Yahoo's closure should serve as a wake-up call for its Chinese peers

The Yangtze River rolls eastward, and its waves wash away all heroes. Yahoo, which created the Internet legend, is coming to an end. While it is a cause for regret, it can also serve as a mirror for many businesses.

Three months ago, Yahoo announced the sale of its core assets, which marked the beginning of its official closure. According to the latest news, the bidding for Yahoo's core business has come to an end recently. Yahoo's core assets include Yahoo Finance, Yahoo Mail, Yahoo News, Yahoo's real estate and patents. Media reports on the value of these assets range from $3 billion to $6 billion, which is insignificant compared to Yahoo's holdings in Alibaba and Yahoo Japan. In other words, Yahoo is almost an empty shell. Compared with its peak in 2000, when its market value exceeded $130 billion, it seems like a lifetime ago.

Many Chinese people's enlightenment to Internet business started with the legendary story of Yahoo. Yahoo was founded in 1995. It pioneered a business model in the Internet industry (free information and making money through advertising). It took only three years to achieve remarkable success. Yahoo portal and Yahoo email were widely popular. Yahoo also directly influenced China's Internet industry. For example, Sohu, which started to learn from Yahoo in the early days, Alibaba, which later became an investment target of Yahoo, Zhou Hongyi, who started his own business from Yahoo, and many second- and third-tier Internet companies, all regarded Yahoo as their master and drew experience and inspiration from it.

However, in the Internet industry, which is changing rapidly, innovation and progress are eternal themes. Those who cannot adapt to the changes in the Internet industry ecosystem will be ruthlessly eliminated. Although Yahoo is at the forefront of the Internet technology progress, the reasons for Yahoo's failure can still be analyzed by using classic management and business principles.

Yahoo's positioning is unclear and its direction is lost. Founders Jerry Yang and David Filo do not have a distinct color or soul - therefore, unlike other Internet giants, Yahoo does not have clear values. Yahoo has had seven CEOs in 21 years, the longest tenure of which was six years and the shortest was only four months. Their ideas and priorities were different.

Yahoo also failed to invest in technological innovation. Jerry Yang once correctly predicted that in addition to e-commerce, community, content, search, and personalization would be the four strategic cores of the future Internet, but Yahoo failed to conquer any of them technologically.

Commercialization was Yahoo's specialty in its early days, but the pursuit of profit-only theory made Yahoo lose the big picture. In the agreements with Google and Microsoft, Yahoo only valued the main share of search advertising revenue, and handed over the more important core market, technical talents and more valuable user data in the search field. Yahoo showed a strong character of taking shortcuts (such as repeatedly borrowing the search technology of its competitors instead of developing it itself). In contrast, Sohu, which imitated Yahoo in the early days, has always adhered to the technical route and is still relatively stable. The latest data in the first quarter of 2016 shows that Sohu's performance has increased significantly, and an important source of this is the self-developed Sogou search engine.

Yahoo has generally foreseen future trends, and has therefore made many investments and acquisitions in the right direction, such as acquiring 40% of Alibaba's shares, investing in Yahoo Japan, and once trying to acquire Facebook. However, Yahoo's acquisition projects are often poorly managed and ultimately fail, such as the photo community Flickr, the blog platform Tumblr, the search engine Inktomi, and Overture, the inventor of the pay-per-click business model. Post-merger management is originally a very traditional management proposition. Yahoo does not seem to attach importance to management. For example, its organizational structure has long been criticized, but it is difficult to see strong reforms.

In an industry where technology is changing rapidly, the industry environment and product services are also changing rapidly. It is indeed quite difficult for companies to keep pace and ride the waves. Companies like IBM that can ride several waves are rare. It is also for this reason that Internet companies are generally "short-lived" and a business model cannot be effective forever. Only continuous innovation, self-transformation and even self-subversion are the soul of the Internet industry.

Yahoo was once one step ahead of the Chinese Internet, and Chinese Internet companies are about to enter the age of Yahoo. Yahoo's demise is enough to alert its Chinese counterparts, and this warning is not limited to the Internet industry.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.