Comment by ignostic | Hacker News Reader

Comment by ignostic | Hacker News Reader

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I've actually faced a similar situation, and let me tell you it was hard. Companies like Yahoo exist to make money - or, at least, they must continue to make money in order to continue existing. Like Dustin said,

> "This is truly a nightmare scenario for any CEO: do you take the risk and proceed with the better user experience/product at the expense of short term numbers–with no promise that the better design will actually lead to long-term benefits–or do you scrap the new design and start over?"

Would the simplified, modern design have led Yahoo into a new era of profitability? Maybe. Or maybe they'd just have a nicer site that made less money for a year.

Our team made a site that made less per visitor, but we felt like it was a better-looking and more useful site. We decided to stick with it and work out the kinks, but ~6 months went by without reaching our old sites' benchmark. There was a ton of pressure on me to make it work or admit defeat and revert. I nearly gave in as the stress built, but eventually revenue surpassed the old site. I later learned that I was almost fired over it.

My story has a happy ending, but just barely. I have sympathy for the people making these decisions.

There's a lot of room between "exist to make money" and "must make money in order to exist". Like, a staggering amount of room.

there's also a lot of pressure when you're public

I don't really see much of a difference. If a company must make money to continue to exist, then I think it's reasonable to say that company "exists to make money." Of course, that doesn't mean is exists only to make money.

The practical difference disappears when your operating margin is 0. When you have money left over after paying your essential expenses, though, you can do stuff. Like, if you're Microsoft and you have 60 billion in cash, you can have a big R&D department that sometimes engages in blue-sky research.

Do you consider a company like Raspberry Pi or Oxfam to "exist to make money"? They certainly need money to exist.

Lots of bookstores, cafes, antique shops, whatever, are labors of love. And not only things like that. A bakery---a good bakery!---exists to make good bread. It has to sell that bread and cover its costs, etc., in order to do that, but it doesn't exist in order to make the money necessary to cover its costs. If that were why it existed, it would be easier to abandon the end of making good bread!

Exactly, reminds me of one of my favorite quotes:

"We survive by breathing but we can't say we live to breathe. Likewise, making money is very important for a business to survive, but money alone cannot be the reason for business to exist."

> Companies like Yahoo exist to make money - or, at least, they must continue to make money in order to continue existing.

Hows that working for Yahoo now?

Actually, that's kind of disingenuous. Google optimises for less clicks per user, because Google is a site for people who want to get stuff done.

Yahoo and Facebook are time-wasters. And unlike Yahoo, I can't see it ever transitioning to anything other than a time-waster.

Time-wasters are basically unprofitable (you're getting clicks from people who are looking to kill time, not find a new insurance policy), but that's what Facebook is. Unless Facebook wants to become the new Linked-In (and they don't - Linked-In just doesn't have the market cap), they just have to be a better time-waster.

If Facebook had a lower valuation, they might be able to move to a position where their focus was on serving people doing stuff, not wasting time, but they can't.

Hows that working for Yahoo now?

Is that supposed to be snark? I realize they're not fashionable, but Yahoo is still quite successful.

Hows that working for Yahoo now?

Pretty well, considering they are still around more than a decade after they stopped being "cool". They're not trendy in tech circles, they are just a business that makes money.

Yahoo and Facebook are time-wasters... Time-wasters are basically unprofitable

Yeah, unprofitable to the tune of $600 million a year. That's Yahoo's net profit last year.

I swear to god, the blindness of people to anything that's not hip right now is amazing. People assume because they personally stopped caring about something that it must have failed.

IIRC, they were the top destination 15 years back. They were the default homepage in most browsers. From that spot to "just a business that makes money" is perhaps not the best thing to happen to them.

At the same time, I don't think Yahoo is purely money-minded. From what I read, they were the only company which challenged the FISA orders last year (even before the Snowden leaks).

How many others of the top destinations from that era are still around?

