Yahoo! Not Just for Yahoos
The on-line directory service has become one of the hottest Internet companies, and it is looking to parlay its brand name into new lines of business
P> Jerry Yang co-founded Yahoo! Corp. in early 1994 when he was a self-described "graduate student with plenty of time to waste" at Stanford University in Palo Alto, Calif. "There really was no vision. It was more or less a hobby. Certainly the World Wide Web wasn't big enough then," said Yang. "We were Ph.D. students in electrical engineering. That's how we got into it."
But today, the makers of the Internet's most popular search directory have a mission and a mandate -- to make the Internet navigable. To get there, the company wants to take advantage of Wall Street's current infatuation with all things Internet and offer stock to the public sometime in the next few months.
Yahoo!'s current success certainly augurs well. An estimated 800,000 users per day visit the company's directory of Internet resources -- a sort of TV Guide for the Internet.
And the tool is a World Wide Web developer's dream: One can advertise a product at Yahoo's directory (http://www.yahoo.com) or simply list a Web site and point prospects to offerings there.
"It's as if we opened a lemonade stand in the middle of a hayfield, and then they built skyscrapers around it," said Yang, president of Yahoo! "That's how we felt. But now we have a very recognizable brand. And Web search and navigational tools can be commoditized if we don't deliver on our brand."
So that is Yahoo!'s focus in 1996 -- leveraging its brand name to enhance the value of its search and retrieval tools while testing new lines of business. The company will continue to develop navigation tools, possibly creating tools for traversing internal Web pages, or intranets, as well as regional Web offerings. Yahoo! has also entered the publishing business with Ziff-Davis, which is jointly publishing Yahoo! Internet Life magazine.
The idea behind Yahoo! is simple: Placing content on the Web is relatively simple. But the resulting explosion of on-line publishing has made finding anything extremely difficult. So Yang and his partner tabulated and aggregated all the sites they knew about on the Internet. "My partner was the main propeller head for the core search stuff and the database stuff. I designed the user interfaces and hierarchy," said Yang. "It was no sudden innovation. It was really gradual."
Yahoo! today obtains its listings in many ways. Primarily, public relations staff at corporations submit their Web site universal resource locator, or URL, to the Mountain View, Calif., company. There are 3,000 to 4,000 submissions a day. And that number is growing. Once the URLs come in, Yahoo! updates the database. "So when you do a search, it takes you through the entire database, and hopefully returns to you what you're looking for," said Yang.
Yahoo! follows the business model for cyberspace pioneered by Netscape: Give users something substantive free of charge. "I think early on we decided that when we sat down and made a company out of this that we wouldn't charge users," Yang said. "We also didn't want to charge people who submitted things to us. We wanted to have critical mass. So it came down to charging the advertisers."
Yang speculates that the reason for Yahoo!'s popularity among corporate communicators is the company's willingness to work closely with them to tailor the service. "The branding also has something to do with it. It is an easily recognizable name -- Yahoo!," said Yang. "It is the cereal box syndrome. You're walking through the supermarket, and you don't know what cereal to buy so you grab the one you recognize. It is kind of that mentality. We also work with them and their clients to make sure the ads are producing what they want."
According to Yang, intranets, those increasingly popular in-house corporate Web pages, have certainly been one of the "hotter topics around here" during the last two months. "One of our technology partners, OpenText, is an intranet company. They develop tools and tool sets for that. We may partner with people like that and there are a number of others."
The company also wants to encourage professionals to develop Web sites with Java, the new programming tool from Sun Microsystems Inc., Mountain View, Calif. In the future, Yang foresees listing Java sites or Java applets, which are applications that can be downloaded via Yahoo! "We see ourselves as a platform or a place where those contents can be listed," said Yang.
"We hope to encourage the development of Java sites. But we always want to be the aggregator -- not the creator. If you look at the role of aggregator, it has always been valuable. Newspapers and TV channels are aggregators. TV Guide is an aggregator. The Web is the extreme case of that. You have tons more content than in the other mediums. An aggregation role becomes even harder and more important," he said.
Though the company is considered a major success story and is poised to go public soon, there are many challenges ahead. Yang thinks it will be more difficult to aggregate information as the Web begins to contain more multimedia and as the development tools become more integrated with different applications. "If the Web becomes merged with TV or telephone, our role changes," said Yang. "Our challenges are plenty. We must understand the technologies and incorporate them in our aggregation."
The magazine venture with Ziff-Davis may give Yahoo! the kind of experience needed to master that environment. "The company is committed to working with third parties and adds content and services of value to readers," said Yahoo! CEO Tim Koogle.
Just where did Yang and his cohorts get the name Yahoo! for their company? It was pilfered from Robert Louis Stevenson's "Gulliver's Travels," which describes a Yahoo as a crude and uncivilized person. "But some people think it means an excitable person," said Yang. "And that's okay with us, too."