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Yahoo Taps Its Inner Startup (businessweek.com)
16 points by Harj on Feb 28, 2007 | hide | past | web | favorite | 13 comments

Yahoo has bigger problems than the lack of innovation. It's insanely bloated as a company now. Why Yahoo Photos and Flickr? Why My Yahoo and My Web and Delicious? Why can't I log in to Delicious with my Yahoo login? Why is their web page so cluttered? They really need to cut it down. Dump Yahoo Photos, dump My Web and Yahoo 360. Streamline into 5 areas: Media (News, TV, Commercial Video), Search (Panama), Social Media (Flickr, Delicious, My Yahoo, Music), Email (most critical) and Hosting (I'd drop hosting too but I don't have an MBA and 5 is a much nicer number than 4). Thats my opinion, but I don't have an MBA... just some common sense.

This reminds me a bit of the Bell Labs west-coast startup program. Back in the 1990s, they created their internal startup area.

While it did do was create a lot of hostility, and keeping of secrets from other divisions. It divided the company up, and most of the internal groups didn't end up doing well..

Check out "Bell Labs: Life in the Crown Jewel", it's an interesting read on the history of the labs.

It seems that independent (external) funding sources can do much better- They can fund any group that shows promise, no matter where it originated.. They put the risk into the hands of the founders, and they have a wider market to choose from.


Great idea; it sounds like someone at Yahoo is taking Christensen's advice.

This will only work well if the division is given enough autonomy. If a small division is trying to help meet the massive revenue goals of mainstream Yahoo, it's just not going to work. They're not going to get the resources or motivation that they need.

That's the problem with Google's 20% time. You're not really encouraged to do little projects, something that a startup might do. Instead, you're encouraged to contribute to the bottom line of Google, which severely limits the kind of things you can work on (i.e., "do search or you're wasting your time"). This is compounded by the fact that your 20% time is inconsistently factored into your employee evaluation (for better or for worse).

I have friends that work at Y! that are the most talented programmers I know--however, when they recently had a startup idea, there was definitely a 'should we tell our parents?' consideration that wasn't shaken off until the startup had already been built (at least the beta).

That said, the code coming out of Y! lately has been excellent in quality and in pushing the web developer community forward (e.g. Yahoo! User Interface Libraries, Yahoo! Pipes) . . . but at such a massive company, that code is coming from a very small percentage of its employees, and features such as '360' seem very uninspired IMHO.

At the end of the day, there is a disturbing theme throughout this article: give some of our best talent the opportunity to leave the mill and work on something revolutionary, and maybe they won't leave in the first place or keep their ideas secret, and just maybe they won't mind if the compensation is rather dismal compared to what it could be--after all, we can protect them from what so many of them consider the greatest risk: jobless with an unsuccessful startup.

Maybe they should ask themselves why they are a mill in the first place?

It seems like a good move on the surface. Digging a little deeper, though, one notices a couple of quotes:

"But he compares what he and Fake are doing to what record label executives do, searching out the best talent."

Someone who compares himself favorably to a record label executive in today's world is out of touch with how the target demographic for Brickhouse products feels about such things. I don't know how much trust I could place in Horowitz's decisions regarding this new internal "startup".

"Horowitz...said the figure would be somewhere between a pat on the back and an acquisition-size bonus."

If I were a Yahoo employee, I don't think I'd feel too reassured that my hard work would get appropriately recognized. That "pat on a back" may be for an excellent idea, well executed, but unfortunately not able to be capitalized upon within Yahoo's current structure.

It seems to me that the idea of Brickhouse is good, but it may be a case of too little, too late. I don't get the feeling that it will be able to achieve its potential.

So what's the consensus on how well this will work?

It definitely seems like a step in the right direction; Yahoo probably has a great deal of internal talent that they are not tapping into. Giving that talent freedom and incentive should make Yahoo more competitive.

But so many of the advantages of real startups are unlikely to apply. What strikes me as one of the biggest factors is that this seems unlikely to draw in too much external talent. The pool of people likely to start successful startups don't want to work for Yahoo until they're getting paid a lot to do so. As the yahoo vp said "It is generally cheaper to incubate these things than to buy them"

I agree, I have long thought that Yahoo was getting "blown out of the water" and they must to *something* to breathe a little life back into their once dominant company.

I have been battling myself over the issue of who to go to with my idea. I believe from my incredibly fortunate and diverse upbringing, lifelong experiences with computers, social networks, MMO interactions, I have come up with a web application that will organize the worlds information in a better way. As a result it will not only appeal to everyone, but help everyone in the world with a computer live more productive and "better" lives. Ambitious? yes. But in case you didn't know.. Facebook, Myspace, Wiki, and Reddit are represent the infant stage of how we will organize the worlds information.

The problem I face now is who to go to... Do I find team of great "Hackers" (not so easy to find in Madison but I will be graduating in May) and start working on a beta and focus on angel/seed/Ycom funding? Do i go to the Bill and Melinda gates foundation and go though probably years of red tape in order to get my idea noticed. Or do I go to a company like Yahoo and tell them "your whole web philosophy and yahoo pages are flawed and I can show you how you can regain the Internet power you once had" Or do I just apply to their "brickhouse" division and hope they give me stock if my idea is successful.

The dilemma as I see it is that because this will be my lifelong endeavor, I want to give it the best chance to succeed. It is not even about the money, even though the most powerful information browsing tool (google currently) will always be the most powerful and profitable company in the world. I just want to make sure Rupert's empire doesn't get a hold of these ideas because it could be used for real evil if all the worlds information was in his hands...

Is this essentially different from being an incubator? I thought those died out with the bubble.

How does this compare to Google's 20% time for your own projects?

How does it compare?

Well, the objectives may be similar but Yahoo's execution is much more deliberate.

While Google's 20% time is a corporate policy that encourages side-projects (that may see see the light of day in the form of a beta product), Brickhouse is Yahoo's full-fledged effort to develop novel ideas in-house that it has been historically purchasing at premium prices.

It seems that Brickhouse, as a division, is able to pursue small, "startup-like" ideas that might stray from Yahoo's corporate vision.

I would suspect that here, they pull you directly away from your current projects, to work on the new Startup- This isn't 20% time, it's "Work on your own time until you have a good prototype.. Then, 100% time"

What are the restrictions? I somehow doubt that you can do whatever you want.

I don't know; I don't work there. :)

It's still a company, after all. They pursue interesting, and even perhaps daring, ideas as a team. I didn't see any implications of a chaotic operation.

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