Founded in 1994 by Stanford Electrical Engineering graduate students Jerry Yang and David Filo, Yahoo grew rapidly throughout the 1990s, with its stock price skyrocketing during the dotcom bubble.
Yahoo was one of the few companies to survive it. While the company may have peaked during the bubble — it was worth $125 billion at the time — things were going pretty well for a few years post-bubble too.
In 2016, Adweek published a timeline of Yahoo’s highs and lows leading up to the Verizon deal.
“Yahoo’s gone from being one of the world’s biggest companies in online search to an internet company that’s struggled in recent years to move beyond display advertising,” Laurel Johnson wrote.
A succession of terrible decisions lead to Yahoo’s downfall. At least that’s what former Yahoo employee Jeremy Ring thinks.
In a Forbes interview published today, Ring said that “Yahoo’s idiocy is hard to exaggerate.”
Ring joined Yahoo when it only had about 10 employees. He had met one of the founders, Jerry Yang, after placing an ad. This lead to a job offer. Ring left the company in 2006. He was there through Yahoo’s huge growth years.
Ring told his story in a book titled We Were Yahoo!: From Internet Pioneer to the Trillion Dollar Loss of Google and Facebook . Can Ring’s book be considered a cautionary tale for entrepreneurs? Is the book indeed a cautionary tale or a tragedy? Maybe it’s a bit of both.
In We Were Yahoo!: From Internet Pioneer to the Trillion Dollar Loss of Google and Facebook , and in the Forbes interview, Yang puts Yahoo’s failures in context. In 2006, when Facebook was still in its infancy, Yahoo refused to buy it. says Ring.
According to CNN Money , Facebook is currently worth over $500 billion. Yahoo could have bought if for $1 billion.
Perhaps the biggest mistake Yahoo made is handing out search to Google on a silver platter. This is how Yahoo went from the most popular search engine on the internet, to holding only 5 percent of the Search Engine Market Share.
According to NetMarketShare , Google currently holds 74.5 percent of the Search Engine Market Share. The Chinese Baidu is second, holding 10.4 percent and Microsoft’s Bing third with 7.9 percent.
“Yahoo!’s leadership just didn’t see the big dollars that were in search until it was too late,” says Ring.
Yahoo, in a way, made Google the titan that it is today.
Yahoo contracted out search to Google in 2000 and waited until 2004 to develop its own search technologies. It was too late by then, Google had already become the dominant player.
Still, that did not help Yahoo see the writing on the wall. In 2008, as Yahoo lost market share, Microsoft bid to buy the former tech giant for $44.6 billion.
The offer was rejected. “It substantially undervalues the company,” Yahoo said at the time.
Three years later Yahoo would have a market capitalization of $22.24 billion. In 2016, Yahoo was bought by Verizon for less than $5 billion. Forbes writer Brian Solomon called this “the saddest $5 billion deal in tech history.”
Talking about his book, Jeremy Ring says: “It tells a story of missed opportunities every entrepreneur needs to understand.”