5 Biggest Reasons Why Yahoo Failed

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Why Yahoo Failed

Yahoo was once a beloved tech company with iconic products like Yahoo Mail and Yahoo News. In the 1990s, Yahoo’s homepage had more daily visitors than Google or Facebook. But by 2017, it was sold to Verizon for $4.8 billion after years of struggling to keep up with an Internet that no longer belonged to them. What happened? The answer is complicated, and in this article, we will discuss the five most significant reasons why Yahoo failed.

What Is Yahoo?

Yahoo is an American multinational technology company. It had its roots in 1994 when Jerry Yang and David Filo founded it as a directory of websites on the internet. Yahoo’s headquarters are located in Sunnyvale, California. Since then, it has grown to become one of America’s most successful tech companies with over 100,000 employees worldwide. Yahoo has tried to expand its business in several different ways, including email services and news portals. 

Still, their biggest success came with the launch of the online search engine – Yahoo Search- back at the beginning of the 90s when people were starting to use the internet.

The Story Of Yahoo

Biggest Reasons Why Yahoo Failed

While the yahoo.com name was launched in January 1995, Yahoo had already got over one million hits on the beta-version domain akebono.stanford.edu/yahoo before the end of 1994.

Have you ever wondered why the name includes an exclamation mark?

Yang and Filo decided to add an exclamation point to the name because the word “Yahoo” had previously been trademarked for barbecue sauce, knives, and human-propelled watercraft. Yahoo developed at a breakneck pace in the 1990s, acquiring a wide range of businesses and launching a slew of new features for its users, eclipsing the competition. Before its initial public offering in 1996, it received much attention and received two rounds of venture capital funding. 

During the dot-com bubble in the late 1990s, its stock price doubled, reaching an all-time high of $118.75 in 2000. However, when the bubble burst in 2000, its price fell to an all-time low of $8.11, despite being one of the few stocks to survive. Yahoo’s home page, which became the beginning point of the world wide web in the late 1990s and early 2000s, changed as the internet era progressed.

So, why hasn’t GenZ used Yahoo and learns almost nothing about it?

Contrary to the cliché, talent comes to many. Still, vision comes to a select number, Yahoo’s success was fleeting, and the company could not keep up with changing trends and technology over time.

Yahoo’s advertisements were a substantial source of revenue for the company. Yahoo extensive’s advertising degraded the quality of its user experience. It caused it to lose its audience to Google, just as Orkut’s poor pace had made it onerous for its users and caused it to lose its audience to Facebook.

Users began to migrate to other options, and the market worth of the product began to decline over time. Let’s take a look at why.

Reasons For Yahoo’s Failure

Biggest Reasons Why Yahoo Failed

Yahoo’s failure may be traced back to a series of bad choices and wasted opportunities. Here are various factors that contributed to Yahoo’s fall from grace.

1. Wrong Focus

Yahoo had been more concerned with making money than with creating a good user experience. It contained a lot of ads and seemed to modify its user interface quite frequently. It became challenging for its consumers to adjust to changing user interfaces regularly.

2. Yahoo turned down Google’s offer to buy it

Larry Page and Sergey Brin, the creators of Google, approached Yahoo in 1998 to sell the company for $1 million to advance their studies. Yahoo, on the other hand, turned down the offer. In 2002, Google became significantly more lucrative, and Terry Samuel, the CEO of Yahoo, saw its actual potential. As a result, Yahoo made a three-billion-dollar offer to Google’s founders. 

Realizing Google’s actual value and potential, they refused to sell it for $3 million and demanded a $5 billion price tag. Yahoo, on the other hand, declined the offer once more.

3. A Failed Attempt To Purchase Facebook

When Google had already made significant progress in the field of internet search, the latest fad was networking. Yahoo offered to purchase Facebook for $1.1 billion in July 2006. However, the transaction fell through, and Yahoo’s unsuccessful offer to buy Facebook was added to the list of squandered possibilities.

4. Merger With Microsoft Fails

Microsoft approached Yahoo in 2008 with a $44.6 billion deal. Jerry Yang, on the other hand, declined the offer. Yahoo was repeatedly turned down for offers because it believed it was being undervalued. However, after evaluating its $4.48 billion acquisition transaction with Verizon in 2017, that no longer appears to be the case.

5. Deficit Of Futuristic Visio

One of the critical reasons Yahoo ended itself in this situation is because of a lack of forethought. It miscalculated where to invest and how to move forward while keeping up with rapidly changing trends and technologies. It lacked talented and skilled professionals with a long-term strategic vision.

The Bottom-Line

Yahoo’s eventual fate can teach future firms that to stay competitive, they must keep up with trends and innovations. Things might have ended out differently if Yahoo had a clear grasp of what its customers required and a clearer vision.

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