Marissa Mayer and the Fight to Save Yahoo! summary

Yahoo had its investor and infrastructure – now it just needed to make some money. So, the company’s leaders decided to turn to advertising to generate revenue. Back in 1995, online advertising was still finding its feet. The estimated volume of the entire online advertising market that year was only $20 million.

Yahoo made its first deal with renowned international news agency Reuters, offering to publish their stories on Yahoo.com. Yahoo then signed a deal with Visa and General Motors to post ads, charging as little as $20,000 per month. Business picked up speed soon after.

Yahoo’s COO Jeff Mallett came from the world of computer software, where you essentially build products and hope users like them. But he realized that Yahoo had the potential for a much more auspicious approach.

Yahoo began to use traffic data to match products to customers’ needs. Mallett realized that with the data about customers’ preferences gleaned from web searches, he could simply analyze their clicks and search behavior on Yahoo to build exactly the products that these customers wanted. He wouldn’t have to guess what people needed, because he would already know.

By late-2000, things at Yahoo began to fall apart. The dot-com crash had hit Yahoo hard, and in that year, the company’s value had shrunk by 90 percent from $128 billion to $12.6 billion. Where did it all go wrong? Put simply, Yahoo sold out.

Since Yahoo was such a popular and big company, every time a new start-up officially announced its collaboration with Yahoo, the start-up’s market value would skyrocket. Some Yahoo executives used this tendency to make deals with start-ups.

Yahoo had destroyed the integrity and profitability of their online advertising business, and it was time for its first CEO Ted Koogle to resign. His spot was filled by Terry Semel, former CEO of Warner Brothers.

The new CEO reorganized Yahoo’s ad business to make it a traditional ad sales business. Semel’s strategy was simple: although much of Yahoo’s market value was destroyed with the implosion of the dot-com bubble, more and more web users were visiting the site each day.

Yahoo wasn’t doing too badly after its change of CEO. But in 1997, the company missed an opportunity that would have secured its dominant role in the internet for decades to come.

Larry Page offered Yahoo his thesis project BackRub, which would later become Google, for a meagre $1 million. He wanted the money to finance his PhD and become a professor. But Yahoo passed up on the offer! Why?

The growing influence of competitors like Google started to chip away at Yahoo’s traffic. Competing with too many specialized start-ups wasn’t helpful for Yahoo’s public and internal image; the company had spread itself too thin.

Yahoo tried to compete with CNN in news, with ESPN in sports, with MySpace in social networking and of course with Google in online searches. When Semel joined Yahoo, it had 400 different products and services.

Marissa Ann Mayer was born in 1975 in Wisconsin, where a middle-class upbringing allowed her to shine at various hobbies. The ambitious and talented Marissa played volleyball and basketball, took piano lessons and at one point even took ballet for as many as 35 hours a week during middle school.

Quiet, intelligent and with little in the way of social skills, she fit the mold of a nerd perfectly. But for all her nerdiness, it soon became clear that Marissa was quite good at giving directions. Whether in sports or class projects, she always took over a leadership role and was supported by her peers, who felt she was fair and exceptionally good at managing progress.

As we found out earlier, Yahoo could do everything, but nothing especially well. It was this aspect of the company that Mayer was determined to change.

When Mayer became Yahoo’s CEO, the company faced an important decision: what was it going to become? Would it be a media company that focused on large-scale online publishing, or the production of content such as videos and news? Or would Yahoo be better off as a tech company, centered on developing innovative new products?

On December 2012, Yahoo’s stock was up 24 percent since Mayer became CEO. Only a few months earlier, she had outbid Facebook to buy Tumblr for $1.1 billion and morale was at an all-time high. More and more highly qualified candidates began sending their résumés to Yahoo.

It looked like Yahoo was finally out of the woods. But it was actually far from it! Despite all its efforts, Yahoo’s search market share was still shrinking, as was its traffic and, ultimately, its revenues from selling ads. As it turned out, Yahoo’s rising stock value was mostly a result of the fact that it owned parts of Alibaba, an exploding Asian start-up.

Mayer and her development teams increased their efforts even more and began to push themselves to the limit. Mayer’s efforts to increase the speed of processes caused problems within Yahoo and among its users.

The new Yahoo Mail was suffering multiple breakdowns, and users couldn’t access their mail. The reason was that the development team was pushed so hard to produce results quickly, they couldn’t properly test the underlying technology before launching.