Watching Yahoo! and the internet from Google in 2000
I remember for years watching Yahoo!’s spectacular rise with awe. Yahoo!’s stock began 2000 at an all-time high of $475 (pre-split). Weeks later on February 14th, Valentine’s Day and the very day I started at Google, Yahoo! announced a 2:1 stock split. The internet was booming.
A month later, March 10, 2000 the NASDAQ peaked at 5046 — double it’s closing price from a year earlier. Then pop!
Following several rocky weeks filled with jarring drops, on April 14 the NASDAQ fell another 355 points to close the day at 3321. The index had lost 34% of it’s value in just 5 weeks. I anxiously wondered what all of this would mean for Google and my nascent career selling online advertising. Watching one internet venture after another implode I kept thinking “aren’t these supposed to be our best customers?”
Nevertheless, that same week Yahoo! announced Q1’00 earnings — beating expectations. I recall that the attitude of the company execs and the soundbites from wall street suggested that Yahoo! was going to be immune from the dotcom meltdown. I hoped they were right and that this was the worst of it.
One year later, on March 16, 2001 Yahoo! stock closed at $6.78. The giant of the internet and wall street darling had lost ~98% of its market value.
It had been an ugly year for the internet. All of us on the small but growing Google ad sales team tried not to look at the carnage. We tried to keep our heads down building Google and doing what we needed to do to find new advertisers and deliver the then little known and underappreciated value of our innovative ad solution*. But week after week the headlines were filled with more bad news and more failing companies. The dotcom bubble was bursting in spectacular fashion. It was unavoidable news and a much bigger story than that of an upstart Google. Recognized internet brands and traditional offline advertisers were not interested in wasting another ad dollar on a new internet start-up — especially one that was selling text ads at a $40 CPM! (“We only buy CPA” was a frequent response from advertisers in the ‘00–02). We would have to look for revenue from newer, more nimble and opportunistic players.
On October 9, 2002 the NASDAQ hit a low of 1114 — down 78% from it’s peak. Yahoo! and AOL (that’s a whole other story) would never be anywhere near the internet powerhouses they had been just 2.5 years earlier. It was still not certain where our path at Google would lead. #excitingtimes
*The guy I worked for at Google and who was leading the fledgling sales team from Sept ’00 forward was Tim Armstrong. With Verizon’s acquisition news today, TA is now poetically the CEO of both Yahoo! and AOL.
