Whither AOL and Yahoo?
About 1,000 years ago, while I was working at Reuters, I did a couple of really smart things: I bought shares in a dial-up Internet company with a mere million or so users, and a web search and catalogue service with a very funny name.
It wasn’t 1,000 years ago, of course, but it sure feels like it has been that long since buying shares in AOL or Yahoo would have been considered genius.
These now-iconic corporations more or less defined the heady, early days of the Internet boom, both as investments and as vast unexplored digital continents which, a few minutes before, hadn’t even existed.
It’s not easy to convey the sense of an infinitely possible future brought on by a paradigm shift — the sort of thing people must have felt when radio disrupted the world, and then television and most recently, the Internet. In my bio I confess that my first encounter with the first web browser, Mosaic, was a borderline religious experience akin to that of Roy Neary, who, at all costs, just had to meet the space aliens visiting Earth (again) in Steven Spielberg’s Close Encounters of the Third Kind.
I’ve long divested myself of any individual shares and some time ago ceased to use the web sites of these companies in any particularly conscious way. And thereby hangs a sad, cautionary tale.
There’s no crying in this game. We stop using certain Internet services and they wither and die by the rules of the jungle that is the free market. Investors roll the dice: they might be in it for the long haul, the short haul, or the short. Those of us who love new toys delight in playing with them. But there is always a new toy, and if it is better then the “old” one gets tossed in a heartbeat.
The missteps taken by AOL and Yahoo are well documented. The Karmic disintegration of AOL came with an ill-considered and since un-spun merger with Time Warner. Now, under former Googler Tim Armstrong, AOL is still swimming upstream to become a media company under the direction of the inestimable Arianna Huffington. But defections and confusion at two key news properties — Engadget and now TechCrunch — seem only to confirm that the company is off course, which leaves it open to stories touting its break-up value.
And poor Yahoo. It was buffeted by the unpredictable better mousetrap that was Google, but it also suffered from an avoidable self-inflicted wound: the colossally unwise rebuff of Microsoft at a share price that is roughly 1/3 what it thought Microsoft should have paid for it back in February of 2009. A paltry 30 months after Carol Bartz crashed the F**k in to shake things up and turn things around from the Jerry Yang era, she is out: fired over the phone, breaking the news to her former reports in an e-mail “sent from my iPad.” Moreover, Yahoo may be up “for sale” — though Chief Yahoo Yang, who indirectly owns some 21 million shares, says it ain’t.
It’s impossible to know if anything short of IBM-like reinvention could have altered the course of these two companies so that the music playing now would still be more jazz than dirge.
But from those of us who were there, heed this: AOL and Yahoo were staggering start-ups whose success guaranteed the seemingly inevitable digital paradise we live in now. If they had failed to execute at that key moment in history in the early to mid 90s, that crazy Internet boom wouldn’t have happened — or that necessary forest-clearing dot-com bust from whose ashes sprung Google, a revitalized Apple and the 1,000 other Internet things we take for granted.
So I come here not to bury AOL or Yahoo, but to praise them. Nothing would delight me more if they became players again. They do not deserve Caesar’s fate.
Photo: Steve Case, former CEO of AOL; Jerry Yang, co-founder and former CEO of Yahoo
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