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Why Yahoo Failed & What We Can Learn

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The end of Yahoo was pretty much inevitable the day they said they could no longer compete with Google (back in the early 2000s). What can we learn from Yahoo’s downfall?

Features Over Content

Building great features for users has been a hallmark of wildly successful companies the past few years. Snapchat with its well thought out and curated filters (that also generate revenue), Medium with its very handy “time to read” feature, and Google with the iOS app, Gboard, which brings a swipe-style keyboard with search built-in are features added to existing good products. Yahoo acquired Flickr then took a very long time to give users the feature of free space which was nothing new; Facebook already had unlimited image storage for its users. Yahoo acquired Tumblr which gave Tumblr some street cred but I cannot honestly think of one feature that Tumblr nailed after the acquisition to separate it from the pack of link sharing and blogging services.

Instead of building great products Marissa Meyer focused on mobile platforms which ended up not panning out too well. The Yahoo scatter beam was also focused on content deals. Huge sums of stock and cash were spent on Katie Couric and the NFL. Coupled with several failed video platform acquisitions (Hulu, Dailymotion, etc.) you could tell that despite Yahoo’s ability to acquire companies it was not going to be a major play in the content space (aside from the display content on its once great “portal”).

Video is where the web is heading. Yahoo saw that early on but failed to execute on that vision. I am sure that lots of Yahoo folks worked on lots of Yahoo product features. What set Yahoo products apart from their competitors?

CEOs Have to Build Great Teams

Marissa Meyer came in to Yahoo with a lot of fanfare and quite a few detractors. She was a brilliant, raw talent that people thought would bring new life to Yahoo. People also criticized Marissa Meyer’s lack of leadership experience. Anything was better than what Yahoo had and why not poach a Google executive? Right?

A CEO has fiduciary responsibilities but, CEOs must build a great team under them. That team has to execute at a very high level to be successful on the stage that Yahoo is performing on. CEOs have to encourage people to innovate. CEOs have to know when to say an idea is not turning into a product fast enough and pull the plug. CEOs have to build teams that know how to fail fast. Yahoo’s strategy of acquisitions, which Marissa Meyer called a necessity, did not build a fantastic team.

In my opinion, the best talent Yahoo acquihired was David Karp the CEO of Tumblr. He created an amazing product from virtually nothing that was drawing in a lot of traffic. At the time of the acquisition by Yahoo, Tumblr was the backend that powered chrisshort.net. I put my money where my mouth was too (even at the $1.1 billion value of Tumblr); I bought Yahoo stock the day the acquisition was announced. I thought the Yahoo Board of Directors would put David Karp on a prominent position and let him innovate. Giving David Karp a lot of leeway over the products, features, and development at Yahoo would have been a great idea. But, that never happened and the value of Tumblr was written down a total of $712 million over two earnings periods.

Yahoo could not keep or manage good talent in the highly competitive Silicon Valley market. Yahoo was unable to build a great team to bring it out of its funk. The Marissa Meyer detractors are sitting there saying, “I told you so.”

Do Your Damn Homework

The botched Alibaba spinoff was pretty much the nail is Yahoo’s coffin. Citing concerns about potential tax penalties, Yahoo decided against spinning off Alibaba after the IRS said it would not rule as to whether or not the deal, as structured, would be a tax free transaction. Two things immediately came to mind when I first heard of this spinoff plan (before the deal’s failure):

  • The Alibaba spinoff would only kick the can a little further down the road
  • The political climate of overseas dealings being tax free for US corporations made for horrible timing (see corporate inversion)

Clearly the due diligence for this deal was not done for whatever reason. This was either a leadership failure or flat out negligence. Either way, Yahoo did not do its homework in regards to the Alibaba spinoff. Now Yahoo is spinning off its “core business” instead.

