Carol Bartz later came and told everyone it was pointless to be in the search business because Google were too big and impossible to compete with on investment. She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place. Pure Harvard Business School spreadsheet stuff.
It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better.
- streamed install process (download a shim of 300kB which will stream the rest)
- obviously the chromeless ui
- the dynamic status bar (ok that was the point above)
- downloads shown below (as cute as the status bar, actually I miss that thing)
- something about tab closing that was more regular (no need to move your mouse)
- option / printing lean and fast
Chrome had a lot of smart people put in a lot of thought into it. It was a sea of difference when it came out.
Not to mention their original Chrome OS pitch was also amazing.
I really wish we had THAT Google now.
Also the update release pace, for better or worse, was also a new kind of fast.
1. At the time, Firefox’ total installer size was ~4-5MB.
2. Much lighter than the contemporaneous IE8 and default Firefox skin, but it just came down to removing the menu-bar and status bar. Chrome’s lack of a traditional menu-bar put me off for a while, I’ll admit. I also disagreed with Chrome having its own visual-style on Windows instead of using the system theme. I know Chrome integrated with Aero Glass on Vista-and-later, but I was an XP hold-out until 2013 when I jumped to Windows 8.1.
3. “Dynamic” is overselling it. Internet Explorer had an auto-hiding status bar since version 4, albeit only in full-screen mode.
4. How is that a good thing? It wastes a thick line of screen space if you downloaded a single file. I preferred Firefox’s separate download manager window.
5. IIRC, Chrome’s “close-everything-without-moving-the-mouse” feature wasn’t in its earlier releases - and I had that functionality in Firefox (back when Firefox had a single close-current-tab button on the far-right instead of close buttons on each tab)
6. Who prints web-pages? Even in 2008.
But yeah, Chrome’s attempt at cutting down unnecessary UI was bold - and prompted Microsoft to redo IE9’s UI to look like Chrome’s in 2011 (despite that, they never fixed the “snappy” feel that Chrome has - why does IE still freeze briefly for 1-2 frames every time you switch tabs? Why is the address bar still so fiddly? Oh well, IE is dead now so we’ll never know...)
Chrome was seriously fast when it launched. It made everything else seem a decade old.
That's misrepresenting the search market's reality though. For most people, they never clicked install.
The author was talking about Chrome.
It's really, really hard to move market share quickly.
I was referring to search engines, though the same was true for browsers. Deals were cut with distribution channels to have browsers pre-installed and to have certain browsers and search engines as the default. The overwhelming majority of people would use the default. In fact, a lot of the benefit of releasing Chrome was that it became another distribution channel that would default to Google as the search engine.
edit - Looks like Firefox introduced both. But Chrome was incredible in comparison at the time. I recall thinking Firefox was no longer worth it. I made the move back to Firefox a few years ago.
But it was not just niche browsers. By the time of Chrome's debut (2008), just about every browser had tabs—including Internet Explorer:
"With the release of Internet Explorer 7 in 2006, all major web browsers featured a tabbed interface." <https://en.wikipedia.org/wiki/Tab_(interface)#History>
I used to work with a guy who always invoked Firefox in gdb so that when it crashed, he could fix the bug (null ptr deref etc.) and continue. As a “tab hoarder” he would lose a day or two of context and productivity otherwise.
pretty sure opera had tabbed browsing as well.
i just recall chrome being very minimal, clean and fast when it was first released. plus as kreeben said, Google was pretty revered at the time.
Some people apparently think tabs has to be drag-and-droppable, which Opera had in 2003, in order to be called tabs:
Tabbed browsing, no idea though.
No one is claiming chrome invented the concept of incognito mode. It was just executed incredibly well.
Also remember at that time that Google, MSN, and Yahoo were the three major search engines at that time. It wasn't clear why Yahoo couldn't close on the #1 spot. It had the clear #1 search engine spot in Japan already. The Yahoo properties (combination of all their websites) was the most popular websites on the internet. They had a much stronger machine learning and data mining research lab, one year bragging that they swept all the best paper awards at the ML/DM computer science conferences.
Yahoo is still huge in Japan. According to the statistics I found, Google is #1 with 75% market share and Yahoo is #2 with 19%, but everybody I know around me uses Yahoo.
Google's origin story doesn't seem relevant to me, in that Google won because they made radical leaps forward in search quality, compute cost, and and compute scale. As well as company culture around innovation/continuous improvement, I suspect. All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%. 
It seems to me that by 2008, there were fewer easy innovations lying around to make. Or if there were, Google was well prepared to match them. That, plus the way the size of the web had exploded  in the decade since Google's launch suggests to me that competing with Google would have been extremely expensive. The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008.
 See https://www.statista.com/statistics/185700/percentage-of-adu... and https://www.statista.com/statistics/214662/household-adoptio...
 From 1997 to 2008, there were more than 100x more websites, and I expect those websites got larger both in number of pages and per-page size. https://www.internetlivestats.com/total-number-of-websites/
That's the myth, but it's pretty far from the reality. Long before Google became such a dominant player, competing search engines had matched or exceeded its quality, compute cost, and ability to scale.
> All at a time when the web was exploding: only 19% of people used the web at Google's launch; by 2008 it was circa 70%.
Bingo. You nailed it. It turns out the search market was largely a distribution game. You wanted to be the search engine distributed to that massively growing audience, and Google did a great job of establishing itself as the first search engine presented to people.
> It seems to me that by 2008, there were fewer easy innovations lying around to make.
