In 2004, I came out of Stanford with a Master’s degree in Computer Science. All of my friends were going to Google, many of them to work for Marissa Mayer in her excellent PM program. I went to work for Yahoo.
While I was at Yahoo, we purchased several amazing properties and hired some of the best product minds in the world. One by one, an organization run by Hollywood execs and then Wall Street execs broke the products and broke the spirits of the brilliant entrepreneurs that they aqui-hired by forcing them to justify their design decisions to a panel of executives who had no clue about product.
After years of stagnation, what should Yahoo do now? Everyone notes that the company’s vision is unclear and focus is necessary but where does it go? Yahoo has two extraordinary assets, a distribution engine and a monetization engine. It should use these assets to re-build the world’s greatest directory of online content.
Yahoo can monetize better than any individual website because (1) ad revenue goes up when you have a name brand and buy in bulk and (2) ad revenue goes way up when you can do smart targeting across many different properties. Yahoo also has a massive global distribution engine in the form of their homepage and user base.
Why does it point that awesome user-base, that incredible resource base at second-tier properties just because Yahoo owns them? Why not make the “Yahoo Travel” button go to Hipmunk? Why not make the “Yahoo News” go to Prismatic? There’s no need to buy all of these companies, just setup revenue sharing – the incentive structure works much better!
What if web developers saw Yahoo as an enormous distribution and monetization platform? More importantly, what if users knew that the Yahoo homepage would send them to best of breed in every category? Everyone would have a reason to use the Yahoo homepage again. What are the best sites for buying cars, playing online games, checking the weather? I don’t do any of these things enough to know, and today Google just sends me to the sites with the most advanced SEO.
Yahoo can learn from and emulate the success of Apple and Facebook’s app stores. Curate and promote high quality applications to give users a great experience and take a share of the revenue from the featured applications.
Facebook, Linkedin and Twitter all offer identity platforms but without an integrated advertising/monetization solution and without the ability to strongly promote high quality apps. Developers on the Facebook platform often spend their time bolting on unwanted viral features to their applications in order to acquire users. Yahoo could use its homepage to become the internet’s largest driver of user traffic and help promote the highest quality applications while making a ton of money in the process.