For anyone paying attention, the beginning of the end for Yahoo! began with decisions made by the first team of executives while the company was on its way up, which set the stage for horrific decisions made by subsequent generations of Yahoo! leadership. Most decisions were either pure incompetence or just lack of vision by CEOs from 2001 to the present.
Twenty-one years after its incorporation and sixteen years after its stock peak, Yahoo sold for 96% less than its value on January 3, 2000, when it had closed at an all-time high of $118.75 per share, resulting in a market capitalization of $120 billion. Wall Street valued Yahoo!, at that time in business less than six years, higher than it did Disney, News Corporation, and Comcast combined. Also on that day, the iPhone was more than seven years away from launch, Google was four years from its IPO, Amazon was hemorrhaging money, and Mark Zuckerberg was still in high school!
At the end of 2016, the top seven businesses on the list of the highest-valued companies in the world by market capitalization include Apple at #1, Alphabet (Google’s Parent Company) at #2, Amazon.com at #5, and Facebook at #7. Those companies combined are valued in excess of $2 trillion more than the price Verizon paid to acquire Yahoo!
Yahoo!’s story is one of missed strategies, failed opportunities, and poor execution. Early decisions to de-emphasize search features, undervalue Google, and overplay Yahoo’s hand in the Facebook negotiations haunted the rest of the company’s existence. In addition, factors outside of Yahoo’s control—most notably how irrational expectations of Wall Street created an environment where short-term decisions were made at the expense of the long-term good.
The story of Yahoo! is a cautionary tale not intended for the faint of heart.