There's certainly been a lot of innovations in search since 2008, but nothing that was "disruptive". It's very hard to get more than a small percentage of people to change what search engine they use, and advertisers are not particularly interested in chasing that segment of the population.
> The way that other people have tried and failed since points that way too, as Google's market share is even larger now than it was in 2008.
Yeah, I really have to scratch my head at how people look at the empirical evidence and think that in 2008 it was a mistake to recognize the losing position competitors were in.
Just curious, which ones? I remember Google felt so far above any other search engine for a very long time.
No question about the "feel", but it's amazing how perception fuels reality. We did a lot of studies of this, and one of the more interesting ones was that if you told people they were seeing Google search results (regardless if they were), they'd be more inclined to rewrite their queries and look farther down in the search results, rather than try using another search engine. Beyond the obvious revenue & marketshare benefits, this helped Google two-fold technically: it gave them better data on query rewrites and search results. The hoops you had to jump through to match our exceed their performance were substantial.
We did a lot of studies of this, and one of the more
interesting ones was that if you told people they were
seeing Google search results
Also, when were the studies done?
I'm curious about the "when" because I think Google's reputation has slipped quite a bit.
In general though, consumer confirmation bias is not that surprising, right? Particularly with technology brands, it's pretty well established that confidence in the brand leads one to be more likely to attribute failure to one's own "mistakes" and therefore invest in further exploration of the product and/or modifying one's interactions with it. It also diminishes one's belief that another product would produce better results, therefore diminishing interest in exploring alternatives; it also leads one to perceive a product's performance as "better" when it is exactly the same.
But in 2001-2002, I remember Google having a significantly better search experience. And it was massively better than all it's competitors from the 90s.
A large factor were the snippets, which gave you a decent indication if the result was relevant before even clicking. Before the other search engines copied that feature, they would just show the contents of the meta description tag.
It also seemed to index a much wider range of sites and ranked them better.
Yup, I would say it was better through most a good chunk of 2002, which garnered it [checks notes]... about 16% market share at that point. If you include the AOL traffic, that'd be 21%. To put that in perspective, MSN's search market share grew by more than that entire share just in 2003.
> A large factor were the snippets, which gave you a decent indication if the result was relevant before even clicking. Before the other search engines copied that feature, they would just show the contents of the meta description tag.
Yup, the impact of that UX was huge. It really improved conversion rates. Everyone else figured that out pretty quickly and adopted that.
> It also seemed to index a much wider range of sites and ranked them better.
Really, it was the ranking function. As their competitors rapidly discovered, having a broader set of sites actually made having a good ranking function so much more crucial.
No way Altavista or Inktomi offered better result than Google. I was a heavy user of both, having adopted AltaVista mainly for similar reasons that I adopted Google, because AltaVista had way fresher and more extensive content than competitors at the time, it offered query modifiers, multi-lingual queries, and media search (images, etc), it even had Babelfish translation. It was obviously, unequivocally better than everything else before it. So the value proposition was unambiguous.
Google was similarly an obvious value proposition when it launched. PageRank was objectively better at returning the most salient results. AltaVista did ranking purely based on how the query phrase matched the index. As the Web grew, the amount of junk it would return piled up, it's easy to spam or game such a ranking algorithm.
As for Inktomi, you can read Inktomi's own employee account: https://www.searchenginewatch.com/2012/05/10/why-google-beat... Inktomi employees were using Google Search as their primary search engine. If you're not using your own product, you've got problems, how can you expect your customers/users to use it if you won't?
Yes, Google's brand is strong, and marginal returns in search quality mean most consumers won't notice the difference between engines, and will judge based on brand or UI presentation now. But to claim Inktomi and AltaVista matched Google Search results I think is rewriting history, when Google launched, the difference in quality was quite obvious and striking.
These days search engines have other requirements given how big the web is, how rapidly it changes, and how many adversarial attacks are made against it (blackhat SEO/webspam). You've got to have the infrastructure to index the entire web frequently, you've got to have a robust defense against spam, and you've got to have an even better ranking strategy beyond PageRank because a lot of the long tail may be good content, but doesn't have many authoritative sites linking to it.
There's still the possibility of someone upstaging Google, by building a search engine that not only indexes the Web, but has the reading comprehension to understand it, and understand queries from the context of gained knowledge. The first company to do that will kill Google Search, as the results will be self-evidently better. There are queries today that GPT-3 can do that Google can't, they're amazing when they work, mindblowing. If you can scale that to the Star Trek level computer, you win.
But you can't displace Google with a 2% improvement in results.
Yes, that would be a foolish claim. Fortunately I made no such claim.
The differences at launch were indeed striking, much as they had been with HITS. That was in 1998. Four years later, at the time the article you linked to was posted, Google's market share was... 16%. While at that point they may have dominated mind share and brand value, they didn't dominate the market. That would come later.
Google's situation in 2002 was that they were no longer such a clear cut winner. Per the article: "Google much like Inktomi, must re-evalutate what it’s currently doing... ...search is going strong but the Penguin update has raised a lot of questionable results to the surface". Their search quality was already faltering. Of course, in the next twelve months, they'd literally gain as much market share as they'd garnered in the entire history of the company (and yes, that was a one time leap in market share).
I'll say it again: most of the market share gains came from the distribution channels. The cost of getting customers to switch was gigantic compared to the cost of just presenting them with your search engine first. The number of people using the Internet was growing by leaps and bounds then.
> There's still the possibility of someone upstaging Google, by building a search engine that not only indexes the Web, but has the reading comprehension to understand it, and understand queries from the context of gained knowledge.
