Yahoo’s Problem: No Identity

Yahoo is a great example of how lack of brand identity can kill you.

We are talking about maybe the first internet giant, some may say the .com bubble starter a company that by all accounts should be what Google is now. So what went wrong?

It was 1994 and a couple of college students, Jerry Yang and David Filo came up with a great idea, a technology idea, creating a web directory. The web was growing very fast and very disorganised so it made a lot of sense to put order so growth could be, well, organised.

The result of the hobby like experiment done by this Stanford students was a great tool for people to find whatever they were looking for in the web. The idea was very simple so simple it was named “Jerry’s guide to the World Wide Web” it was nothing more than a directory with lists and subdirectories and sublists off all the companies that were on the internet so it was easy for users to find things. And it worked, boy did it ever. In 1995 the pair decided to turn this crazy idea into a company and they changed the name to Yahoo. (Yet Another Hierarchical Officious Oracle).

So, the Brand Identity of this new company, created by engineering students, should have had at least something to do with technology, right?

Success and money came too soon and to big. By 1996 Yahoo became public it had risen more than 30 million dollars and was used by millions of people.

Google was not even born (it started in 1998), Microsoft had crushed Netscape nothing seemed to be on Yahoo’s way. Except they had money and were growing by 10% every month, every month!

In comes the distractor. Advertising agencies wanted a piece of the million Yahoo users so they started offering millions of dollars for Banner ads, the amounts were ridiculous, banners were not worth that much.

So some investors saw this and decided to create, support and invest on a bunch of startups based on the value created by Yahoo and the ad companies. A bloated value. a fictitious value. hence the .com bubble and burst.

But to the point. Yahoo should have been a technology company it’s core business should have been the creation of code that improved search in the tangled web making life easier for web users.

Instead Yahoo considered itself a media company, selling ads in “portals”, people working there were “producers” and different parts of the company were called “properties”.

So by trying hard not to be a tech company and not really being a media company has made Yahoo a company with No identity. They even had a chance to maybe buy Google in 1998 but how could they make that decision? Google was a tech company focusing in search (What Yahoo should be doing) it was a clear match but not so clear for a media company.

Even today Yahoo has bought companies based on no clear focus. Some of them real head scratchers. Almost all of them turned into failures because of the lack of focus.

Having a clear identity and a set of values derived from a Brand Culture would maybe made things different for Yahoo, instead it is a company that sometimes means one thing sometimes other, even the most recent logo was created by CEO Marissa Mayer over a weekend with their design team on Adobe Illustrator and in her own words “rolled up their sleeves and had a lot of fun” creating the new Yahoo Logo. The culture, identity, values the core business of the company never were a factor over this fun weekend. The result is a company with no aim or focus.

Even Today Yahoo is a huge company, thousands of people work there it has millions of users but it has no brand power and perception is that it is a failing company. And it is. A Brand is what people say it is, not what the CEO thinks it is.

On the other hand Google has a clear identity it is a Tech Startup almost a 20 year old Startup. But everything about Google feels like new, like an adventure that will make life easier, better for everybody. Advertising is the main cash flow producer but not the core of the brand.

The small difference between this two companies is Brand Identity. The difference between failure and success is knowing who you are and being faithful to your values.

Some similarities can be found in Microsoft and apple, but it looks like Microsoft is refocusing quite successfully.