Sweet Spot Case Study

Rahul Gupta

9/11/03

CS453 E-commerce Technologies

Background

• Two founders from Stanford: David Filo and Jerry Yang [4]

• Started in February 1994 in a campus trailer [7]• Incorporated in March 1995 [6]• In April 1995 funded by Sequoia Capital with an

initial investment of about $2 million [7]• Went public in April 1996 [6]• Corporate Headquarters in Sunnyvale, CA [6]• Director and former-CEO of Yahoo, Timothy Koogle,

is a Wahoo! [6]

Why was it started?

• Started as a way to keep track of their personal interests on the Internet [7]

• Evolved into a complete online navigational guide [7]

• Initially called “Jerry's Guide to the World Wide Web” [7]

• Yahoo! acronym for “Yet Another Hierarchical Officious Oracle” [7]

• Definition of Yahoo accepted by creators: rude, unsophisticated, uncouth [7]

What’re the consumer functions?

• Provides internet content from over 2000 top-of-the-industry providers in areas such as news, travel, sports, games, and weather. [6]

• Provides commerce services such as shopping, auctions, finance, and classifieds. [6]

• Provides communications services such as Mail, Messenger, Photos, Greetings, and Clubs. [6]

• Yahoo! Everywhere provides consumers with mobile access to information via devices including wireless phones, two-way pagers and PDAs. [6]

What’re the enterprise functions?

• Marketing: Enables agencies and clients to find and connect to audiences through Fusion Marketing. [6]

• Business and Enterprise Services: Integration of commerce, communications and media into web portal and similar services via Corporate Yahoo!, Yahoo! Broadcast Services, Yahoo! Small Business. [6]

• Premium Services: Yahoo! Store, Business Express, Yahoo! Yellow Pages, Yahoo! Auctions, Yahoo! Bill Pay, and extra mail storage. [6]

Who are the customers?

• More than 237 million unique worldwide users in 25 countries and 13 languages (December 2001). [4]

• 93 million active registered users [5]

• More than 1.5 billion page views a day [5]

How does Yahoo! compare?

Taken from reference [9]

How it compares cont’d

Taken from reference [9]

Awards

Taken from reference [9]

Why is Yahoo special?

Taken from reference [9]

Front-end of main portal

Taken from reference [1]

Front-end of Yahoo! Search

Taken from reference [2]

Front-end of Yahoo! Auctions

Taken from reference [3]

Back-end

• Yahoo at first used a proprietary server-side page language written in C/C++ [5]

• Transitioned to PHP in 2002 [5]• 4500+ servers in 16 co-locations [5]

– USA: Sunnyvale, Santa Clara, San Diego, Washington DC, Dallas

– Intl: England, Central America, South America, Taiwan, Hong Kong, Singapore, China, Australia, India, Japan, Korea

Acquisitions

Yahoo! has acquired twenty companies since its start. [6]

Taken from reference [6]

Financial information

• The opening price of Yahoo!'s stock on the day of the IPO was $13.00 per share and the closing price on that day was $33.00 per share. [6]

Taken from reference [10]

How’s Yahoo! doing now?

• For Fiscal Year 2002 [8]:– Revenue per average Unique User per month:

$0.40– Net Revenues Total: $953.1 million– Net income (loss): $42.8 million– Net income (loss) per share: Diluted: $0.07– Free Cash Flow: $221.0 million

Spectacular successes

• According Nielsen/NetRatings 8/2002, Yahoo! is the World’s most trafficked Internet destination. [5]

• First all-encompassing portal/guide to the Internet [4]

• Takes number 1 spot on corporate desktops, with a 70%+ reach in the U.S. workplace[4]

Spectacular successes cont’d

Taken from reference [9]

My Thoughts on Yahoo!

• I believe that Yahoo! is going to continue to be very successful due to it’s extremely wide breadth. It turned a healthy profit early in its history and each year that profit has increased. I predict that it will continue this same trend in the coming years.

• Yahoo! Search is a great feature designed to rival the simplicity of Google, but it might not be enough to recapture the customer-base that Google has earned. I personally use Google as my main search engine because it gets me what I want quickly and accurately.

• Even with so many formidable competitors I believe that overall Yahoo! is still unique due to the fact that it seems to have everything that most people use on a day to day basis such as search, auctions, sports coverage, news, directories, music, movie reviews, and email.

References

1. Yahoo!: http://www.yahoo.com

2. Yahoo! Search: http://search.yahoo.com/

3. Yahoo! Auctions: http://auctions.shopping.yahoo.com/

4. Company Overview: http://docs.yahoo.com/info/misc/overview.html

5. Making the Case for PHP at Yahoo!:http://public.yahoo.com/~radwin/talks/yahoo-phpcon2002.htm

6. FAQ: http://docs.yahoo.com/info/pr/faq.html

References Cont’d

7. The History of Yahoo! - How It All Started... : http://docs.yahoo.com/info/misc/history.html

8. Supplementary Financial Information: http://docs.yahoo.com/info/investor/metrics.html

9. Yahoo! Facts & Figures: http://solutions.yahoo.com/advertiser_center/research/factsandfigures.html

10. Yahoo! Investor Information: http://yhoo.client.shareholder.com/11. TechWeb: Yahoo Turns Reputation Into Acquisitions:

http://www.techweb.com/wire/story/TWB19990401S0016

References Cont’d

12. Yahoo! Introduces New Yahoo! Search: http://yhoo.client.shareholder.com/ReleaseDetail.cfm?&ReleaseID=105839

13. Yahoo! Auctions Introduces Offline Seller's Management Tool: http://docs.yahoo.com/docs/pr/release709.html

14. Press Release: Yahoo! No. 1 Online Music Destination in the U.S. According to Nielsen/Netratings' Marketview Report: http://docs.yahoo.com/docs/pr/release990.html

15. Press Release: Yahoo! No. 1 Search Destination in the U.S. According to Nielsen/Netratings' March Marketview Report : http://docs.yahoo.com/docs/pr/release983.html

16. Press Release: New Yahoo! Shopping Network Ranked the No. 2 Online Shopping Destination by Nielsen/Netratings: http://docs.yahoo.com/docs/pr/release904.html