Skip to Content

What Yahoo Got Right

The company may have failed, but not everything it did was a bad idea.
July 25, 2016

News that Yahoo’s Internet business will be sold to Verizon for $4.8 billion marks the end of the failed effort by CEO Marissa Mayer to revive a company widely seen as dysfunctional and outdated. But the history books will also record that Yahoo made lasting contributions to how the Internet works. Here are three things Yahoo got right.

The financial foundations of the Internet

Yahoo was incorporated early in 1995, and by late the next year turned its first profit—a timeline just about unthinkable for an Internet startup today. The company grew profits and revenues fast in its early years by helping establish the basics of online advertising, the business model that dominates the Internet. One example is how in 1996 Yahoo agreed to charge consumer goods giant Procter & Gamble only when people clicked on ads, not just when an ad was displayed, an early move toward the complex tracking and targeting used by online ads today.

Big data plumbing that keeps the world running

Facebook, the U.S. government, and countless other organizations rely on software gifted to the world by Yahoo to manage and analyze giant data stores. Hadoop, as the software is called, started life in 2006, when Yahoo hired two software engineers working on a new system for big data inspired by white papers released by Google. Before long Yahoo was using Hadoop internally, and in 2008 the company released the software as an open-source project. Many companies have since been built on Hadoop, or built to sell services based on it. Intel, Google, and T. Rowe Price have all invested in one leading Hadoop company, Cloudera, which is valued at roughly $4 billion—about the same as the parts of Yahoo being acquired by Verizon.

Spotting the vast potential of the Chinese Internet

In 2005 Yahoo cofounder and CEO Jerry Yang made a risky looking $1 billion investment that has been called the most lucrative in Silicon Valley history. He bought 40 percent of a small Chinese e-commerce startup called Alibaba, which in the years since has grown into the world’s largest retailer. Yang’s bet on Alibaba has helped keep Yahoo afloat in recent years, but ultimately forced this week’s sale to Verizon. The roughly $25 billion stake in Alibaba dwarfs the company’s other assets and businesses. But Yang’s investment in the company was smart because he correctly identified a huge trend in the future of the Internet. Companies such as Alibaba and Baidu that grew up with China’s vast Internet population are increasingly looking to expand beyond the country’s borders.

Keep Reading

Most Popular

This startup wants to copy you into an embryo for organ harvesting

With plans to create realistic synthetic embryos, grown in jars, Renewal Bio is on a journey to the horizon of science and ethics.

VR is as good as psychedelics at helping people reach transcendence

On key metrics, a VR experience elicited a response indistinguishable from subjects who took medium doses of LSD or magic mushrooms.

This nanoparticle could be the key to a universal covid vaccine

Ending the covid pandemic might well require a vaccine that protects against any new strains. Researchers may have found a strategy that will work.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.