On Monday, goliath U.S. telecommunications operator Verizon announced that it would purchase Yahoo’s core assets for $4.83 billion USD. As the first search engine, web portal, news channel, email service and chat platform used by many older netizens, Yahoo “kicking the bucket” after only 20-some years might not earn it a place among the most venerable traditional enterprises ever to exist; but in terms of the online industry, there is no question that it was growing considerably long in the tooth.
The purchase will elicit heavy-hearted sighs from some who recall when Yahoo founder Jerry Yang rejected a similar bid from Microsoft. Indeed, the $44.6 billion offered back then hardly bears comparison to the $4.8 billion of today. However, to this day I still support Yang’s position, as that moment was Yahoo’s last chance to get back in the game. Had the offer not been rejected, the Yahoo of yesteryear would have become much as Nokia is today. In this world, there are two types of takeovers: the first kind allows the sold entity to weather a crisis while preserving its independence and unique personality in the hope of creating a future in which the whole is greater than the sum of its parts; the second sees the purchased company consumed in its entirety and assimilated into the buyer’s corpus while the indigestible gristle is cast aside like so much detritus. To Yahoo’s great misfortune, Microsoft in this case will most likely opt for the latter route.
Adherents to the “tornado theory”* will say that Yahoo lost its way because it failed to sniff out each and every updraft on the turbulent windstream of internet development. But saying so would be a fallacy, with the proof once again being Nokia’s precipitous tumble, even as its “efficiency” far exceeds that of Yahoo and Motorola. It is more likely that these winds of prosperity simply never existed and that paths to fortune are rather forged by trailblazing heroes. It was Yang’s entrepreneurship combined with investment from Masayoshi Son that allowed them to strike gold during the internet’s nascency. Well-regarded tech giants, such as Apple, have also never seen fit to define themselves as such metaphorical storm chasers.
The emergence of heroes is always cause for renewed hope, particularly for industries navigating through the thorny brambles of their embryonic development or for well-entrenched firms that find themselves constantly embattled in a stagnant war of attrition against equally well-entrenched adversaries. The luminaries of the PC era were Steve Jobs and Bill Gates, and just as the sun began to set on Apple the day it forced Jobs out of the company, his return breathed new life into the firm as it deftly maneuvered back to center stage during the age of mobile internet, nary a step behind newer entrants to the dance, such as Google and Facebook. These champions must ever remain in the limelight for others to admire if they are to continue leading their charges to further developments, and they can often even bring more consumers into the fold with their status as idols of tech.
For a zero marginal cost internet enterprise, core competitiveness lies within the business model, as well as innovation in operating methods and the technology itself. All of these are largely born from the founder’s independent ruminations, or perhaps even from moments of inspiration, and not from the collective wisdom of company administrators or professional managers. A founder’s influence over his or her creation can be likened to that in the “Son of God” or “facing reality by transcending reality.” Yang’s fatal misstep was in setting down his “heroes’ mantle” too soon and leaving the thick of the action to take a seat backstage, switching roles from protagonist of the production to mere assistant director, even as the audience clamored for his return. And as he prepared to once more shore up confidence in the company, the dealings of some looking to make a profit saw Yahoo’s most valuable investments come to naught. This was not due to any mistake of Yang’s, but rather ill timing and the opportunism of others.
Of course, compounding the problem was that although Yang did return to the captain’s chair and reassume the position of chief executive, his creative juices were running dry and Yahoo began to turn from innovation to investment. No matter how exceptional the company’s investment in Alibaba turned out to be, Yahoo could not be saved from its fate. This was much like the Jobs-less Apple of today, where Tim Cook is also being forced to migrate his company into investments and, by so doing, to attempt to stave off its irreversible decline. And if the purpose of all this was no more than to serve as a delaying tactic, then it’s congratulations to Yahoo for a job well done.
The author is a tech industry watcher.
*Translator’s Note: “Tornado theory” refers to a theory sprung from Xiaomi founder Lei Jun’s assertion that “even a pig can fly in a tornado.”