That's been tried and failed. The technical difference didn't garner the market share needed to support it. I wouldn't say it is impossible for it to happen, but the odds are long, and ultimately the market largely does not appear to care.
> But you can't displace Google with a 2% improvement in results.
I guess it depends on how you are measuring 2% improvement, but by conventional metrics of the time, a 2% improvement now would be well neigh impossible to achieve. Again, that's part of the problem: the head of search engine queries have effectively been optimized to the point where there is little room for improvement beyond tiny fragments of the tail that amount to a percent or two of the average person's search history.
If you look at the queries in GPT-3 that are used to extract structured data, or to synthesize answers, the technical difference is huge, but it just has a high failure rate.
The various vertical search systems are examples of this, but the key to a next-gen system isn't to hand-code such verticals, but to have the AI be able to create an infinite number of them on the fly. Vertical based on Julia code? Yes. Vertical based on Pokemon cards? Yes. Today these things are hand-curated collections.
There's also the general switch from searching for information, to doing things. We've gone from 10 blue links, to answers, to assistive functionality. The current state of assistive functionality is pretty shitty and has a long way to go IMHO.
Yup. Though there are other systems that arguably had more technical success.
> There's also the general switch from searching for information, to doing things. We've gone from 10 blue links, to answers, to assistive functionality. The current state of assistive functionality is pretty shitty and has a long way to go IMHO.
Yes, I agree there's a great deal of opportunity for technical innovation. I expect to see a lot of it from Google themselves. Just don't kid yourself about the impact of those innovations on market share.
The actual technological innovation in the search product was minimal (the stuff they did later to scale was pure innovation, but that came much later). They largely purchased their position (for a good price).
Because of their success with their initial data center approach AltaVista was arguably one of the last to shift to a model that more closely resembled the one Google employed, but they certainly did a very fine job of it (late mover advantage and all that). I still liked AllTheWeb's data centers somewhat better, but at that point the differences were pretty small.
I wouldn't agree with your characterization of Brin & Page's contributions, but their direct technical contributions to Google by that time were at best marginally greater than Yang's, so it's not really relevant anyway.
Google definitely had some great tech, but the extent to which that won them the game is more myth than reality. Their aggressive strategic moves are really what made them successful.
In 1996, I worked in a group on digital cash payment schemes, digital checking, years before PayPal, they had a trusted enclave (CITADEL PCMCIA card), we had a MIME plugin for Mosaic and Unix email that would do peer to peer digital money transfers, and when it came time to ask "when are we going to try to productize this", the answer came back "we talked with banks and will be ready to do a pilot project in 5 years"
This is much like Steve Jobs "stealing" GUI, Smalltalk, and Ethernet from PARC and claiming there was no innovation. At that stage, shipping something consumers can use is innovation.
If you were a techie/engineer in 1998, as opposed to a general consumer (of which there were very few), Google results WERE better than AltaVista and competitors. The early adopters and pioneers switched because like with Chrome v1, a lot of the value proposition was obvious.
The bigger question perhaps is why didn't their competitors react quickly to prevent their rise, and I think the answer to that is in general, once a company makes a large splash, and gets the public attention, it's hard for others to overcome the free value from being the thought leader. This is true of Apple and true of Tesla in cars. Tesla makes the best EV right now. It's sexy, it's fast, and Elon Musk commands the world's attention. One day, other brands will catch up, they'll be Tesla competitors just as good, but no one will care, and Tesla -- if Musk doesn't fsck it up -- will continue to have a halo effect, a reality distortion field.
I disagree. Inktomi, Altavista, and AllTheWeb weren't even close in terms of search result revelance and the number of pages they indexed. Every time they attempted to close the gap, Google would just widen it with stuff like real time search, their revolutionary maps UI, and gmail.
When you actually measured the result relevance number, it turned out that all the major engines were pretty similar, and Google often was not the top one. More importantly though, the observed phenomenon was that no matter how bad the results you presented were, most people didn't switch to another search engine.
I get that you're a Google fan, but GMail & Maps weren't part of the search engine. Ironically "real time search" was rolled out as a PR move to counteract the narrative that was being constructed at the time: that Google was falling behind UX innovations in the search engine space. All of the above were rolled out after Google was the dominant player in the search space.
Google has absolutely done some amazing things, and their search team is second to none, but the narrative that they became the dominant player because of their technical advantages is very misleading.
> More importantly though, the observed phenomenon was that no matter how bad the results you presented were, most people didn't switch to another search engine.
That may be the case today because the results are similar now, but it wasn't the same case years ago. The ancient search engines prior to Google weren't much better than human curated directories like Yahoo. Otherwise, why would anyone switch from them to Google?
I'm sorry, I guess I inferred the wrong conclusion from your statements. I would argue that your perception of Google at the time would be a more significant factor influencing your perception of their performance, but that's actually largely beside the point.
> That may be the case today because the results are similar now, but it wasn't the same case years ago. The ancient search engines prior to Google weren't much better than human curated directories like Yahoo. Otherwise, why would anyone switch from them to Google?
I think your question at the end there underlines the central point of confusion here. While some people do indeed switch search engines (depending on how you measure, somewhere between 10-30% of users), the vast majority do not. Even when presented with what one would expect to be the worst search engine in the world (one that presented only paid search results), most people would not switch to another engine.
So the answer to your question is: most people don't switch from any particular search engine to any other search engine.
I would be the first to agree that there was definitely a window of time where Google was observably producing better search results than their competitors, and I'm sure you were amongst many others (including myself) who switched to them at that time... but again, that was a small subset of the population.
