Two Important Lessons from Yahoo’s Decline and Downfall

Verizon to Pay $4.8 Billion for Yahoo’s Core Business” reads the headline in today’s New York Times website. This is a stunning fall for a company which epitomized all things internet and which had a peak valuation of more than $125 billion dollars just over a decade ago. So what are the reasons for this stunning fall of Yahoo so fast and are there any important lessons to be learned from Yahoo’s downfall?

I think that there are two main reason for this dramatic a change in Yahoo’s fortunes and some important lessons to be learned. They are:

Customer Focus: Yahoo started off as a search engine but quickly lost focus of its core service and wanted to be everything to everyone on the internet. Just take a look at Yahoo’s home page even today (on July 24, 2016) and you can see why. Home page is cluttered with so many competing services trying to catch our attention and lost on the page is core functionality customers want – web search.

Compare it with Google’s home page and focus on the core service of web search – see pictures below:

 

Yahoo Home Page

 

Google's Home PageUser or Customer Experience Management is the second important reason for Yahoo’s decline. While trying to be everything to everyone on the internet, Yahoo failed to focus on the user experience – quality and speed of search results. And it quickly lost ground to the “newcomer” Google in early 2000s. Yahoo had some great services like Yahoo messenger etc. and it failed to capitalize on those strengths, especially when social media took off in a major way in 2008 and in 2009. As a result, Facebook and WhatsApp capitalized on the opportunity and have become so dominate in the market.

Lesson to be learned from Yahoo’s downfall is that:

a) Never lose focus of what your customers want and

b) Customer Experience matters more than anything else

And if you don’t focus on the above two critical aspects of your business, you will face decline and downfall.

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