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How Did Yahoo fail? Full Case Study

How Did Yahoo fail Full Case Study
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Yahoo could be one of the biggest companies in the world and there was a time when Yahoo was the most visited website in the world. At the time, Yahoo even had an opportunity to buy Google for just $1 million, But they refused. Even today, most people believe that Yahoo failed because of Google, but the reality is different. Here a question arises. How Did Yahoo Fail? What was Yahoo’s Working Model? Why does Yahoo Reject Google?

How Yahoo was started?

The story begins in 1994 when two friends, Jerry Yang and David Filo were exploring the Internet together. At the time, the internet was so disorganized that it took hours to find a website.

So, these two friends made a list of some websites so they could be easily visited without having to find them. This was a directory of his websites, sorted into different categories. When Jerry and David created this directory they thought it would be beneficial. When their friends ask them for help, they share this directory with them. And slowly their friends started sharing this directory with their friends,

In a small period of time, thousands of views started coming on this directory & this directory got named “Jerry & David’s guide to the world wide web”.

How Did Yahoo fail Full Case Study

In 1994, a company called Net Scape developed a web browser called Net Scape Navigator. Gradually, more people started using this web browser, and along with it, the Jerry & David directory became popular.

Due to its popularity, Net Scape Navigator links this website directory in the top row. After that, lakhs of views started coming to their directory. Everything was going well, but a big problem arose “traffic overload”.

When so many people started visiting this website and the traffic increased significantly, Jerry and David needed a bigger server to manage it and they started requiring more people and teams as well Because now they need to update those websites in the directory which people are submitting to them. And Jerry and David had no choice but to turn this thing into a business. Then this was called Yahoo.

Yahoo Business Modal

Yahoo’s traffic began to increase, and other businesses began paying Yahoo to place their ads. But Yahoo noticed a big realization.

Yahoo realized it had a lot of data showing which sites people wanted to visit more, How often do they visit these sites, which sites do they trade on, and do they stay on sites they don’t like at all? With this in mind, Yahoo launched its product and positioned it very strategically.

Now, Yahoo start linking its own products instead of linking to other people’s products. To see how it works. In the 90s, people liked to visit websites for chat rooms. Seeing this, Yahoo launched its own chat room and started putting it on its website. So, Yahoo expanded this to suit consumer tastes. slowly, Yahoo Launched Yahoo file sharing, Yahoo Shopping, Yahoo games, Yahoo finance, and many other services.

How did Yahoo manage all these things?

So Jerry & David hired a lot of people in the beginning and then split them into separate product teams. After such division, each team will be assigned a team leader, who will serve as his CEO for that team. By the year 2000, Yahoo had over 400 products,

Yahoo’s Overall Model Now Looks Like This

So, 80% of Page views were using the services of Yahoo, and the rest of the 20% of page views used the directory.


The company was founded in 1994 by the year 2000 the valuation of the company was over $1 billion. Yahoo became the world’s most valuable company at that time.

Yahoo Reject Google

When Yahoo was spreading in the market, at the same time two students came to sell their small startup company to them. But Yahoo rejects them, but who knew that the same startup would become a trillion-dollar company today

This startup is Google because this incident changed everything for Yahoo. But it’s worth noting that Google wasn’t the reason Yahoo failed.

Yahoo’s Working Model Till 2005

So there are thousands of websites on the internet and Yahoo employees use to feed these websites manually into the directories. This method is extremely inefficient, especially when you are in the tech industry,

In the meantime, Google worked on its algorithm and came up with it. So this algorithm will automatically scan all the websites on the internet and automatically put them in the directory. That means no manual labor is needed.

And since this algorithm automatically scans and delivers web pages to directories, So when people search, they will always get relevant search results. Due to this user experience, Google has become much better than Yahoo. People who were using Yahoo started switching to Google and the game moved completely to web search from web services.

How Did Yahoo fail?

The real reason for Yahoo’s failure was an internal mess. In 2007, A Yahoo employee sent a memo to management stating the number of problems occurring internally at Yahoo and how solving and fixing these problems was very important to the company, it was told in this memo that how Yahoo has completely spread out all of its resources, and unable to focus on anything.

In fact, Yahoo takes all of its employees to the company’s recreational facilities, where they make their employees do an activity as companies are given to all the employees. They were given the name of the company and what is the first thing that comes to their mind, they have to write it on paper,

so look at what people have written, Google for searches, eBay for auctions, and PayPal for payments.

But at Yahoo, every employee wrote something different. In fact, most Yahoo employees had overlapping responsibilities. Yahoo acquired his Flickr application, a photo-sharing application. Still, there was already another team for Yahoo Photos and another team for Flickr, but the role of both applications was the same. Yahoo had many teams but had never properly integrated them.

The Reason Behind Yahoo Fail

The reason is revolving management. So Yahoo changed 5 CEOs in just 6 years. By 2007, the CEO of Yahoo was Terry Semel, He was a very big failure.

Because first of all, he missed the deal with Facebook after that missed the deal with Google, After that he missed the deal with Double click as well, Double click is the same company that was acquired by Google. Double click was actually an internet advertising agency, And today`s date advertising business of Google is only due to Double click.

  • 2007-2009 Jerry Yang, who was the original founder of Yahoo became the CEO.
  • Then 2009-2011 Carol Bartz handled.
  • Then 2011-2012 Scott Thompson handled.
  • And in 2012 Marissa Mayer handled the company.

In 6 years they changed 5 CEOs. Yahoo doesn’t have a clear vision. People changed their mission statements many times, this is one of the biggest reasons why yahoo fail

Initially, Yahoo was solving a real problem, By providing people with a searchable directory, because at that time the Internet was very complicated. But when a web search emerged after the need for a directory finished, Yahoo went astray.

Yahoo did a lot of things but it wasn’t the best at anything because 90% of its products were beaten by other companies.

Yahoo Messenger is defeated by WhatsApp Messenger, Yahoo mail is defeated by Gmail, Yahoo shopping was beaten by Amazon, and Yahoo’s answer was beaten by Quora.

They didn’t fail because of Google, but because of a combination of these 5 things.

Summary “Why Yahoo Fail?”

  1. Poor products, their products were very poor because there is no product that Yahoo can promise to be the best.
  2. Hesitating, to put it simply, not making a decision, because no decision was made and coming very late to the same decision.
  3. A lot of competition, when Google came out, the competition increased a lot. Because Yahoo is not only in charge of the search, but also in charge of many other products and services, So, Yahoo is not only competing with Google, but with many others, Be it Facebook, eBay, Messenger, and many more.
  4. Bad leadership, Yahoo had changed 5 CEOs in 6 years, and in fact, some of them have caused the company loss instead of making a profit.
  5. Finally, a company valued at $128 billion at the time, Verizon bought the company for just $4.46 billion.

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