The Rise And Fall Of A Giant And What You Should Learn

The Rise And Fall Of A Giant And What You Should Learn

The Rise And Fall Of A Giant: What You Should Learn From Yahoo's Downfall

The Rise And Fall Of A Giant: What You Should Learn From Yahoo's DownfallYahoo was once one of the most recognized companies in the world. During the 1990s, it was a leader in internet search, email and news.  In 2012, Marissa Mayer took over as CEO of Yahoo. At that point, the iconic company had already been in decline for about a decade. In spite of this, there were big hopes that Mayer could turn the company around. With a cooperative board, tons of cash and more than a billion visitors a month, it surely could be done.

In spite of all of these things that Yahoo had going for it, Mayer has failed to turn the company around. Now 4 years after she took over, investors have little faith in the company. According to the New York Times, the board finally agreed to sell the company to Verizon in July for $4.8 billion. This was a huge blow to a company that was valued at more than $125 billion just 10 years ago.

So, what went wrong? Additionally, What can businesses learn from the failure of this once-thriving company? Here are a few of the most important lessons.

Pay Attention to New Technology and Trends and Adapt Quickly

Yahoo failed to adapt to new technology and trends fast enough. As a result, its competitors won over its customers. The New Yorker reports that when Mayer became the CEO of Yahoo back in 2012, she conducted research into what activities people were doing most with their phones. She learned what we all now know; that people were using their phones more and more every day for texting, checking email, playing games, obtaining financial information and sharing photos.

At the time, Yahoo did not have much of a mobile business. Mayer knew that things would need to change. She said in a public conference call that Yahoo would have to become a predominantly mobile company to succeed. The problem is that this change never happened. Yahoo failed to keep up with the exploding popularity of mobile devices. As a result, Yahoo’s mobile apps never became popular for mobile users and their display ads did not show up well on the small screens. As is evident, failing to keep up with new consumer trends can bring even a company like Yahoo down.

Have a Clear Brand Mission

Yahoo does not have a clear brand mission. Period. In fact, an official mission statement for the company does not exist. Yahoo’s self-description has changed more than 20 times since it was founded approximately 20 years ago ( yep, that’s about once a year!). Marissa Mayer failed to explain to investors, employees and customers exactly what Yahoo does and why it should continue to exist.

To stay competitive, any business needs a compelling statement of its mission. The company must be able to explain why it exists and have a sense of purpose. Simply put, a company’s mission is what helps propel it forward. If your mission changes constantly or you have never really formulated one, then your potential customer base is never going to know what you can do for them, and why they should do business with you.

Focus on Your Core Business

Yahoo started off as a search engine. Unfortunately, the company quickly lost focus, emulating the success of others and trying to be everything to everyone. The homepage is littered with so many competing services that it is hard for customers to know exactly what the company offers. To make things even worse, Yahoo bought dozens of promising sites, trying to maintain its status. It bought anything and everything. These investments never worked out.

Had Yahoo stuck to what it was good at, internet search and advertising, things might have worked out differently for the company. The lesson here: Once you have your mission in place, zoom in on it and don’t branch off so often that your core services get lost in the clutter.

Know When to Fold

Microsoft offered to buy Yahoo for just over $44 billion in 2008. Despite the offer being more than 60 percent more than Yahoo’s market value at the time, the struggling company declined the bid, saying that the offer was too low (Wired). The $4.8 billion that Yahoo was sold to Verizon for this July is about $40 billion less than what Microsoft would have paid for the company in 2008.

It’s better to bow out gracefully and keep your good name intact than to earn a reputation for bad decision making that could hinder you in future business endeavors.

Do Not Miss out on Opportunities to Beat Your Rivals

In the early 1990s, internet search engines did not return very accurate results. In 1997, two students from Stanford discovered a better way to search the internet. They named their technology “Google”- you may have heard of it. Google returned much more relevant search results compared to existing search engines at the time, including Yahoo’s own search engine. Wired reports that in 1998, Google’s two young co-founders approached Yahoo for financial backing. This would have allowed Yahoo to acquire the duo’s technology or snag a licensing deal. Unfortunately, Yahoo declined to partner with the young company.

Again, in 2002 Yahoo had the chance to buy Google. Google wanted $5 billion and CEO at the time, Terry Semel, believed that was too high for the company so he refused the offer. This was the last time that Yahoo would have the chance to buy Google. Google went public two years later, after which, Google’s stock soared to $500 a share or a market value of $147 billion. Google now controls almost 70 percent of the search-related advertising market. This is a growing industry that is worth more than $15 billion a year.

No one has a crystal ball, but keeping close tabs on your industry and on consumer trends can help you avoid missing out on your business’s opportunity to partner with or acquire the next Google.

The Bottom Line

Yahoo made some notable mistakes throughout its history. These mistakes may have felt small at the time, but ultimately they lead to the decline of this giant internet company. Fortunately, their failure has provided some lessons that all business can learn from.

 

About the Author: Lauren has a Bachelor of Arts degree in history, and enjoys writing about business, marketing and tech trends. When she is not writing you can find her enjoying the outdoors, or curled up with a good book. You can read more of her articles at www.cozmotek.com/blog.




Send Us Your Comments/Questions