YAHOO!!!

GROUP III Ma hui xin MA2N0245

黃琤琁 MA260207

廖康彬 MA1N0232

陳怡琇 MA290206

INTRODUCTION Yahoo! Inc. is an American multinatioal Internet corporation

headquartered in Sunnyvale, California. Yahoo was founded by Jerry Yang and David Filo in January 1994 and was incorporated on March 1, 1995.

It is globally known for its Web portal, search engine, Yahoo search , and related services, including Yahoo Directory, Yahoo Mail, Yahoo News, Yahoo Finance, Yahoo Groups, Yahoo Answers, advertising, online shopping, video sharing, fantasy sports and its social media website. It is one of the most popular sites in the United States. According to news sources, roughly 700 million people visit Yahoo websites every month. Yahoo itself claims it attracts "more than half a billion consumers every month in more than 30 languages

JERRY YANG Taiwanese native who moved to California at the age of 10 Raised by his widowed mother and grew up in San Jose Completed both his bachelor’s and master’s degrees in electrical

engineering in Stanford Opted to stay at Stanford for a PhD degree in electrical

engineering

DAVID FILO Native of Moss Bluff, Louisana In 1988 finished undergraduate program and enrolled in

Stanford’s master’s program in electrical engineering Opted to stay at Stanford and try to his PhD in electrical

engineering Extremely competent in the electrical arena

DAVE AND JERRY AT STANFORD

Yang and Filo met each other in the electrical engineering department at Stanford

Filo was Yang’s teaching assistant for one of his classes

Worked in the same design automation software research group

Became close friends while teaching at the Stanford campus in Kyoto, Japan

Their individual personalities perfectly complemented each other

CREATING JERRY’S GUIDE TO THE WORLD WIDE WEB

They started their business that they could transform their Internet hobby into a viable business

Filo and Yang, along with thousands of students began devoting large amounts of time to surfing in the Web and exploring the vast content available

Focused on bookmarks They discovered interesting sites and they wanted to return

directly to a page that they had visited without having to navigate through several different links

According that problem, they wrote software using Tcl/TK and it’s allowed them to group their bookmarks into subject areas

Named their list of sites Jerry’s Guide to the World Wide Web and developed a WEB interface for their list

CREATING JERRY’S GUIDE TO THE WORLD WIDE WEB People all around the world started sending Jerry and Dave email,

saying how much they appreciated the effort Yang and Filo considered their choice of name. Jerry hated

‘Jerry’s Guide’ so he and Filo opted for YAHOO YAHOO (Yet Another Hierarchical Officious Oracle)

YAHOO’S GROWING POPULARITY

Yahoo was accessible by Yang and Filo who studied engineering in Stanford.

They created a Web interface that spread by word of mouth and e-mail, more people began using their site.

COMPETING SERVICES None offered the same service that Yahoo! Did, Yahoo

could definitely provide potential competition to any new business that Yahoo would start.

Webcrawler at the University of Washington, Lycos at Carnegie Melon, the world wide web worm, and Infoseek, founded by Steven Kirsh. AOL and Microsoft in 1995 represented larger competitors who could enter the market either by building their own capability of the other start-ups

LEAVING STANFORD AND STARTING THE BUSINESS

Yang and Filo had been in Silicon Valley long enough to realize that what they really wanted to do was to start their own business.

A few months later after they started their project, they received over two million hits a day on their site.

Unexpected overturns from AOL and Netscape caused them to raise their sights, although both companies wanted to turn Filo and Yang into employees.

Filo and Yang had three options: 1. Sell Yahoo! 2. Partner with their sponsor 3. Start an independent business

THE SEARCH FOR FUNDING

The first people who contacted Yahoo! Is Reuters, Reuters wanted to be a partner but their progressed was too slow.

ISN also wanted to join Yahoo! but the contacted was not success.

Netscape Communications offered Yahoo! to join them by using some space on site and come to Netscape network. By early 1995 Yahoo! Was running on four Netscape workstation

CORPORATE PARTNERSHIPS

AOL(American Online) is the company that offered Yahoo! With the carrot of money, stock and management positions, AOL said “if Yahoo! Say no with this deal they want to be the big competitor with them” but in the end Yahoo! dedined the offer.

