Remember Yahoo?…You Should!

The markets might have been smacked a little on Friday, but Amazon still closed at an all-time high over $1,400.

There are so many giant technology companies crushing it right now that it is easy to forget how hard it is to stay relevant.

The average lifespan of a company in the S&P has plummeted over the last fifty years.

Yesterday, I read this great essay titled ‘What Happened to Yahoo’ from Paul Graham in 2010. It urns out Yahoo was doomed by revenue of all things…

In technology, once you have bad programmers, you’re doomed. I can’t think of an instance where a company has sunk into technical mediocrity and recovered. Good programmers want to work with other good programmers. So once the quality of programmers at your company starts to drop, you enter a death spiral from which there is no recovery. [2]

At Yahoo this death spiral started early. If there was ever a time when Yahoo was a Google-style talent magnet, it was over by the time I got there in 1998.

The company felt prematurely old. Most technology companies eventually get taken over by suits and middle managers. At Yahoo it felt as if they’d deliberately accelerated this process. They didn’t want to be a bunch of hackers. They wanted to be suits. A media company should be run by suits.

The first time I visited Google, they had about 500 people, the same number Yahoo had when I went to work there. But boy did things seem different. It was still very much a hacker-centric culture. I remember talking to some programmers in the cafeteria about the problem of gaming search results (now known as SEO), and they asked “what should we do?” Programmers at Yahoo wouldn’t have asked that. Theirs was not to reason why; theirs was to build what product managers spec’d. I remember coming away from Google thinking “Wow, it’s still a startup.”

There’s not much we can learn from Yahoo’s first fatal flaw. It’s probably too much to hope any company could avoid being damaged by depending on a bogus source of revenue. But startups can learn an important lesson from the second one. In the software business, you can’t afford not to have a hacker-centric culture.


Also published on Medium.