Here's a brisk "decline & fall" story of how Yahoo ceded the search advertising space to Google from yesterday's Wired.
A lot of interesting points:
1) Valuations look really funky in hindsight. Yahoo could have conceivably bought Google for $5bn in 2002. What would someone have needed to buy AOL five years earlier?
2) It's not what you got but what you figure out to do with it. The idea for pinning ads with searches seems to have only sprung up with GoTo in 2001, a good six years after Netscape's browser and at least half a dozen vaunted search engines. Google already had its technology by then. The Big Leap was moving beyond the "gee-whiz" factor and using the cool tech to place & sell ads, things that probably had never entered Google's head before then.
3) Even when the writing seems to be on the wall, most people don't see it. As late as Summer 2004, well after Google had come out with both its search engine and AdWords/Sense, well after Yahoo had already shown that it was having some serious engineering snafus, the Wall Street money was still on Yahoo.
4) Outdated tech can really screw you. Overture's scaling weaknesses reminded me a bit of Friendster's.
5) It never hurts to be user-friendly. It can be easy to underestimate the value of easily automated functions and friendly user interfaces. Plenty of people have similar tech, some may be superior to others. But it's usability that usually trumps. Hello YouTube, iPod, etc...
6) Lastly, the word of the day. It always warms my heart to see the word "clusterf*ck," fully spelled, in a magazine article.
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