How does a company that had the biggest share of search engine marketing, highest number of visitors and more cash than anyone else in the industry, employed the most talented people from around the world, and had bigger dreams than any other company in the Silicon Valley, fell so far and failed so decisively?
Back in 2002, when Yahoo! was making about $837 million yearly revenue and Google only $240 million a year, Yahoo! offered to acquire Google for $3 billion. But the relatively young Internet search firm, which was founded only 4 years ago in 1998, was not interested. However, Yahoo! had a backup plan; it would buy a top-quality search engine for itself and develop its own search-advertising technology, and it would beat Google in the up-and-coming marketing arena of small text ads that pops up on the search results pages. But Yahoo! mishandled and messed up that plan at every single step, and as a result, today, Google is controlling nearly 70% of the overall search-related advertising market, which is an industry that is calculated to have an annual worth of about $15 billion, and growing by almost 50% a year.
So why did Yahoo! fail?
The answers to the question, “why did Yahoo fail to beat Google?”, are quite easy to notice.
Yahoo! was too busy doing everything
Yahoo has constantly failed to make quick decisions on what it should focus on. It wasted so many years and opportunities trying to do everything and ended up doing nothing well. In contrast, Google has always been focused on its company mission – “to organize the world’s information and make it universally accessible and useful”.
Sclerotic decision making
Yahoo! is well known for its inability for making fast decisions. This was clearly seen when it was thinking about acquiring many hot properties, including YouTube, Facebook, and even Google. It would have helped in making crisp decisions if Yahoo! had a compelling vision.
Too many failed products
HotJobs, Autos, 360, Real Estate, Music, and the list goes on and on. Of course, Google also has a long list of failed products, including Wave, Buzz, Google Video, Knol, Orkut, and Friend Connect. However, for hundreds of failed products, it still dominates its primary industry, search engine marketing. And Yahoo! does not lead on any of the areas it is working on. And it does not seem to be focused on one either.
Poor user experience design
Just visit the two websites, www.yahoo.com and www.google.com, and see which one looks more appealing. Yahoo!’s homepage is just throwing information at you from everywhere, while Google offers a simple homepage with only handful of links.