What does Yahoo’s downfall teach us? That you must bring together a great team. The assembled players have to push people to build great features (the content will come, as exemplified by Medium, Snapchat, Facebook, etc.). That team must also do its due diligence in an effort to add value to the company. Now we all get to see how Verizon will deal with Yahoo assuming that deal gets approved, of course.

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About the Author

This article was written by Chris Short of a blogger committed to documenting the insights and developments in the tech sector. Chris Short has worked in the Information Technology field since 1995. Chris is now working in the Linux systems and DevOps spaces. See more of Chris’s work at his personal blog.

Callum Connects

Benedict Heng, Founder of Mr. Farmer

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Benedict Heng is bringing back the ‘kampong’ days of having the Ho Liao (good ingredients) for Ho Jiak (good tasting) food.

What’s your story?
I’m Ben from Mr. Farmer. Mr. Farmer is an online grocer dedicated to supplying the freshest produce to our customers. We believe in sustainable and ethical farming. Since a young age, I have always been an avid food lover (especially meats), developing a strong interest in all things delicious. That is why I ventured into the F&B industry, working as a junior cook for 3 years.

Midway through my career, I made a move to the finance industry to pursue monetary rewards. I dove into high-risk investments and I made lots of money from these investments. However, the good fortune did not last long and all these came crashing down when I suffered a tremendous loss. This coincided with the time that I had just started my own family and it was a huge blow to me both materially and mentally. It was this crash that made me realize that this life wasn’t for me. I went on a hiatus and eventually, it was only through the strong support from my family that I managed to tide over this tough episode.

I went back to help the family business and this was how Mr Farmer came about. My family has been in the food industry for many decades and one thing they noticed from years of experience is that sustainable farming practices are not as developed as in Europe. This is why through Mr Farmer, we hope that we can provide the best quality products to families out there who want the best ingredients for their loved ones.

What excites you most about your industry?
Delicious and wholesome food excites me. I believe food is a critical component of life and it brings people together. The opportunity to serve the community with fresh produce for a healthy life, that brings me joy.

I feel that there is still so much more we can do to improve the quality of food and bring it to the masses. One of the key components of ensuring greater quality of food is to support ethical and sustainable farming. Due to commercialization and urbanization, most farming practices these days are no longer the way they were in the old “kampong” times. Shortcuts are taken, standards are compromised, all in the name of profit. At Mr. Farmer, profit is important too but we want to focus on the concept of One Welfare – sustainable farming directly impacts our health. Our vision is to bring back the ‘kampong’ days of having the Ho Liao (good ingredients) for Ho Jiak (good tasting) food.

What’s your connection to Asia?
I was born and raised in Singapore. I call Singapore my home as it’s where my family and close friends are. I also travel frequently to Malaysia and APAC for work.

Favourite city in Asia for business and why?
It’s definitely Singapore. There is just so much this tiny city can offer! Singapore has been globally recognized for its top-notch business environment providing its residents with developed infrastructure, political stability and excellent connectivity. These factors have given us an outstanding support system for businesses to strive.

What’s the best piece of advice you ever received?
Surround yourself with people that inspire you, challenge you to rise higher, make you better and, keep them in your life.

Who inspires you?
I draw inspiration from my uncle, who is the head of both the family and business. He takes care of our family matters at home and manages hundreds of employees at work. Handling both the family and business side of things can be tricky, but he has shown me that success can be sustainable and done with a conscience. His guiding philosophy of handling business and family is simply, to have a big heart.

What have you just learnt recently that blew you away?
Even just one day of separation from the day the meat is slaughtered, makes a world of difference to its flavour.

If you had your time again, what would you do differently?
I have come to learn that awareness is the beginning of everything. If I had my time again, I would have probably spent more time figuring out who I truly am and with that self-awareness, begun to lead my life with more purpose and meaning.

How do you unwind?
I like to spend my free time sipping white coffee at my favourite coffee place. I enjoy taking in the surrounding sights and letting my mind wander freely. It allows me to unwind and gain clarity at the same time. It also helps me organize my thoughts to prepare for the week ahead.

