former-CEO Tim Koogle once bragged that search queries were going down, keeping people from leaving Yahoo. There was a basic DNA to the two companies that was at odds: One all about enabling discovery of the Web and one all about enabling discovery of….Yahoo.
It became fashionable to say Yahoo needed to be more of a technology company not a media company. But Yahoo was good at being a media company—it amassed an audience of half-a-billion people coming to its front page. When we launched TechTicker on Yahoo Finance it quickly got four-times the reach of CNBC. I’d love to take the credit, but that was the platform. Yahoo’s mistake was trying to become a Hollywood-style media company. Purple exclamation marks just aren’t Hollywood-cool no matter how many times Tom Cruise visits the campus.
Which brings us (belatedly) to the point of this post: Google needs to stop trying to be Facebook and focus on extending and investing in what makes Google successful: The Algorithm. Social media is about people, not algorithms. In a weird, way we’ve gone from content being in vogue (early AOL, Yahoo) to algorithms being in vogue (Google and those weird Ask.com ads) and now back to content—albeit the user generated kind. It’s just not Google’s strong point anymore than search was Yahoo’s. You can bet somewhere inside Google a manager is yelling that Facebook surpassed it today in time spent on site. But as the contrast with Yahoo shows, Google was never playing that game. That’s like me being jealous of Stephanie Meyer because she sold more books on vampires.
Google has spent billions acquiring social media companies between Slide, YouTube, investing in Zynga and other smaller deals. And yet, I don’t hear a damn bit of buzz about this new gaming platform. What are people excited about? Instant search and priority inbox.
Sure, as a public company Google needs to grow, but the best opportunity isn’t all this social nonsense, it’s Android. It’s clearly where Eric Schmidt’s heart is. And it’s where Google is using endemic advantages — a suite of cloud-based apps people love and a hoard of cash and market influence– to do something no one else could: Pose a threat to the iPhone. With social Google is working against its own endemic advantages. And with the billions of people bridging the digital divide via mobile, a low-cost, open smart phone strategy comes at the exact right moment, versus Google’s social strategy which comes way too late.
Google hasn’t gone the Yahoo way yet, but it’s on the precipice: Don’t let Facebook define what you’re not, continue to excel at what you do well.
Google provides search and advertising services, which together aim to organize and monetize the world’s information. In addition to its dominant search engine, it offers a plethora of online tools and platforms including: Gmail, Maps, YouTube, and Google+, the company’s extension into the social space. Most of its Web-based products are free, funded by Google’s highly integrated online advertising platforms AdWords and AdSense. Google promotes the idea that advertising should be highly targeted and relevant to users thus providing...
Facebook is the world’s largest social network, with over 1 billion monthly active users. Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard students. It was a huge hit: in 2 weeks, half of the schools in the Boston area began demanding a Facebook network. Zuckerberg immediately recruited his friends Dustin Moskovitz, Chris Hughes, and Eduardo Saverin to help build Facebook, and within four months, Facebook added 30 more college networks. The original...
Yahoo was founded in 1994 by Stanford Ph.D. students David Filo and Jerry Yang. It has since evolved into a major internet brand with search, content verticals, and other web services. Yahoo! Inc. (Yahoo!), incorporated in 1995, is a global Internet brand. To users, the Company provides owned and operated online properties and services (Yahoo! Properties, Offerings, or Owned and Operated sites). Yahoo! also extends its marketing platform and access to Internet users beyond Yahoo! Properties through its distribution network...