How to Fix Yahoo!

How to Fix Yahoo!

By Tim Vandergriend

Yahoo! Once a great technology brand, central to everything we did online, is no longer relevant. I can’t think of one asset that I use other than borrowing free photography from Flickr for blog articles.


There is now much discussion about the sale of Yahoo!  But we all know that’s not going to solve the problem, other than facilitate a quicker demise.


Things were looking on the up in 2012. When you lure a key executive from Google to your company, that’s huge boost of confidence. But what’s happened?


Yahoo!’s focus initially was on talent acquisition, that somehow acquiring hip new innovative companies would inject some new energy and ideas into the company, bottom up.  This hasn’t succeeded. The brands acquired have stagnated, whilst the acquired talent have moved elsewhere.


Yahoo! then started talking up MAVEN products (mobile, video, native, social advertising).  This channel centric focus, I’m a bit unclear on, because it doesn’t really articulate anything meaningful to me. This seems more like a distribution model, not a value proposition.


An example of how the MAVEN model fails is to look at it from my user experience of the Yahoo! News/Media website.  The last time I opened a Yahoo web page I was presented with three videos that auto-played simultaneously. An unbelievably bad user experience. I’m sure there was some good advertising revenue out of that hit, but I’ve not returned to a Yahoo! news site since.


The most recent development at Yahoo! is to focus on  eradicating poorly performing business units. This is about gaining better returns on capital, or in other words, making your company more efficient.  But again, is this really a growth strategy?


To me it seems pretty clear what’s missing from the above. The best way to attract and keep talent is to create a successful brand. A successful brand is a growing one, making money, and remains relevant in every day life to its users.  Does that mean focusing on distribution or efficiency focus? Not in my mind. To create a successful brand is to focus on your end-users. Your true customer. When you listen to end-users and solve their problems, everything else follows naturally; great products, customer attention, and advertising revenues.


Let’s look at how this might work practically

This is just one view of Yahoo!’s future. It’s not the only possibility, but it’s a compelling one.


Firstly I would ditch publishing. Content is disposable and does not build a long term asset.  Audiences are fickle, attention is fleeting. I would prefer Yahoo! to create sustainable long term solutions and opportunities for its users. Not entertain me when I’m bored.


The focus on product solutions should take the best of what Yahoo! was/is, and create one integrated strategy that solves a gap in the market place.  Consider this multi-layer approach…


Layer 1) End-user Communication (the true social app)

Everyone knows communication is where people spend most of their time online. And once upon a time, Yahoo! had the greatest web based messaging tools on the planet. Yahoo Mail, Messenger (instant chat), augmented by nice tools such as address books, calendars and file sharing. The only reason Google got into a leadership position is because they offered unlimited data storage. This is no longer a competitive advantage so Yahoo! can become relevant again in this space.  I would put this at my number 1 priority. Revenue is not immediately clear here, but creating an engaged user base is the foundation of everything else you do.  Perfect the communication tools for a better UI, and innovate by developing these tools into more seamless online communication experience.  For example, secure online identities, integration with all social media channels, that allows you to securely manage all your contacts, keep track of all your conversations (think Hootsuite for consumers).  You can then manage your social interactions better (planning meetups, inviting contacts, organising, and storing your memories afterwards) 


Layer 2) Local search and discovery

This is an area that Yahoo! used to do well, but got dropped by the way-side. And although there are tools out there, if you look carefully at them, not one is doing the job really well (be honest).  Imagine if you expand on the communication tools outlined in the first layer.  As end users tag places and events of interest in local communities, they help Yahoo! build a user-centered local search database. Yahoo! have the infrastructure and technology to create a better local database that users can interact with. Innovate on the UI such as proximity search, visual search, mobile interface and you’ve got the potential for a really good, and differentiated local search experience. Now things are starting to get interesting, right?


Layer 3) Local services (small business)

As product retail shifts to the big online players, local will become more about personal and professional services and niche vendors, where a physical presence is your biggest value.  A physical presence is the one thing you can’t outsource to China or India.  The solopreneurs and small businesses who operate in this space, need help to brand themselves better online, interact better with the local community, get found and monetise their services more efficiently.


Yahoo! have the web apps. But lack integration and ease of use to provide a true turn-key solution. WordPress/Shopify style hosted commerce sites could offer off-the-shelf shop fronts for the local stores.  The real benefits come with tools that integrate with the communication and search tools outlined above.  Contacting local consumers, facilitating appointments, bookings, handling payments and transactions, and follow up surveys. These all help the small business be better businesses and work more efficiently.


It’s a nice closed loop, this 3 layer model.


Why this business model?

The great thing about this business model is the market opportunity.  When you take a good look at Facebook and Google revenues, small business advertising is actually the lion’s share of their income. Yet they are not considered true local search tools. If Yahoo! can position themselves in this gap, there’s huge growth upside and revenue potential!


Now, none of this might sound terribly sexy to the tech investor community.  I didn’t talk about AI, IoT, omni-channel, big data, software defined anything, etc. But the technologies you use to serve your clients, are secondary to how you solve a problem. When you go down the technology stack, all of these new technologies of course play their part in the solution.


Who should fix Yahoo!?

When you consider that the solution starts with the end-user, not talent, operational efficiency, or distribution channels, you start to see that Yahoo! have been approaching the problem back to front.


The solution therefore requires a different mindset, a new way of looking at things.  Whilst simultaneously unburdening yourself from the past (acquisitions, sunk costs).


Whether Yahoo!’s existing leadership has the courage and conviction to take such measures is not for me to say. I’m not advocating radical people changes. Just a change of mindset - a better idea of who Yahoo! is and where they fit in the market place.


I feel for Marissa - she cops a lot of criticism. But it’s a huge task to reposition a big company like Yahoo!. She has the board to contend with, influential investors, as well as various internal factions (business units). She has to juggle the demands of thousands of vested interests, all of whom no doubt make a compelling case. I’m not sure much can be done, without clear mandate and authority. Which I’m not sure she had or has.


But you never know. When your back is against the wall, you have nothing to lose. This frees you up to make the big call - all or nothing.  So now might just be the right time for Yahoo! to make the radical strategy change. If they can refocus on under-served market spaces, with the right product, positioning, product and branding, I have no doubt, they can again become the dominant force it once was.