Favourite Asian destination for relaxation? Why?
It would be Bangkok as the people there are genuinely friendly and hospitable. They say people are what defines the city and I couldn’t agree more with this. I also enjoy the ‘laid back’ vibe of Bangkok. Not to mention Bangkok has all the good food and awesome shopping choices too!

Everyone in business should read this book:
“Spin selling” by Neil Reckham. It’s an amazing book that teaches you a process designed to help you successfully sell your products and services to business buyers.

Shameless plug for your business:
We at Mr. Farmer have the best tasting meats in Singapore, do a blind test and you will know why it’s Michelin chefs’ preferred choice. Not only are we very confident about the taste, we are also proud to say that all our products are chemical, hormone and antibiotic free. We also focus a lot on supporting ethical and sustainable farming practices believing in the ‘One Welfare’ concept. Do check us out if you enjoy good quality food like us!

How can people connect with you?
[email protected]

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Callum Connects

Zac Chua, Founder & CEO of The Kettle Gourmet

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Zac Chua’s popcorn business validated itself straight away and fast tracked him to the startup world. Zac now employs 11 people and shifts 500 bags of popcorn daily.

What’s your story?
It’s a crazy one. It was an accidental startup. If you think about it, no university graduate would ever dream of becoming a popcorn seller. We crashed our first tech event to validate our idea and it took off from there. I bought a logo for $7 from a designers marketplace, printed some cheap name cards, and built a 1 page landing page. Sales started pouring in and eventually, we were serving B2B clients (corporate pantries) and we have never looked back. Today we move about 500 bags daily, we have 11 employees and we are growing. Talk about a validation that worked in our favour.

What excites you most about your industry?
It’s food! Everybody loves food! In Singapore the F&B scene is brutally competitive and it spurs me on to fight and compete for market share and to prove to myself that I can do it. It keeps me going and I won’t stop until we become the market leader.

What’s your connection to Asia?
I was born in Singapore, and have traveled to most of Southeast Asia.

Favourite city in Asia for business and why?
Singapore! Even though Singapore has a high cost of living, the Government is actually very supportive of startups. They provide grants for us to tap into, and the technological infrastructure makes it possible for us to compete on a global scale. I believe if you can succeed in your business in Singapore, you can succeed in most of Southeast Asia.

What’s the best piece of advice you ever received?
You only need to be right once, and the rest is history.

Who inspires you?
My father, who was a VC. In fact he was the one who gave me the best piece of advice which I shared above. Having one successful exit, he showed me that it’s okay to fail a million times – all it takes is just one time for you to win in business and in life.

What have you just learnt recently that blew you away?
The power of compounding.

  • Mary and John are the same age.
  • Mary saves $2k annually from the age of 19-25 – so she puts $14k into her portfolio
  • John saves $2k annually from the age of 26-65 – so he puts $80k into his portfolio, but 7 years after Mary.
  • If both are able to generate 10% per annum, who would have more at age 65?
  • John of course! But how much more?
  • Mary will have $944,641 whilst John will have $973,704
  • Think about it! Mary puts in only $14k but John delays for 7 years and puts in $80k.

CRAZY RIGHT!?!?

If you had your time again, what would you do differently?
Nothing, my mistakes taught me how to become a better me. But if I really must choose, I’d say take more time to find the right business partner.

How do you unwind?
Poker, Mahjong and Dota 2.

Favourite Asian destination for relaxation? Why?
Vietnam! Things are cheap, people are warm and friendly, and their coffee fills up my life. I would love to retire there if possible.

Everyone in business should read this book:
The richest man in Babylon

Shameless plug for your business:
We don’t need a plug. Just try our competitors and you’ll understand why!

How can people connect with you?
Facebook: https://www.facebook.com/chuazongyou
LinkedIn: https://www.linkedin.com/in/zacchua

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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