The search engine space was (and is) very competitive, and it did not take long for competitors to react and close the gap. When we measured performance in 2004, Google did not come out on top. Subsequent measurements produced similar outcomes, although occasionally Google would come out on top. Having more relevant results definitely lead to increased adoption, but only of a small segment of the much larger market.
Unless you count AOL searches as part of Google, Google didn't lead in market share until ~2004 (and it really wasn't until 2005 that they were ahead by more than a paper-thin margin). At that point, they had slightly less than 30% market share as compared to present market share which is closer to 90%. Even by 2004, the predominant way that search engines acquired new users was not through "switchers" changing search engines because of better results, but rather because of distribution deals (like the deal Google had with AOL) where a distributor would make a particular engine the first one users were presented with.
Think of it this way: how many times have you checked to see if other search engines were performing better than Google? After you switched to using Google, how regularly did you check to see if other alternatives were doing a better job? Most people I've spoken with never even heard of Powerset, let alone tried it to see if it served their needs better than Google. If consumers never check, it's hard to believe product performance makes a difference, right?
That's the reality of the search engine business. It certainly helps to be better than everyone else at search, but it is no where near the primary driver of market share.
On the other hand, my personal experience just tells me that you are wrong. Like the other commenters, I distinctly remember just how much better Google's search was back in the days. And I must be one of those cited 10%-30% of users that try to switch search engines, as in recent years I have tried twice to switch to DuckDuckGo for privacy reasons. Both times I had to return to Google because DuckDuckGo's results were just too bad (for me).
Perhaps you are right, and it is just an illusion that Google search results are better. But intuition and Occam's razor tells me that most likely it's just still the best general search engine.
One example supporting that theory is the fact that users have discovered that other search engines, first Bing, and now Yandex, are better suited for specific types of content, and are indeed using those search engines when searching for that type of content. This goes counter to your claim that users don't switch search engines even when there is a difference in search result quality.
DuckDuckGo is working at a significant disadvantage as compared to Google. For starters, they have significantly smaller market share. This is no longer like the days of yore when the market was much more fragmented. Google's market share is roughly 18x larger than DDG's. That means they get far less behavioural data to inform their ranking algorithm. That also dramatically impacts the amount of revenue they can feed in to the engine (and the impact isn't linear, as I mentioned elsewhere). Then add on that their privacy efforts mean they are deliberately blinding themselves to much of the data that can be used to tune a search engine. It'd be amazing if their result quality was better.
Again, it wasn't an illusion that Google's search results were better, particularly whenever people switched (which mostly happened long before Google gained a dominant market share). I would argue that even with comparable technology, today Google has an overwhelming advantage over competitors. I'd be surprised if it weren't absolutely the best at least amongst any of the alternatives that most people would even consider. That's just not how they got most of their market share.
The illusion is that technical advantages were the primary driver of Google's success in the search engine market, and that Google has consistently been the best search engine in the market. The former is just clearly not true (the AOL deal alone helped them way more than any subsequent technical innovations), and the latter flies against the evidence that at the very least during height of the search engine wars, result relevance was very competitive.
> Long before Google became such a dominant player, competing search engines had matched or exceeded its quality, compute cost, and ability to scale.
Could you say more about this? I wasn't involved, but my recollection is that Google pioneered using a zillion low-cost nodes for search. E.g., I remember that AltaVista was using a big iron approach partly as a way of showing off DEC's wares. I can believe everybody had to try to keep up, but I am skeptical that Google slowed down enough for everybody else to catch up and/or surpass them.
It's the nature of innovation that something that puts you ahead doesn't create a sustainable advantage (e.g. AltaVista as you highlighted), and there tends to be some marginal advantage for second movers of having the benefit of hindsight. I don't know that anyone knows the why of how this played out in Google's case, basically no one is privy to all the information about each search engine's operations, and to the extent they do, they likely cannot share what they know.
Certainly, on the cost side, Google's approach wasn't entirely novel in the sense that there was a lot of expertise already out there on how to run low-cost nodes at scale. Reverse indexes are actually a pretty "embarrassingly parallel" problem, and Page Rank style algorithms don't really make it much more difficult. In short: once Google demonstrated the value of the approach, it was pretty easy to figure out how to implement it. Google certainly continued to innovate on their data center designs, but if anything were at a disadvantage in terms of rolling it out because they already had a substantial investment in their existing designs that were working pretty well for them. There were also startups like FAST (AllTheWeb) that sprung up after Google and were able to leapfrog Google much as Google leapfrogged its competitors.
In terms of relevancy, we did do double-blind style evaluations of the relevancy of search engines as well as of the consumer behaviour with search engines. What we found was that by 2004-2006, search engine competitors had largely closed the relevancy gap, and in some cases reliably exceeded Google. What we also found though was that it largely didn't matter. Even when presented with terrible results, most of the population would not switch search engines. Indeed, most of the growth in market share amongst search engines came through distribution deals where users would be presented with a search engine as the default.
Now, that's not to say that people didn't switch because they found a search engine to be better. They absolutely did.. but only 10-30% of the users would ever engage in switching behaviour for any reason. Getting those users certainly would help you, but the vast majority of the market was driven by other factors.
Except for privacy-centric search. This is what DuckDuckGo has capitalized on and it's worked out for them. Neither Microsoft with Bing nor Yahoo was able to see this as a niche to compete.
Now fantasy is a big business and deeply tied to legalized sports gambling. That could have been worth hundreds of millions in revenue for Yahoo.
