Yahoo! fighting for its profitable life11/5/2014
“On a long enough timeline the survival for everyone drops to zero.” That paragon of pessimism comes courtesy of Chuck Palahniuk’s “Fight Club,” and the disturbing wisdom of the phrase can be applied to pretty much everything. Your career, your life, our planet — all of it will one day cease to be. This same principle applies to businesses as well. Standard Oil, Kodak and Lehman Brothers are just few examples of corporate juggernauts who once dominated an industry before falling to father time. The tech industry is no different. However, as the Internet nears 25 years old, some falling giants refuse to give in to their mortality. Case in point? Yahoo.
For all the billions of dollars the Internet has generated, none of it would be possible without the search engine. Of course Google is currently the king of searching the information superhighway, but it was far from the first. Webcrawler, AltaVista, Lycos and many more started the search engine race of the mid-’90s, but few of them reached the cultural cache of Yahoo!. As search engines go, the quality of their results are dependent on their proprietary search algorithm (robust mathematical equations used to solve a problem or provide answers in computing). For a few short years Yahoo!’s search was the most accurate.
Once the general Internet populace started using Yahoo!’s search engine en masse, the company quickly branched out into other web services (i.e. email, online storage space, news and entertainment, etc.). During the mid-to-late ’90s, employees at Yahoo! must have felt like they had built Mt. Olympus a utopian web portal that no one could best. Of course we all know that within a few short years, Google basically ate Yahoo!’s lunch, improving on every Yahoo! offering — starting with search — and Mt. Olympus quickly fell into ruin.
For the past decade, Yahoo! has been more or less scrambling to forge a new business identity, failing year after year, always teetering on the precipice of irrelevance and ultimately failure. It’s business model has gone from search giant to web-based business services to news and entertainment behemoth, and now currently startup acquirer/mobile services innovator. None of these reinventions could in any way be deemed a success, save for possibly its current incarnation.
Starting in 2012, with the start of Marissa Mayer as CEO, Yahoo! has been throwing billions of dollars at social ventures, start-up tech firms and mobile innovators, hoping to buy relevance. This was a risky move considering none of its investments had proven their million-to-billion dollar worth, but Mayer’s acquisitions clearly showed if Yahoo! were to survive, it would be on the backs of outsiders’ hard work and web traffic. Stockholders and executives were restlessly onboard until a recent near-mutiny over the move’s slow-to-no return on investment, an uprising that looked to eventually cost Mayer her job. That is, until the latest earnings report.
Yahoo!’s cash holdings, revenues and profits all ballooned during its last earnings period, and all of it was due to Mayer’s business strategy. From software investment to mobile advertising revenue, Yahoo!’s immediate looks secure and potentially sustainable with optimism climbing future earnings. Looks like Mayer’s, as well as approximately 12,300 Yahoo! employees’, jobs are safe for now.
Still, the problem remains. That Fight Club proverb still lingers. For every Yahoo! that lives to see another day, there’s always AOL, BlackBerry and Best Buy. The tech reaper must be satiated and eventually Yahoo! — and ultimately Google — will fall victim to the scythe of tech progress. You may now go back to your futile existence. CV
Patrick Boberg is a central Iowa creative media specialist. Follow him on Twitter @PatBoBomb.