Yahoo’s Greatest Regret
With the recent sale of Yahoo’s operations to Verizon for $4.8 billion, we should look back and reflect on the decision making process that caused Yahoo to turn from one of the largest Tech companies at the turn of the century into what it is now.
According to Jeff Desjardins from visualcapitalist.com, Yahoo first went public in 1996 and was valued at $848 million. At this time, however, the tech industry was really getting going, and Yahoo was one of the companies that really skyrocketed in terms of value. In 1998, Larry Page and Sergey Brin came into contact with Yahoo and attempted to sell their PageRank search engine algorithm for $1 million. At this point in time, Yahoo was valued at $40 billion. Yahoo ended up rejecting the PageRank algorithm, while saying that it would decrease ad revenue. One could say that this was one of the biggest mistakes that Yahoo could have possibly made in its history of questionable decisions.
Later, in 2002 after the tech bubble burst, Yahoo was valued at $10 billion. The creators of PageRank at this point have now formed a company named Google, and are now asking for $3 billion, which Yahoo decides not to pursue.
According to CNN Money, Google was valued at $498 billion earlier this year in May. If anything, from Yahoo’s standpoint this just goes to show how important it is to have flexibility and good foresight in an industry so volatile like the Tech industry. Failure to acquire Google when possible is likely Yahoo’s largest regret. However, this does beg the question: Although Google was able to become such a huge success, would it have come this far had it been bought by Yahoo originally back in 1998?
Sources: http://www.visualcapitalist.com/chart-rise-fall-yahoo/
http://money.cnn.com/2016/05/12/investing/apple-google-alphabet-most-valuable/