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Yahoo net worth: Lost to the dot-com collapse

Yahoo was once the centre of the online universe, but poor leadership and unwise acquisitions caused the Yahoo net worth to plummet.

Google and Facebook dominate the internet nowadays. In fact, only the Google owned YouTube platform separates them.  Yet, that wasn’t always the case. As internet access boomed in popularity during the late 1990s, it was dial-up broadband provider AOL and search engine Yahoo! fighting for control of the online world.

Stanford University students Jerry Yang and David Filo founded the Yahoo! search engine in January 1994.

Yahoo net worth - Compelo
Jerry Yang, Madeleine Albright & David Filo. Flickr/Yahoo

However, Yahoo! quickly became much more than a search engine. By 2000, the internet start-up had acquired 12 other companies. They entered the new millennium with a portfolio that included services such as Yahoo! Mail, Yahoo! Games, Yahoo! GeoCities and Yahoo! TV.

In that time, the Yahoo net worth had rocketed. The company went public in 1996, valued at $896 million. Given the rapid rise of internet usage, investors were eager to invest in online companies. This was known as the ‘dot-com bubble’. However, the bubble soon burst, causing many online companies to collapse. While Yahoo! survived the crash, the company lost more than 90% of its value in just two years.

Yahoo net worth - Compelo
Flickr/Yahoo

3 costly mistakes that damaged the Yahoo net worth

The dot-com collapse hit many internet companies and there was little that many of them could have done to change it. Yet, it wasn’t solely the fault of eager investors.

Many companies had been spending beyond their means, operating at a loss and doing little to improve their services, knowing that their value would continue to rise regardless. Yahoo! was one such company, as these three mistakes prove:

Acquisitions

Yahoo! completed a huge number of acquisitions throughout their early years, spending billions to purchase a number of online services.

Yet, Yahoo! showed a lack of focus. Despite their spending, they failed to acquire services that would have actually helped the company to improve in areas where they already excelled. For example, Yahoo! was offered Google’s PageRank system (the algorithm used to rank pages on Google) for $1 million in 1998. They were also offered Google Inc. for  $1 billion in 2002. Had they agreed, it is likely that Yahoo! would still be dominating the search market.

Development

Of the acquisitions that Yahoo! did make, many of these eventually faded away. Broadcast was purchased for $5.7 billion in 1999 and discontinued three years later. Likewise, GeoCities, purchased for $3.6 billion in 1999, has also closed down.

The problem appears to be Yahoo!’s reluctance to develop and improve their products. When the company bought Flickr for $40 million in 2005, there were plans to turn the photo-sharing website into a social media platform. These changes were never made and the space has since been filled by mobile app Instagram.

Yahoo net worth - Compelo
Flickr/JD Hancock

Leadership

Since Timothy Koogle stepped down in 2001, Yahoo! has fallen under the control of seven different CEOs. Compare that to Apple and Google, who have had two CEOs each in that time.

The company is frequently pulled in a new direction as control changes hands. As a result, there is no long term vision in place for the company to work towards. This has always been the case, as Yahoo!’s acquisitions suggest. The company has never really known exactly what it is. It has never focused on pursuing a dominant market share in one area. As a result, they have been surpassed by the likes of Google in search, Microsoft in email and Reddit in social bookmarking.

As a result of their failings, Yahoo! is now worth considerably less than it once was, with a current market cap of $48.6 billion.

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