Riding the Wave: Yang and Filo Turn Surfing into a Success
Riding the Wave: Yang and Filo Turn Surfing into a Success
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.
Riding the Wave Yang and Filo Turn Surfing into a Success
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“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.
Riding the Wave Yang and Filo Turn Surfing into a Success
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 Lesson #5: Create a Company Culture Worth Caring About
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 “You have to realize when David and I were doing this it was just for fun,” says Yang. “We never thought it would even become a business.” |
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Two Yahoos on a Roll: The Early Years of Jerry Yang and David Filo
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| They started off as two graduate students at Stanford University. Today, they have a combined personal net worth of $5.1 billion. That is all thanks to Jerry Yang’s and David Filo’s attempts to find anything they co... |
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Searching for the Stars: How Yang and Filo Took Their Business to New Heights
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| “I think that it's always possible to have a great company if you have great ideas,” says Yang. “I will say that since the web has become more commercialized, it also takes some good financial resources to build a g... |
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Lesson #3: Focus On the Inside Out
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| “I believe that Yahoo! is too often defined by the competitive landscape, rather than by what we can accomplish with our assets,” says Yang. “I’m determined for us to define our own path.” |
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Lesson #1: Go With Your Growth
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| “Thousands of people were producing new Web sites every day,” recalls Filo of Yahoo!’s early days. “We were just trying to take all that stuff and organize it to make it useful. As it became more popular, it became ... |
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Dianne CramptonDianne Crampton is an executive leadership coach, team consultant, author and president of TIGERS Success Series, Inc. Dianne has been helping CEO's and Executives connect their employees to their core values and goals for over 20 years using the trademarked TIGERS team culture process, which stands for trust, interdependence, genuineness, empathy, risk and success. To download a free white paper on behaviors that build strong teams and behaviors that will predictably tear them down go here. - Visit Dianne Crampton's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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