Bebos, billions, and why Yahoo is starting to piss me off.

Yahoo may buy Bebo, the British “Myspace”, for a billion dollars. That is a LOT of money – about 3% of Yahoo’s market cap. Presumably this, like Yahoo’s unsuccessful Facebook aquisition attempt, is Yahoo’s approach to recapturing the market dominance it enjoyed back in the day. Dominance through the aquisition of a social network rather than developing their own.

They should know better than to trust their existing criteria for decisions about aquisitions. Yahoo is the company that aquired Overture’s pay per click technology years ago, and then managed to cede dominance in that area to Google. Ever heard of Google? Yahoo probably could have *owned* Google, but it seems higher management didn’t think search had the monetization potential of … broadcast.com which was purchased for billions.

Isn’t it time for top management at Yahoo to let innovation, not aquisitions, rule the day? This approach has worked very well for Google, who’s main mistakes now appear to be in aquiring things like YouTube which in my opinion is unlikely to recover YouTube’s 1.6 billion price tag and will certainly pester Google with big money lawsuits for decades. Yahoo’s still got a LOT of great technical people, especially in the developer and new business divisions. More importantly, the world is producing hundreds of thousands of new, brilliant innovators every year, most of whom are chomping at the bit to bring new and exciting innovation to the hungry online world. Why not devote the billions to this rather than purchasing companies with marginal revenues and long term prospects that are more hope and prayer than reality?

With the latest flurry of high priced aquistions it almost seems like, to the big players, the billion dollar deal is the new million dollar deal. I remain skeptical that deals of this size pay off in the long run – certainly very, very few of the early pre-bubble ones did not pay off for companies. I’d suggest that the smaller deals (e.g. Flickr) do have potential, but that Yahoo’s top management is looking for a killer deal that simply does exist while the innovation approach (ie much, MUCH more support to the core values and teams at Yahoo) is starting them in the face. Traffic? Yahoo’s got plenty of it. Modest changes can send millions of Yahoo users to any new idea, so why not do this *a lot more* and test *a lot more ideas*.

Edison suggested that there is always a better way, and it’s time for Yahoo to ….. find it.

More Bebo-logy from Techmeme:

Yahoo may net Bebo owners $1bn

 

 

Bebo/YHOO: My Rumor’s Bigger Than Yours

Yahoo May Be Bidding For Social Network Bebo: Report

Yahoo: When You Can’t Buy Facebook, You Buy Bebo

Bebo is not for sale


2 thoughts on “Bebos, billions, and why Yahoo is starting to piss me off.

  1. I agree, Joe. For so long Yahoo really did have it going on, doing a lot of things really well before others even started doing them at all and then not as well as Yahoo. I’d much rather see more Yahoo’s own ideas and “creations” rather than see what they’ve bought – and I think it served them well enough in the past that it wouldn’t be a bad idea and would probably make the more money than getting lucky on just the right acquisition.

  2. Yup, I think that’s it Maggie. It’s almost like higher management has “lost it’s nerve” despite the fact they’ve got lots of great people, traffic, and programs. Google’s doing great and Yahoo should be too. (But I’m biased cuz I have Yahoo Stock!)