Reasons for yahoo's failure

Yahoo: 9 reasons for the internet icon's decline

Yahoo's core business sold to Verizon for $5 billion Credit: Bloomberg

• Cara McGoogan

25 July 2016 • 1:07pm

Icon of the early days of the world wide web, Yahoo announced that it is selling its core business to Verizon.
Until recently, the web portal and search engine had revenues higher than Twitter and LinkedIn, and its visitor numbers outstripped the likes of Amazon, Wikipedia and eBay. So what went wrong?Â
Here are nine mistakes that contributed to the downfall of the early-internet darling:

Losing out on Google

In 2002, Yahoo had the opportunity to acquire Google when Sergey Brin and Larry Page said they would sell-up for $1 billion. But when Yahoo's then-chief executive Terry Semel eventually went back to the reluctant pair to accept the offer, they upped their price to $3 billion.
Paul Graham, founder of Y Combinator and a former Yahoo employee, said the company dismissed search as an important part of the business at the time.

Missing an opportunity with Flickr

Before Facebook, Instagram and Google Photo there was Flickr, a photo sharing site that Yahoo bought in 2005. At the time, Flickr's team had plans to turn the site into a social network. But Yahoo missed this opportunity and mismanaged the site into obscurity. Along the way it has done the same with GeoCities, Delicious and, most recently, Tumblr.Â

Not buying Facebook

In 2006, Yahoo approached Facebook with an acquisition offer of $1 billion. Mark Zuckerberg turned the offer down, but reports suggest Facebook's board would have forced him to sell if that offer had been increased to $1.1 billion. Semel refused to increase the offer.

Rejecting Microsoft

In 2008, Yahoo resisted a $44.6 billion takeover bid from Microsoft. Steve Ballmer, then chief-executive of Microsoft, tried hard to convince Yahoo to sell, but its board decided the offer was "too low". The next year Yahoo gave up efforts to create a search engine of its own and signed a deal to use Microsoft's Bing.Â

A string of bad chief executives

Strong leadership has helped other floundering tech companies reverse downturns equally as worrying as Yahoo's. Take Apple under Steve Jobs, Microsoft under Satya Nadella, and Google under Eric Schmidt as examples.
Yahoo, however, failed to hire a chief executive up to the task of turning the company around. Semel is regarded among many as one of the worst tech chief executives, while Carol Bartz's foul-mouthed outbursts won her few friends, and Scott Thompson resigned amid claims he lied on his CV.Â

Jerry Yang and David Filo founded Yahoo in 1994 as "Jerry and David's guide to the world wide web" Credit: AP

Jerry Yang stepping down from the board

Yahoo co-founder Yang stepped away from the company in 2012 to "pursue other interests outside of Yahoo". The resignation left Yahoo without a driving force or raison d'etre, unlike other internet giants that benefit from the visionary and clear leadership of their founders, such as Mark Zuckerberg at Facebook, and Page and Brin at Google.

Marissa Mayer's failed turnaround

Even with the millions of dollars pouring into Yahoo from its stake in Alibaba, ex-Google prodigy Mayer failed to steer the company towards a prosperous future after her appointment in 2012.
Despite acquiring social-blogging site Tumblr, hiring a team of high-profile journalists and changing the working culture, Yahoo's profits continued to tumble and Mayer was forced to look at spinning the company's core business off from its stake in Alibaba.  

Marissa Mayer left Google to head up Yahoo in 2012 Credit: AFP

Buying Tumblr

One of Mayer's crowning moments as Yahoo chief executive was the acquisition of Tumblr in 2013 for £1.1 billion. At the time, Tumblr was yet to turn a profit and Mayer had a plan to monetise the microblogging social network with adverts.
Reports indicate that Yahoo overvalued Tumblr to the tune of hundreds of millions of dollars. Slower-than-expected user and revenue growth, as well as redesign problems have led to Tumblr being absorbed into the Yahoo fold and confusion about the network's future.Â

Lacking a clear mission

One of Yahoo's most prominent weaknesses over the the last two decades has been the failure to figure out what its mission is. It has posted as many as 24 different company descriptions in 24 years, while fluctuating between the guises of a tech company and media giant.Â

Death of the web portal

As Google and Facebook rose to become the giants of web 2.0, Yahoo floundered. It failed to piece together its own search engine, and struggled to capitalise on the social potential of Flickr and Tumblr. So when the days of accessing the internet through web portals, that also included the likes of AOL and MSN, disappeared, Yahoo was left behind.