Yahoo! was approached by KPCB that had an exellent reputation as the best venture capital firm in the silicon valley.

KPCB offer fund to Yahoo! If they agreed to merge with Architext.

QUESTIONS 1

What makes Yahoo! an attractive opportunity (and not just a good idea?)

ANSWER In 2005, it was easy for Yahoo! to find some capital

from outside because of its attractive opportunity as a

business. There were several uniqueness of Yahoo!

among Internet search providers:

“The Yahoo! hierarchy is a handcrafted tool in that all

of its…categories were designated by people, not

computers. The sites that they link to are

likewise deliberately chosen, not assigned by

software algorithms.

ANSWER In this, Yahoo! is a very labor intensive product.

But it is also a guide with human discretion and

judgment built into it - and this can at times make

it almost uncannily effective….

In addition, Yahoo! offered a central place where people

could go to just to see what was out there. This made it

easy for people with little previous exposure to the Web

to start searching through Yahoo!’s lists of links, often

just to see if they could find something of interest.

ANSWER• This is the essence of Yahoo!’s uniqueness and (let’s say it)

genius. It isn’t especially interesting to point to information that

many people are known to find interesting. TV Guide does this.

So do phone books, and countless Web sites that cater to well-

defined interest groups….

• But Yahoo! is able to build intuitive paths that might be

singularly, or even temporarily important to the people

seeking it. And it does this in a way that no other service

has truly replicated.

QUESTION 2

How will Yahoo! Make money?

Business model

HOW WILL YAHOO! MAKE MONEY?

Through targeted advertising based on enormous following

New premium service Explore broad-band service (from 2004)

SELL ADVERTISING Yahoo! sells advertising (This is not the

auctioned search advertising that Google has become known for, although Yahoo! also does this).

This advertising is the banner ads that you see when you use all their compelling services. (chatting, email…).

The ads can be very specifically targeted such as a movie ad that is shown for a few hours on a Thursday and Friday afternoon to a specific demographic.

BUSINESS MODEL- YAHOO! CREATED ENORMOUS FOLLOWING

• Generate following through its strong brand and

momentum created

• The interest-area based structure of Yahoo! made it an

easier and more enjoyable way for users to find

relevant information, generate following

• Through its editorial efforts, it provided a combination

of comprehensiveness and high quality.

QUESTION 3

Identify the major risks in each of these categories:

Technology, market, team and financial. Rank order them.

TECHNOLOGY RISKS

Any failure to scale and adapt existing technology architecture to manage expansion and respond to rapid technological change could adversely affect business.

The technology architectures and platforms utilized for the services are highly complex and may not provide satisfactory support in the future.

New technologies could block display advertisements or search marketing listings.

Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws.

MARKET RISKS Yahoo! face significant competition for users, advertisers,

publishers and distributors, principally from Google, Microsoft, and AOL.

In markets, Yahoo! compete with local Internet service providers that may have competitive advantages. Especially those in Asia, Europe, and Latin America, Yahoo!

face substantial competition from local Internet service providers and other portals that offer search, communications, and other commercial services.

International operations are subject to increased risks which

could harm Yahoo’s business, operating results, and financial condition.

TEAM RISKS Employees of the company responsible for making the business

model work.

Weak management team impact on instant credibility to outside investors.

 A strong management team may not be able to salvage a weak business model, but should be able to change the model and redefine the business as it becomes necessary.

Changes in Yahoo’s management or leadership, competitors’ hiring practices, and the effectiveness of compensation programs

FINANCIAL RISKS

Fluctuations in foreign currency exchange rates affect to operating results in U.S. dollar terms.

Yahoo! may be required to record a significant charge to earnings if our goodwill, amortizable intangible assets, or investments in equity interests become impaired.

Yahoo’s stock price has been volatile historically and may continue to be volatile regardless of operating performance.