Hierarchical is exactly what you're describing and I remember using that a lot in the early days.
Yahoo was also a major shareholder in Google because of those agreements/investments and cross-licensing Overture patents.
I ask because it seemed like there were attempts but they were sort of fits and starts and meanwhile most of Yahoo still seemed like just old Yahoo...
It does seem like a continuous failure in leadership at Yahoo to really change much at all. There were sort of psudo attempts to do other things (be a media company I guess) but they never came to much.
The biggest mistake they did in the late 90's is to stop being a tech company and be a "media company" instead.
So in 2008 they were still big but mostly running on momentum they built during the 90's and a couple acquisitions. They had Yahoo!Mail that was popular, their homepage was still popular because some people forgot to try something different, Flickr that they bought and was the most successful photo sharing website until the got overtaken by general purpose social networks, and Yahoo!Japan that was hugely popular but was a joint venture with Softbank. Maybe some other stuff I'm forgetting... But they didn't have anything that made people dream.
Right before 2008 they tried to join the social bandwagon with a horizontal social network across their properties, but it failed just like when Google tried to do the same a couple of years later with Google+.
However, as much as Yahoo was seen as a failed company, Microsoft didn't get their Nadella rebirth yet. It was still an old evil outdated company, run by Balmer, mocking the iPhone and claiming their Windows CE phones with their tiny start button and stylus were better.
So Microsoft didn't look super sexy either. It really looked like 2 losers trying to band together to fight the cool winner that Google was.
But the settlement had nothing to do with Yahoo failing to reach an agreement with Microsoft; it was to weaken a poison pill Yahoo had put into place that meant employees would get expensive severances in the event of a takeover. This kind of financial measure is bread-and-butter for corporate fiduciary law, and it doesn't contradict what I said.
It looks like YHOO shares never went back above $45B, though: https://www.businessinsider.com/yahoo-market-cap-over-time-2...
So when Yahoo’s remains changed to Altaba after selling that $4.5B Yahoo namesake and Yahoo Japan for $4B+ soon after, it was still a nearly $40B market cap company. Almost all of it being 16% of Alibaba.
Edit: Apparently they used to hold 30%, but sold half of that for peanuts in 2012.
Carol Bartz really screwed Yahoo over in its dealing with Alibaba. Yahoo had 2 seats on the 5-seat board of directors and Bartz couldn't be bothered to appoint directors to those. When she became CEO, Jack came to meet her and she dressed him down in front of his underlings: a big slap in the face to Jack. These two incidents made sure that he was as uncooperative as could be. He took Alipay out from under Yahoo and never informed Bartz.
Whatever you may say about Marissa Mayer, when she became CEO her first priority was to fix the broken relationship between Alibaba and Yahoo. She smoothed things over, and Jack let Yahoo keep the 15% stake, instead of asking for all of it back. She made Yahoo many billions with her moves.
Pure Harvard Business School spreadsheet stuff.
Yahoo sold half of the Alibaba stake for $8B and $40B in 2012 and 2019. Yahoo Japan stake for $4B in 2019. And Yahoo itself for $4-5B around that time.
Of course the people who would have taken Microsoft stock would’ve made a lot if they held on through 2013, 2014. Microsoft stock was 10x less in 2008 and rose 50% before the end of 2014. The shareholders who would’ve taken cash wouldn’t have been better off without knowing how that cash would be used.
There's nothing inconsistent with the idea that a decade after Google established its extremely strong monopoly position in the search market, the barriers to entry, and the way to achieve success in the now established market are completely different than they were before Google achieved that monopoly and the market was as mature.
As did I
> I'm amazed share holders didn't sure Jerry Yang and the board for avoiding the sale.
There was a lawsuit: https://www.seattletimes.com/business/yahoo-settles-lawsuits...
> Yahoo had very little of technological value and was actively trying to destroy its own search business amongst other properties at the time.
I'm not sure what you are referring to there. There was a lot of investment going on in search at the time. Certainly, critics (including me) felt it was maybe not the right investment, but "actively trying to destroy its own search business" doesn't ring true.
> They really were in a prime position and bungled it extremely badly, I think they had maybe 20% of the search market at the time.
20% market share was unfortunately, a very weak position that was deteriorating pretty rapidly. The network effect ensured that the search business would continue to reward the dominant player dramatically more so than the smaller players, even if the smaller players had a technically superior product, which was what Bartz was getting at.
"She made it very clear the equation for success was money spent === great search engine results, ignoring how Google came into being in the first place."
That's not ignoring how Google came into being, and the "money spent === great search engine results" isn't exactly what she said either. There's a reality that the business had evolved (not accidentally) to the point where barriers to entry were increasingly higher and more costly and the rewards disproportionately went to the dominant players. It is typical Harvard Business School stuff, because it's not at all an unusual circumstance in business.
> It still feels like a wasted opportunity to me, it seems so weak to just throw your hands up in the air and say it’s too hard to make your extremely successful search engine better.
If you'll recall, they made the engine better; it didn't matter. Less than a quarter of the market would switch to another engine even if you gave them absolutely the worst results, and smaller differences in search quality impacted the behaviour of less than 10% of the market. Hell, there was still a ton of traffic going to Alta Vista despite that engine no longer being different from Yahoo's. Meanwhile the advertisers hugely favoured larger market share, and the consequently more efficient market yielded huge marginal rewards in terms of quality and profit. The search engine battle had largely already been lost by then; it was largely lost several years prior (arguably as far back as Google's AOL deal). The opportunity wasn't "wasted": they'd thrown pretty much everything at it, and come up short.
