“It was a really gradual thing, but we'd find ourselves spending more and more time on it,” says Yang of his and Filo’s newly created online directory. “It was getting to be a burden.”
In the first month alone, traffic to the duo’s Stanford-hosted website doubled, and kept on doubling every month thereafter. Visitors became so numerous that Stanford University administrators were getting frustrated. “They told us we were crashing their system and that we’d have to move the thing off campus,” says Yang. It was at that point that the two began seriously considering the possibilities of turning their website into a full-time business.
Yang contacted a friend of his, a student at Harvard University. As it turned out, his friend had to write a business plan for one of his classes and he agreed to use the website as his proposal. “Actually, we were doing him a favour,” says Yang. “He needed a real idea to work with.” That plan never made its way to investors, but it did help formlate a better vision for Yang and Filo, and it helped prepare them for what was to come next.
One of the early users of their site decided to introduce Yang and Filo to Michael Moritz, a venture capitalist with Sequoia Capital. Sequoia had already been involved with many of the leading Silicon Valley companies, including Apple Computer, Oracle, and Cisco Systems. Moritz liked the idea behind the website and agreed to give the pair $1 million in working cash, as well as access to some of the industry’s leading business experts, in return for a minority stake. “It was a suicide impulse on our part,” jokes Moritz. “Really, we saw it as a public service to rescue those guys from PhD land.”
With that offer on the table, Yang and Filo both took an official and indefinite leave of absence from Stanford (which they maintain today) and went to work full-time on their new venture. Other offers had come as well, but the two were happy with Moritz. “There was no bidding war,” says Filo. “We liked the deal with Sequoia. For us, the most important thing was that we could hold onto it. We really weren't into this for the money or for the fast payoff.”
The first order of business in 1995 was to rename the website. Yang and Filo decided upon Yahoo for two reasons: first, it stood for ‘Yet Another Hierarchical Officious Oracle”; and, they liked the general definition of the word: “rude, unsophisticated, uncouth.” Because the name was already trademarked for barbecue sauce, they added the exclamation mark to it. Yahoo! was born.
Yahoo! began as a web directory but quickly grew into a web portal, competing with new up-and-comers such as MSN, Lycos, and Excite. It began acquiring other companies to expand its range of services, including Rocketmail, ClassicGames.com, and eGroups.
In 1996, Yahoo! went public and raised $33.8 million by selling 2.6 million shares. It continued to expand, acquiring other search engines, such as Inktomi and AltaVista, and forming partnerships with the likes of Verizon for an integrated DSL service.
In 2004, Yahoo! abandoned its Google-powered search results and started using its own technology. Form there, it also increased the amount of storage for Yahoo! Mail accounts, launched Yahoo! Messenger, and acquired photo-sharing site Flickr and social bookmarking site del.icio.us.
Yahoo! became one of the few large Internet companies to survive the dot-com bubble. Today, as the Chief Yahoos of the company, Yang and Filo continue to steer it towards greater success in the face of rising competition.
Like this article? Share it with your friends
|
|
David Filo Jerry Yang Newsletter
Get our free newsletter to learn more about David Filo Jerry Yang and other famous entrepreneurs!
|
|
|
