5.1. YAHOO! DREW THE MAP
The parallels between Yahoo! and Google are almost spooky. Two bored Ph.D. candidates at Stanford, looking for a way to win a fantasy basketball league, came up with the idea for Yahoo!. Jerry Yang and David Filo won the sports pool, and not long afterward realized they had created something with economic potential. They took a whimsical and fun approach to business, and in naming their company they started with the Internet jargon for "yet another,"YA. They came up with the rest of it: Yet Another Hierarchical Officious Oracle. Yahoo! was born.
Yahoo's main goal was to help their Stanford buddies locate intriguing websites.
The system uses "content-based" search.
Yahoo! earns its money from advertising.
After a while, the 20-something entrepreneurs hired a "grown-up" businessman, Tim Koogle, to help run and develop the business. Naturally, he was a Stanford graduate.
The company went through a stage of hypergrowth and success, launching an IPO with a multibillion-dollar market capitalization.
"We were unique," said Yang. "We were the first in this business to build a credible, sustainable, and likeable brand. If you believe the Internet is the next big medium, and if you realize every medium has had a brand associated with it like CNN with cable, then it's conceivable that Yahoo! will become one of those brands".[]
Yahoo! was formed about five years before Google came along, and in many ways, the relationship between the two companies goes way back and was close. Google pitched Yahoo! on buying the search engine, but were sent away with nothing more than sound counsel. Yahoo! soon chose Google as its default search engine, and a day later, Yahoo! purchased eGroups for $413 million, a company that Larry's brother, Carl Page, helped to found. For a while, starting in June 2000, Google's and Yahoo's paths were linked. Providing search results for Yahoo! and other websites got Google off to a strong start. Before long, Google began to look like a competitor, and eventually Yahoo! dropped Google and developed its own search technology.
Sadly, after a terrifically successful run, Yahoo! fell victim to a horrendous business blunder. Microsoft made a big offer for the company but dropped it when it considered Yahoo!'s counteroffer too high. The Google founders wanted to help Yahoo! remain independent and struck an advertising arrangement. However, Google's help turned out to be no help at all. Read more about that in the section entitled "Google, Microsoft, and the Internet Civil War," in the chapter "The Dominant Power in the Industry?"