Yahoo! may have exposure to additional tax liabilities which could

negatively impact to income tax provision, net income, and cash flow.

Adverse general economic conditions have caused and could cause decreases or delays in marketing services spending by the advertisers and could harm to ability to generate marketing services revenues.

Yahoo! rely on the value of our brands, and a failure to maintain or enhance the Yahoo! brands in a cost-effective manner.

QUESTION 4What are the advantages and disadvantages of each of the funding options that Yahoo! Could pursue?

Which one do you recommend?

FUNDING OPTIONS [1] Accept Sequoia’s offer and launch Yahoo! As their own company. [2] Accept corporate sponsorship. [3] Merge with an existing corporation. [4] Postpone their decision. [5] Selling their company

OPTION 1: ACCEPT SEQUOIA’S OFFER AND LAUNCH YAHOO! AS THEIR OWN COMPANY

ADVANTAGES

[1] More capital/money.

[2] Can manage business

better.

[3] Strong brand.

DISADVANTAGES

[1] Yang & Filo loses

25% share.

[2] Possibility of

disagreement.

[3] Betrayal of a

partner.

[4] Invaluable

resource.

OPTION 2: ACCEPT CORPORATE SPONSORSHIP

ADVANTAGES

[1] Receive funds.

[2] Development of

their site.

DISADVANT

AGES

[1] Company

may be sold

out.

[2] May

destroy the

company’s

image.

EXHIBIT 1 YAHOO! FOUNDERS AND POTENTIAL INVESTOR

Jerry Yang： He co-created the Yahoo! Online guide

in April 1994.

David Filo ： Co-created the Yahoo! Online guide in

April 1994.

Michael Moritz, Partner, Sequoia Capital ： Moritz

was a general partner at Sequoia Capital since 1988

and focused on information technology investments

BUSINESS STRATEGY Yahoo!’s goal is to remain the most popular and widely

used guide to information on the Internet.

The internet is in a period of making development

characterized by extremely high rate of both user

traffic growth and entry of new companies focused on

various products and services.

YAHOO’S ENORMOUS HAS BEEN GENERATED BY THE FOLLOWING LIST:

Yahoo! was first company to create a fast,

comprehensive and enjoyable guide to the Internet.

The unique interest-area based structure of Yahoo!

makes it an easier and more enjoyable way.

Yahoo! has continually built a guide which is

noticeably better than its competition.

MARKET ANALYSIS Approximately 40 million users of the Internet use

email only.

About 8 million people have access to the Internet and

World Wide Web.

The comparable penetration rate might be has high as

25 percent and 40 percent respectively.

MARKET SEGMENTATION AND DEVELOPMENT

Three principal user groups driving the growth of the Web:

Large businesses using the Internet for both internal

wide area information management and

communication.

Small home based business using it for retrieval of

information relevant to the business.

The individual user-consumer using it initially to

find and access information which is relevant to

their personal entertainment.

INTERNET MARKET SIZE

Estimates of the amount of current projected revenue

for Internet related business vary.

The total served market for Internet hardware,

software, and services will total approximately $1 in

1995, up from approximately $300M in 1994 and

might grow to a total of $10B by the year 2000.

MARKET TRENDS

There is large scale adoption of enabling

technology in the areas of network hardware and

software, as well as communication hardware and

software.

Telecommunication companies and newly entering

Internet access providers are rushing to put in place

basic “hook-ups” in high bandwidth form.

The price for high-speed computer and

communication “port” hardware and software of

adequate bandwidth to support acceptable levels of

transport and display is still somewhat high.

With the availability of 28.8K baud modems, ISDN

lines and high performance/low price personal

computers, home adoption of Internet access is on

the rise and slated to have extremely high growth

over the next five years.

YAHOO!’S SUSTAINABLE ADVANTAGES

The Internet is in a period of market development characterized by extremely high rates of both user traffic growth and entry of new companies focused on various products and services. Yahoo! has developed is current position as the leader in its segment. Yahoo!’s ability to sustain and grow its position will depend on a number of things.

THANK YOU FOR YOUR ATTENTION

GROUP III

2014.03.24