To this day, Google still has a dominant market share, despite a plethora of would be competitors. Sure, there is a possibility for a market disruption to change the game, but in a decade and a half, that has yet to emerge, so if you'd bet on game changing disruption in 2008 (and many investors did), from an investor's perspective, you'd have lost that bet.
Bartz really wasn't there long enough to execute on a strategy, but her point was that the opportunity cost of continuing to try to win the search engine wars was far greater than the likely value of the investment.
At least from a historical perspective she was right. Alibaba, social media, mobile, games, content, etc. All of those spaces had lots of opportunity for the right moves.
True, but don’t you kind of have to win at something to retain users?
It’s just unclear to me where they wanted to invest the freed money.
It was a short stint, and my memory is dull, so I can't remember which products were launched under her watch, but that's the wrong measure in first place (indeed, this was the company from which the Peanut Butter Manifesto sprang). There's really not a lot of question about her changing a lot of things at the company though. I found this article talking about the impact she had after the first four months: https://www.reuters.com/article/stocksAndSharesNews/idUKLNE5...
It still seems like a bit of a losing strategy as I don’t see any reason for people to stay with Yahoo.
I bought some Yahoo stock thinking Meyers was going to turn it around, but nope.
MSFT's bid was for Yahoo including its stake in Alibaba, which had a far greater value than the parent company itself. The Verizon deal did NOT include the stake in Alibaba. This was spun off as a separate company Altaba under the ticker AABA. (edit: I should be more precise. This is why yahoo was spun off and sold. AABA is the remainder of the company, and retained the majority of the value. I heard previous plans to spin off the stake in Alibaba weren't workable due to issues around triggering a taxable event.)
AABA's spinoff accounts for the large value discrepancy. Poorly written news articles portrayed this as losing out on a great deal but this simply was not the case.
Microsoft, Yahoo!, and Google were pioneers in the data-centers space. Amazon was only beginning to turn-up the heat. In retrospect, given the engineering talent and expertise at Y! at the time, it is a shame that in light of AWS' success they did not invest in Infrastructure-as-a-Service when their "web services" org was already churning out a range of tools and services on top of SOAP / REST. I mean, the Apache Hadoop ecosystem was mostly Yahoo!
As an outside observer, I think, with any luck, cloud computing could have saved Y!'s bacon, even as a late entrant (MSFT re-launched Azure in 2010). Y!'s focus on being a Media house now seems like a bad bet, which could have worked had they snapped Facebook for $1B.
Microsoft struggled with its initial "Red Dog" / "Windows Azure" release in 2008, too; so much so that parts of the company were EC2 customers back in the day.
I think this goes to show how stars had to align for AWS to stay a market leader as they started from a position of disadvantage (and needed a decade of exponential growth to consolidate only to contend with unrelenting competition from Azure), in face of companies that were are no slouches in terms of ability and product innovation, either. For Google though, around the same time Y! was floundering, their acquisitions and execution with Android, YouTube, and Chrome (I like to say Chrome was acquired because Google literally hired lead Firefox engineers to build it) ensured their relevance in the decade to come.
No wonder the folks who ran AWS, Azure, and Android/Chrome ended up as the eventual CEOs of their respective trillion-dollar mother-ships; whilst Y! has bitten the dust.
MSFT could rely on a large enterprise-focused sales team with existing relationships with CIOs. Y! would not have had that luxury.
IIRC Yahoo at that point was a big name that wasn't irrelevant, but whatever they would be in the future seemed like it would have be be akin to creating new product(s) / company / sea change type move.
It was hard to imagine them becoming worth 66% more anytime near that time (even without hindsight).
It was a very good offer, but it wasn’t enough for Yahoo to sell. Perhaps a larger offer would have helped, but I think Yahoo had an inflated opinion of their own worth.
It felt like a company that had success, and then never could find a way out of being old Yahoo while the world changed around them.
