What to doo with Yahoo?

Tuesday, June 19, 2007 by Dave Winer.

The big win for Yahoo was My.Yahoo, it was the perfect example of send them away to get them to come back. Any comeback for Yahoo must include revitalizing this service, quickly, because this is yet another area where Google is gaining ground on the sleeping giant. Scott Gatz, the exec who made My.Yahoo what it is, is still at the company.  

I'd also suggest decentralizing the company more. Some analyst told them they needed to gain economy and synergy from their acquisitions by centralizing and eliminating duplication, but this makes no sense. Their goal isn't to economize, the goal is to grow. That's the only thing that matters.  

The problem with Yahoo is too many people for too few opportunities. But, ironically, they need to make the problem worse in order to get back on a growth track. They also need more startups outside Yahoo to view Yahoo as the logcial company to acquire them. The way to do this is to set some standards by unbundling basic services, most important being identity. Yes it's nerdy, and hard for a Hollywood guy like Semel to understand, but now that the Hollywood guy is gone, maybe Yahoo can start being a technology company instead of the 21st century equivalent of a pet food retailer. That means implementing some big ideas that are rooted in technology not merchandising. 

Basically the problem of Yahoo is the problem of Silicon Valley (and that includes Google btw). But it's not the problem of Apple, which people tend to overlook in their analysis of Silicon Valley (a big mistake, Apple is practically the only Silicon Valley company left).  

The business of the valley is not publishing. It is not advertising. It is not retailing. It is not pet food. It is cool packages of technology that thrill people with empowerment and novelty. 

So start by giving My.Yahoo some space, and money, and get some new hot features out there ASAP. 

And then unbundle some services and offer them to internal users and to developers. It's not mandatory for the internal users to build on them, but there's no guarantee that management won't acquire an external competitor that does a better job of hitching up to the backbone that Yahoo is using. 

Google hasn't been very successful with GData, and there are good reasons for this. They think like an advertising company. Try thinking like a technology company instead, and all of a sudden Yahoo will start growing again. 

PS: Invest in open source projects. You can buy love. 

PPS: Invest in anything that undermines Google. 

PPPS: Merging with Microsoft is death. 

PPPPS: Doc pulls the killer quote.