Yahoo, one of the original internet giants has finally seem to have fallen from grace after years of slow decline when Verizon recently purchased its core assets for $4.83 billion.
What happened to what was once king of the net? What steps did CEO Marissa Mayer do to prevent their demise? And what will small business owners learn from this acquisition?
Wise Competitor Decisions
When Yahoo attempted to buy Google for $3 billion back in 2002, the latter rebuffed the acquisition. Yahoo would eventually start its own search engine with sponsored links two years after, but it never came close to Google’s hold on the market.
In 2008, Microsoft attempted a buyout of Yahoo’s shareholders at $45 billion. That’s a $37 billion more than Yahoo’s current estimated value. Jerry Yang, CEO at the time, convinced shareholders to resist the buyout, a decision that likely has Microsoft sighing in relief.
To put things in perspective, Verizon now owns Flickr, Tumblr, all Yahoo sites, as well as AOL properties like the Huffington Post, Engadget, and TechCrunch. The remaining parts of Yahoo that aren’t part of the deal include their stake in Alibaba and a few properties valued at around $40 billion.
What Went Wrong?
Yahoo ignored the business that soon would make it very profitable: the search engines. Instead, they leased its searches out to a start-up company named Google in 2000.
Although Yahoo wasn’t alone in placing a lot of money into concepts/ideas without considering they could actually ever be profitable, they’ve already lost a lot. Yahoo’s value plummeted to $11 billion in 2002, its assets and investments severely devalued.
The Moral So Far
There’s a lot to take in here. The scenarios with Google and Microsoft already had several implications to the future of the company. Businesses need to have a mindful thought process when planning into closing business deals. When you recognize an opportunity, act on it. That could be the break you are waiting for. This also goes to businesses with buyout proposals that seem to risky and eventually would come down to declining that offer. Making wise decisions need mindful business leverage and keen observation of the market changes.
Good leadership can help improve and fulfill the company’s directives but it would still need the collective efforts of the entire management team. Although there is substantial leadership under Mayer, the number of half thought business strategies has led to the company’s final stop. It goes without saying that business leaders can only do so much without the help of the entire team.
Ultimately, Yahoo should’ve invested in what Google invested and made it a household name. The Google search engine became so powerful that it enabled to expand its business throughout other platforms that potentially made more profit. By allowing itself to be a one stop site for collective and free information, it gained attraction from other businesses also wanting to get a share of this success. As small businesses its essential to be adaptive to the changes of the ever changing online world. And focus on its initial strengths when it was still starting up.
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