Google Buys FeedBurner … And A Step-by-step Plan For Yahoo To Recover From Its MisstepsJun 2nd, 2007 | By Rachit Dayal | Category: Google AdWords, Technology Brands, Yahoo Overture
Just got a heads up from a source (actually it may be stale news by the time I actually get around to finishing this post). Google just bought the most popular RSS company – Feedburner!
Feedburner is the most popular way for blogs to publish their blogs and track its usage … and you can rest assured those features will now be built into Google Reader (although Google hasn’t done a great job with its other blogging movement – Blogger).
Feedburner is one of the gzillion recent acquisitions by Google
If you haven’t been reading the news … this is just one of the gzillion acquisitions to happen recently …
- Google bought DoubleClick for 3.1 billion. DoubleClick was the biggest advertising network outside of Google & Yahoo to offer graphical ads (in fact, they were early proponents of pop ups & other intrusive advertising … not sure how that fits into Google’s philosophy of “Do No Evil”)
- Last week, Google bought Panoramio. I hadn’t heard of this company before … but it had something to do with embedding real pictures into virtual maps. Right after the acquisition, Google announced “street level” pictures on Google maps … giving real 360 degree views from the ground … instead of the usual satellite pictures
- Last week, Google also bought Green Border, a computer security firm. Their anti virus is slightly different from other anti-viruses technology wise (instead of finding viruses, they run every application in a virtualization mode). It’s a foregone conclusion that this will be soon be included in the “Google Pack” along with Norton Antivirus.
Meanwhile, everything at Yahoo seems downhill …
Before I talked to someone in there, I didn’t have a great view of Yahoo … for the past few years, they had been doing everything wrong!
- They had been losing search market share to Google for years now. Practically every single quarter.
- The launch of Panama was delayed for over six months because they underestimated the work required.
- Newer sites like MySpace were fast catching up with Yahoo for the spot of the #1 visited property on the Internet.
- Yahoo’s CTO resigned last week, just six months after taking over one of their most important units.
- A few years ago, Yahoo had acquired some great companies like Flickr, del.ico.us and Outpost … but after that, very few acquisitions impressed me.
- They rarely generated any news. Google got coverage for every little feature launched. Microsoft got news coverage because … well, they’re Microsoft.
- Google’s buying every cool company out there (think YouTube). Other people are snapping up popular sites (even Fox got into it and bought MySpace). Yahoo’s acquisitions? Barely making a whimper …
- There were serious talks of Yahoo! being acquired by Microsoft! (In Silicon Valley insider circles, if your management has to answer to Seattle … it’s the end of being “cool”)
Here’s the truth about “buzz” that hi-tech businesses get …
But here’s the truth about high-tech businesses – businesses doing well are put up on a pedestal … they are talked about over and over again … ever move lauded and every mistake quickly forgiven …
And businesses doing badly are just criticized … frequently & brutally. Even good moves are dissected and the media loves to predict demises of yesterday’s sweethearts.
So even though the news may make it sound like Yahoo was doomed, I decided to dig a little deeper to find out what’s really going on (oh and on a side note, I used Google News for my updates … no wonder Google has so much press coverage wherever I look).
So, to solve the puzzle … I had a quick skype-chat with one of my favourite uncles … a guy who’s a silicon valley veteran and currently works at Yahoo. And I asked him what Yahoo was doing in the face of all the G-rated challenges and it’s own screw-ups over the past 2-3 years …
Is anything going right for Yahoo?
After all, it is a company that had over 7 billion in revenues last year and has a market cap of about 30 billion … here are some Yahoo highlights not talked about much …
- Yahoo.com is still the most visited property on the Internet (400+ million visitors per month). In fact, if you combine all of Yahoo’s properties (Yahoo, Flickr, Geocities etc) … they add up to about 8% of all advertising space on the Internet
- Yahoo mail has 100 million users. Gmail, for all it’s hype, has 1 million users. Even though the cool Gmail features pushed Yahoo & Hotmail to upgrade … there is no way Gmail will catch up with Y! Mail anytime soon …
- Flickr is still as popular as ever … although the growth rate is nothing to boast about
Ok … that’s a few saving graces … but what are they doing to get better?
Major Restructuring Going On Inside Yahoo
In the past, Yahoo was made up of numerous divisions – the Hollywood arm, the old web arm, the web2.0 arm, the text advertising arm, the image advertising arm etc
As of last year, Yahoo is being significantly trimmed.