Microsoft eyeing Yahoo (buyout) deal! - https://news.ycombinator.com/item?id=19336 - May 2007 (25 comments)
Microsoft offers to buy Yahoo in $44.6 billion deal - https://news.ycombinator.com/item?id=107770 - Feb 2008 (3 comments)
Microsoft bids $44.6 billion for Yahoo - https://news.ycombinator.com/item?id=107771 - Feb 2008 (80 comments)
WOW. Microsoft Offers $44.6 Billion To Acquire Yahoo - https://news.ycombinator.com/item?id=107772 - Feb 2008 (2 comments)
Open-source silver lining in Microsoft's wedding vow to Yahoo? - https://news.ycombinator.com/item?id=107874 - Feb 2008 (4 comments)
Yahoo-Microsoft merger bad news for startups? - https://news.ycombinator.com/item?id=108099 - Feb 2008 (4 comments)
Source: Yahoo employees say "there is no way in hell that we are going to work for Microsoft." - https://news.ycombinator.com/item?id=108391 - Feb 2008 (6 comments)
Non-obvious winners and losers in Microsoft Yahoo Deal - https://news.ycombinator.com/item?id=108531 - Feb 2008 (1 comment)
Why Microsoft Acquiring Yahoo Could Suck For Everybody - https://news.ycombinator.com/item?id=108769 - Feb 2008 (7 comments)
Google's Chief Legal Officer on Microsoft's acquisition of Yahoo - https://news.ycombinator.com/item?id=108824 - Feb 2008 (5 comments)
Why Yahoo Should Say Yes To Microsoft - https://news.ycombinator.com/item?id=108873 - Feb 2008 (8 comments)
Google Offers to Help Yahoo Fight Off Microsoft - https://news.ycombinator.com/item?id=108949 - Feb 2008 (2 comments)
Google works to torpedo Microsoft bid for Yahoo - https://news.ycombinator.com/item?id=109346 - Feb 2008 (4 comments)
Silicon Valley after a Microsoft/Yahoo merger: a contrarian view - https://news.ycombinator.com/item?id=109612 - Feb 2008 (12 comments)
Redeye VC: Microsoft/Yahoo - let the exodus begin - https://news.ycombinator.com/item?id=110366 - Feb 2008 (8 comments)
Microsoft Adversary Rises Instinctively at Yahoo Bid - https://news.ycombinator.com/item?id=110392 - Feb 2008 (1 comment)
Microsoft Bid for Yahoo Drops To $29.50 a Share - https://news.ycombinator.com/item?id=110584 - Feb 2008 (1 comment)
My Opinion: Google wants Microsoft to buy Yahoo - https://news.ycombinator.com/item?id=112444 - Feb 2008 (3 comments)
Yahoo Board To Reject Microsoft Offer - https://news.ycombinator.com/item?id=112749 - Feb 2008 (44 comments)
Microsoft is 2000 times less effective than Google; Yahoo Board seems to be insane - https://news.ycombinator.com/item?id=112841 - Feb 2008 (17 comments)
Yahoo protects employees in case of Microsoft takeover - https://news.ycombinator.com/item?id=120372 - Feb 2008 (6 comments)
Yahoo sued for spurning Microsoft - https://news.ycombinator.com/item?id=122047 - Feb 2008 (19 comments)
Microsoft: Yahoo! has 3 weeks to decide - https://news.ycombinator.com/item?id=155833 - April 2008 (7 comments)
Yahoo tells Microsoft to increase $41B bid - https://news.ycombinator.com/item?id=156836 - April 2008 (10 comments)
The Yahoo!/Microsoft chess match continues: Yahoo! enters trial partnership with Google - https://news.ycombinator.com/item?id=159294 - April 2008 (6 comments)
Microsoft Said to Be Talking With News Corporation About Joint Yahoo Bid - https://news.ycombinator.com/item?id=159493 - April 2008 (3 comments)
Pmarca: If Microsoft goes fully hostile on Yahoo - https://news.ycombinator.com/item?id=175477 - April 2008 (27 comments)
Microsoft Says They’ll Pay More, increasing Yahoo! bid to as much as $33/share (from $31/share) - https://news.ycombinator.com/item?id=177816 - April 2008 (3 comments)
Microsoft Withdraws Yahoo Bid; Walks Away From Deal - https://news.ycombinator.com/item?id=180517 - May 2008 (58 comments)
Yahoo shares fall 19.7 pct as Microsoft withdraws $44B bid - https://news.ycombinator.com/item?id=181422 - May 2008 (5 comments)
How Yahoo Blew the Microsoft Deal: Part 1 - https://news.ycombinator.com/item?id=181885 - May 2008 (1 comment)
Battered Yahoo Admits It Overplayed Hand; Open To New Microsoft Talks - https://news.ycombinator.com/item?id=182085 - May 2008 (36 comments)
Why isn't anyone writing about Yahoo's amazing stock gains and Microsoft's plunge? - https://news.ycombinator.com/item?id=182259 - May 2008 (5 comments)
Yahoo, Microsoft Back At The Table - https://news.ycombinator.com/item?id=193615 - May 2008 (10 comments)
Microsoft, Yahoo, Google, and Facebook: War of the Worlds II - https://news.ycombinator.com/item?id=194101 - May 2008 (2 comments)
What Yahoo doesn’t want you to know about the Microsoft deal - https://news.ycombinator.com/item?id=208276 - June 2008 (2 comments)
Why Yahoo Passed On Microsoft's Search Deal (New Details!) - https://news.ycombinator.com/item?id=217178 - June 2008 (1 comment)
Microsoft Signals It Would Rather Talk To An Icahn-Controlled Yahoo - https://news.ycombinator.com/item?id=238583 - July 2008 (3 comments)
Yahoo spurns Microsoft again as blood boils - https://news.ycombinator.com/item?id=245059 - July 2008 (4 comments)
Yahoo tells Microsoft: 'Buy us' - https://news.ycombinator.com/item?id=355531 - Nov 2008 (19 comments)
Microsoft rules out Yahoo acquisition (again) - https://news.ycombinator.com/item?id=356526 - Nov 2008 (4 comments)
Why Microsoft Should Bid Again — and Yahoo Should Accept - https://news.ycombinator.com/item?id=369671 - Nov 2008 (1 comment)
Microsoft Poaches Yahoo's Top Search Engineer; "the end of Yahoo search." - https://news.ycombinator.com/item?id=369908 - Nov 2008 (21 comments)
Why Microsoft should forget about Yahoo and buy Palm - https://news.ycombinator.com/item?id=442003 - Jan 2009 (18 comments)
Microsoft-Yahoo Deal Struck, Will Be Announced Within Next 24 Hours - https://news.ycombinator.com/item?id=729152 - July 2009 (22 comments)
Microsoft and Yahoo Reach Agreement on Search - https://news.ycombinator.com/item?id=729823 - July 2009 (24 comments)
Microsoft looking to buy Yahoo again - https://news.ycombinator.com/item?id=3270790 - Nov 2011 (38 comments)
Yahoo Shares Top $31, The Price Microsoft Offered In 2008 - https://news.ycombinator.com/item?id=6414838 - Sept 2013 (49 comments)
Facebook was public, growing, had figured out mobile and had already acquired Instagram. It was by far the top social media company.
