Yahoo Case Study

The Yahoo!(tm) case study presents and interesting look back. The most striking aspect of the case study is that the business plan got the major trends right. These included
1) Growth of the number of people with access to the Internet
2) The Expected use by companies, home businesses and consumers
3) Ability to use platforms such as Yahoo!(tm) to serve advertisements

What they got wrong were the numbers associated with
1) Rate of growth of the Internet
2) Variety of uses for this new communication medium
3) The peer to peer communication enabled by this new medium (a vital miss)

This also brings up a question as to how much effort one should put into developing rigorous growth and financial projections in creating business plans in new areas. 

Yahoo!(tm) was attractive because of the following:
1) it solved a key problem in a new communication medium - how do you help people find information
- this was the same problem that Google(tm) later on solved in a much better automated manner.
2) Managed to 'brand' itself early in the process
3) Business model that generated revenue by focusing on ads and sponsorship

Even though their background was in technology, their core business was NOT centered on technology. Though they did mention that they would need servers, databases etc, their business plan notes that they effectively would outsource some of this work to a Canadian entity. This was probably their biggest mistake in retrospect.

On a final note, a quick internet search on Google(tm) (I don't use yahoo to search) indicates that they went public a year later with just 46 employees. This was a pretty rapid 1 year exit for the venture capital firms. Compare that with the recent nearly 10 year wait for Linkedin(tm) to go public. This is a trend that is expected to be the new norm.