Look at Lycos. Excite. Altavista. Even the nominal survivors like AOL are largely shadows of their old selves. Frankly, it's fairly impressive that they've held out. Consider their starting point: Just a directory.

The bubble in retrospect makes them look faded and tired, because they're "only" $36bn today. But $36bn is $36bn...

And being "the default homepage" with an audience so much smaller was a much less impressive position to be in than their current reach.

$600 million? So they're doing a bit better than AOL, then.

When I last heard, Yahoo seemed to have a net value of less than zero (http://www.bloombergview.com/articles/2014-03-17/is-yahoo-s-... ), once you exclude their minority stakes in alibaba and Yahoo Japan.

That could just be investors / analysts being stupid (either the ones valuing alibaba too highly, or valuing Yahoo too low). But Yahoo doesn't make a ton of money off its core business.

It's still quite possible for them to turn it around. They are really very good at what they, and they have the eyeballs.

Since Alibaba doesn't pay them dividends, owning a share of it has no effect on profit & loss.

I can't find any links ("Yahoo finance 2013" is exceedingly useless) but wasn't that $600M partially/mostly from them selling off stakes in things like AliBaba and not from the core business?

No. None of that $590 million came from the sale of Alibaba shares, as the Alibaba sale took place in 2012, not in 2013.

In addition, $590 million is not Yahoo's net income, but their pretax income from operations. In other words, excluding Alibaba.

Here's the breakdown for 2013, in thousands:

    Income from operations         589,926
    Other income, net               43,357
   -----------------------------------------
    Provision for income taxes    (153,392)
    Earnings in equity interests   896,675
   =========================================
    Net income                   1,376,566

"Earnings in equity interests" is Alibaba.

See 10-K at Yahoo's investor relations site: http://investor.yahoo.net/sec.cfm

It appears that $80M of that $590M came from a one-off patent sale - which was the kind of thing I was talking about.

That's a ~14% (artificial) boost in profit that takes them from "$65M down on 2012" (bad) to "$23M up on 2012" (adequate).

Nobody jumped on your "time-waster" comment. I think that's an interesting concept. Is your startup a "time-waster" or a "time-saver"?

2 things about Yahoo:

1) I'm still paying for their email service, and have been for 10 years. Their UI redesigns have been horrendous at times, but email lockin is powerful.

2) I really don't think dominance on the internet should be expected or desired, just because its possible. There's an example below about Yahoo Japan "owning" auctions in Japan. Sure, eBay has cornered peer-to-peer non-local vending in the US (let's not kid oursevelves what "auctions-buy-now" really are), but why should they be the preferred platform in Japan? Yes the internet allows it, but in the end, for a variety of historic and social reasons, different companies will fill different niches in different places, even if the internet looks like one gigantic niche and place. In other words, there is very little benefit seen from dominating auctions in US and Japan. Sure a few people would be able to order items more easily across the Pacific, but that effect pales in comparison to other internal factors. Maybe some local website had a marketing deal with a popular franchise in a certain country and got more popular initially, and then dominated that local market by network effect.

To summarize: I think it's normal to have local companies cornering local markets at the country/cultural level, even though the internet and e-commerce could theoretically be dominated globally. Google and search is a unique case, and expecting all companies to be like them in every market is misguided. I think that leaves a lot of space for Yahoo and many other similar companies to survive.

I also have no interest in using Yahoo, but my (Japanese) wife loves using the Japanese-language version to browse news, etc. I wonder if they are making most of their money in Japan.

Quite likely, given that their online auction platform dominates the Japanese market (ebay eventually gave up).

If you're talking about Yahoo Japan, that isn't Yahoo. It's an independent company, which Yahoo holds a 35% stake in.

To be fair, revenue could have kept growing with the old design; you still don't know if you've achieved more with the new one!

It happened www.lifehacker.com a few years ago.

But I think they really made it worst after the updated UI, I never got back there.

interesting

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