Amazon had taken over online retail. It was already a behemoth. AWS was in its infancy, but it was growing.
Apple was already the most valuable company in the US.
Microsoft had been one of the top 10 most valuable companies for a decade.
Google was already a behemoth when it came to search. YouTube was massive and Android had just started gaining traction.
Out of the top five companies, Google is the only one that hasn’t been able to pivot or diversify. The rest of the companies have been able to learn from the mistakes of the previous generation.
In the case of Apple and Microsoft. They have both been around for 35+ years. Microsoft wrote the first version of the embedded AppleSoft Basic interpreter for Apple //e’s in 1980.
Small nit: FB wasnt public 10yrs ago but your point is valid either way.
Contrast Google with Apple. Even though the iPhone is 60% of Apple’s business, last time I checked, the Mac business alone would put its revenue well within the top 100 companies.
On the other hand, it’s reported that Google pays Apple $12 billion a year to be the default search engine on Apple devices.
Apple makes a lot more from Google on mobile than Google makes from Android.
Andy Jassy, the CEO of AWS, has said in plenty of public statements that only 4% of all enterprise IT spend is on any cloud provider. GCP is in a distant third.
Google docs / business is interesting but I'm not sure they make much money out of it and are scatting on the freemium tier success.
Even if it did - it is still mostly search advertising. That’s not diversification.
Spotify - like Jobs said about DropBox, they are a feature not a product. Most of their revenue goes back to the record labels. Their gross margins are slim
Uber - is losing billions and it’s unit economics isn’t good.
Lyft - See Uber
Tesla - it’s “profits” aren’t from selling cars.
I disagree with the notion that the success of a for-profit company is solely defined as "profitability". Factors such as growth or value are also often cited as success criteria. I couldn't find literature supporting your statement that profitability is the only measure of company success.
Intuitively, it also seems wrong to me to claim that a children's lemonade stand netting $10 in profit is a more successful business than Tesla.
If I sold a bunch of dollars for 95 cents, my revenue would be astronomical. But does that make it a sound business model?
Which is a better business model? An Indy writer with 3000+ people charging $100 a year for a newsletter (Ben Thompson/Stratechery) or a multi million dollar news organization employing dozens of people with higher revenue losing millions per quarter?
What you're saying makes perfect sense to me though.
Facebook was profitable before they went public. The main reason they went public if I remember correctly, is because they had more than 500 shareholders and it made it more difficult to stay private.
As far as Amazon, Amazon wasn’t GAAP profitable. But it did have positive cash flow and was investing in infrastructure. The companies mentioned above have very slim to no marginal profit. They are literally selling dollars for 95 cents.
So far Google still have a stronghold on search, they've been able to secure it with Android and Chrome by controlling the devices, they seem to be doing fine.
Apple’s business model has always been to sell “computers” at high margins. They had record Mac revenues last quarter. All of their other devices are just computers with different form factors running a variant of the same OS, most with a variant of the same processor.
Office and Windows have been the main driver for MS for over 25 years.
How much are customers buying $200 phones worth to advertisers compared to customers paying 3 times as much?
Google also has to pay third party Android OEMs a share of search revenue.
Google pays Apple to make Google the search engine on the iPhone for the same reason that Coca Cola and Anheiseur-Busch spend tens of millions per year on 30 second spots during the Super Bowl.
The combined company? NoPerfectSolutions
44.6B would've been a great investment then
2017: Verizon buys Yahoo for $4.8B.
2019: Verizon sells Tumblr to Automattic for reportedly <$3M.
Wow for some reason I believed that by 2008 Google was already the dominant online ads player
A good podcast episode on it: https://share.transistor.fm/s/66bcbec6
They really avoided a huge disaster by walking away from Yahoo, so I applaud them.
That offer included Yahoo's stake in Alibaba, which was split off after Microsoft's bid fell through. Yahoo owned 30% of Alibaba at the time. Alibaba's current market cap is north of $600 billion.
They’re very close to being worth multiple trillions right now, their market cap is 5.44% shy of $2T
13 years changes a lot.
Version paid $4.4 billion for AOL and $4.5 billion for Yahoo and now sell it for $4.25 billion w/10% stake. Am I missing something? why company (Version) just waste money like this?
"Apollo buys Verizon media assets including Yahoo for $5bn"
Paywalled, but link should be good for 3 visitors. I can post another if anyone is desperate to read.
Why did SoftBank sell far less? Why would a behemoth well run company like Microsoft fare the same as Yahoo vs Alibaba?
In parallel, why has Naspers never faced this issue?
Why Verizon would buy a site like Yahoo is still a mystery to me, but they own a lot of other junk as well.
Buy Yahoo.com, make Yahoo.com the default home page of every customer.
They do this in other ways - I'm a FIOS customer and I don't use their DNS because you will see ads anytime you mis-type a domain name. You can turn this off with their not-so-simple instructions that any Baby Boomer will be completely unable to do:
Yahoo Finance is a great product.
Still not sure it adds up to $5 billion, though.
The brand value of both AOL and Yahoo has to add up to something, but TechCrunch and Engadget is most likely just thrown in for free to get rid of both sites.
On its own I believe that Yahoo Finans could be a profitable little site.
The one that gets me is Second Life which was such a hot thing for an instant in time and is still, amazingly, around even though I haven't heard anyone mention it for years.