In 1998, Yahoo made the most expensive mistake in corporate history.
Two kids begged Yahoo to buy their website. Yahoo’s CEO called it "a waste of time".
11 years later, those kids wiped Yahoo off the internet.
Here’s the shocking story of Yahoo's downfall 🧵
Yahoo started as a college project in 1994.
A website built to help people find information online.
By 1996, they became the largest online platform at a $33.8M valuation.
They had the users, the hype, and the cash.
But cracks were forming…
In 1998, two Stanford students, Larry Page and Sergey Brin, built a revolutionary search engine.
Their algorithm made Yahoo’s search look ancient.
They offered to sell their idea to Yahoo for just $1M.
Yahoo’s response?
They turned it down, saying it wasn’t “worth their time.”
Instead, they integrated Google search into Yahoo's website.
This way, people could still go to Yahoo's homepage instead of Google's.
It made sense. But in the long term, it turned out to be a disaster...
People LOVED Google search.
And by having Google on Yahoo's site, Google was given free advertising.
Yahoo panicked and offered to buy Google for $3B.
But Google wanted $5B. And Yahoo said no again.
Another trillion-dollar blunder…
Yahoo doubled down on developing its own ecosystem.
But as the internet exploded, so did the number of websites.
Yahoo's search system couldn’t keep up, it became slow, inaccurate, and outdated.
So what did the users do?
They got frustrated and switched to Google.
The website was clean, simple, and easy to use. The search results came fast and accurate.
Yahoo kept losing users… and money.
Meanwhile, Google was printing money with a game-changing model…
Introducing: AdWords
It allowed businesses to place targeted ads directly in search results.
Unlike Yahoo’s clunky banner ads, AdWords felt natural.
The revolutionary idea? Businesses only pay when users click.
And it worked perfectly…
This model turned every search into a transaction.
It was generating billions for Google while delivering value to both advertisers and users.
AdWords made Google unstoppable.
While Google innovated, Yahoo took a different path...
Instead of directing users to other services, Yahoo built their own.
This let them control the ecosystem and rake in more ad revenue.
They launched platforms for sports, shopping, finance, and more.
The vision?
Yahoo wanted to become a media empire.
They poured billions into acquiring other companies.
http://Broadcast.com for $5.7B. Tumblr for $1.1B
Instead of focusing on their core product, they went on a spending spree.
And Google took advantage…
While Yahoo stumbled, Google kept building.
Gmail, Google Maps, YouTube. Everything they touched turned to gold.
Every product Google launched was better, faster, and what users actually wanted.
By 2009, Yahoo gave up on search.
They struck a deal with Microsoft, letting Bing take over.
Yes, they handed their core product to a competitor.
It was the beginning of the end…
In 2016, Yahoo was sold to Verizon for $4.48B, a fraction of its peak value.
The $125B giant became a shadow of its former self.
Today, it’s a footnote in internet history.
So what went wrong?
Google had a clear vision. They focused on users. They took bold risks.
Yahoo was scattered. Reactive. Obsessed with short-term wins.
Google turned search into a gateway to ads, cloud, and innovation.
Yahoo faded into irrelevance.
This downfall reveals a powerful insight...
Google didn’t just beat Yahoo. They buried them.
Yahoo’s decisions were safe.
But sometimes playing it safe is the riskiest move you can make.
Yahoo missed opportunity after opportunity. And it cost them everything.
This isn’t just about tech giants…
I see businesses miss golden opportunities like this every day.
There’re 1000s of potential customers out there looking for exactly what you’ve been delivering for customers.
Many of them would say yes to your offer.
The problem is… you never asked.
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Read my other thread here 👇
https://x.com/BizHustlez/status/1941172482498843047