When this restructuring finishes next quarter – Yahoo will have only two divisions.
- Content division
- Technology division
- Advertising division
I really really like this simplification … it boils down to the only three things a good web company should bother about … one, creating something great … two, make it run really well … and three, figure out how to make money off their creation.
Each of those divisions will have subdivisions (for example, each divisions need marketing, finance etc). But everyone who worked at Yahoo is getting their roles redefined.
But I think this reorganization is getting to the real root of Yahoo’s recent failures – it’s bloatedness. Yahoo started out as a cool, small startup … when it was nimble it acquired some great companies (AltaVista, inktomi, overture) and quickly embedded them into Yahoo’s systems.
But then it tried to do too much. Yahoo’s competing with MS for email, AOL for instant messaging, Google for search, MySpace for social networking, Blogger/Wordpress for blogging and CNN/Google News for content.
And it’s CEO wanted to take the company to Hollywood Studios. I never quite understood the vision of tying up Yahoo’s future in Hollywood … then Yahoo would lost its geek value.
So, What Does Yahoo Need To Do Now To Recover?
I think we’ve talked enough about how Yahoo screwed up these last few years because of its bloatedness and inability to be flexible. Here are the 5 things Yahoo needs to do to get back on the path to being a real competitive company again:
- Build a better, more integrated advertising platform: Not many know this, but Yahoo (under the name of Overture) really commercialized the Pay Per Click concept. And then, Google came up with a better version (Google AdWords) and the rest is history.Now Yahoo needs to do a better job than Google with Panama (the beginning version of Panama is capable, but limited. It needs to work with more mediums than Google – text, image, video, audio
… it needs to be more cost effective than Google – AdWords has gotten unaffordable for the little guys …
… it needs to be “cooler” than Google to show off content ads from Yahoo on the websites of the little guys (I’m sick of showing off the little ads from Google)
- Get new, large advertising properties: Google always pips Yahoo for the best advertising deals. It got MySpace. It got AOL. It got all the tiny little websites.The prevailing argument is that Google has more cash in the bank and can afford to splurge for these deals (and some questionable deals). But it’s do or die time for Yahoo … even if its financially risky, Yahoo needs to secure high-traffic websites for its content ads now … and it needs identify potential high traffic sites early and secure them into long term contracts.Potential Yahoo acquisitions/partners – Facebook, LinkedIn, Fotoblog, Digg, CNet, Aweber, Xtube
- Better integrate its properties: Yahoo has email. It has photos. It has websites. It has a blogging platform. It has news. It has social networking.Yahoo stands for everything. It stands for nothing. While it’s doing its simplification in-house … it also ought to integrate its brands. At least bring it all under the Yahoo tag … and do a better job of turning the visitors of Yahoo.com into serious, devoted users of its other services.
- Get large advertising clients: After it secures some good new properties to display its ads on, and perfects the Panama system for showing relevant text/image/video/audio ads to the relevant audience … it’s gotto hook in IBM, Dell, P&G, Toyota and other real-world powerhouses into huge advertising deals.There’s one thing Yahoo has which google doesn’t – Awesome editorial control. Small guys hate editorial control (Editors tend to scale down their salesy message). Large guys love editorial control (it ensures their competition is consistent).It’s gotto use this advantage well. And ensure that all the other large companies that want to advertise online … run to Yahoo … and away from Google’s wild advertising platform.
- Get some buzz by sharing more technology innovations: I don’t know how much innovation really happens in Yahoo labs any more (they came up with a really cool thing called “Yahoo Pipes” a little while ago). But the way to be a media daring in the technology world is keep innovating.Google gets kudos because it launches a new service every few days. Personally, I think none of those things are going to work … but Google does a good job of getting publicity out of them.Yahoo can differentiate itself by innovating within boundaries. Instead of coming up with the latest application to share photo tags by Bluetooth (the kind of random innovations that happen at Google), Yahoo should innovate in the applications that are its strengths – Yahoo.com, Yahoo Mail, Flickr and Panama. Throw out 10 new ideas every week for users of these services … and based on their response, be prepared to rapidly execute the things that people really like.
Either way, one thing is clear. Q2 and Q3 this year are critical for Yahoo … if it doesn’t recover and show some serious signs of gaining ground … it’s legacy will be in serious jeopardy.