Founder: David Filo and Jerry Yang.
Distinction: The original online search engine; now profitable
Primary Products: Web directory, chat, shopping, community
Annual Sales: $588.6 million.
Number of Employees: 2,711.
Major Competitors: America Online Lycos, Microsoft.
Chairman and CEO : Timothy Koogle;
Chief Yahoos! : Jerry Yang, David Filo.
Headquarters: Santa Clara, Calif.
Year founded: 1994.
Website : www.yahoo.com
When the Web was still a primitive but tantalizing novelty for the few
nerds and hackers clever enough to finagle early access, there was just
one way to navigate its already vast and mysterious terrain: Yahoo! The
wonderfully odd (yet strangely appropriate) exclamatory moniker quickly
came to define the Web's first "search engine." It was a straightforward
but artfully complied online directory that attracted experienced as well as
novice visitors. They could easily locate any type of site—or any specific
one—and travel there instantly by means of a single mouse click. This may
sound like standard fare today, but back in the mid1990s,
Meeting a booming demand as it did, Yahoo! Grew fast. The
company went from a dorm room in 1994, to incorporation in 1995, to
initial public offering in 1996. Regional and other highly focused offshoots,
such as a kid's guide, were added regularly. Customer conveniences,
including news, sports and business headlines,
and assorted online
services, chat rooms and message boards, electronic shopping and
auctions, soon followed. Advertisers were signed to pay for it all, while the
continually escalating traffic rapidly made it profitable—and even more of a
standout in its field.
Today, the Yahoo! Brand is one of the most established in
cyberspace. Founders Jerry Yang and David Filo have each realized
about $7.5 billion from the venture. Their firm, in which they retain active
roles, now calls itself "a global Internet communications, commerce, and
media corporation." From headquarters in California and offices in Europe,
the Asian Pacific basin, Latin America, and Canada, it serves nearly 50
million Web travelers each month and contracts with about 5,200
advertisers and partners who foot the bills…and then some.
And yet, as Yahoo! And the Internet both prepare for the new
century, it is still running hard to maintain its place among powerful
competitors, such as AOL and Microsoft. However, that incredibly
extensive, and remarkably effective, Web directory still assembled
primarily by human editors who apply a logic and execution all their own
evolves as mighty new technologies impact its core.
Jerry Yang, born in Taiwan in 1968, moved to the United States 10
years later as part of the first group of immigrants permitted into the
country after diplomatic relations were reestablished with China. He, his
university professor mother, and younger brother wound up in San Jose.
Although the kids were initially at a distinct disadvantage when it came to
the language, they excelled at math from their arrival. In short order they
also conquered English. By the time Yang graduated from high school he
was class valedictorian (as well as student body president). He accepted a
scholarship to Stanford and in four years earned both a bachelor's and
master's degree in engineering.
David Filo, two years older than Yang, was raised in Louisiana before
earning his bachelor's degree from Tulane. The two met in 1989 when Filo
moved to Palo Alto to attend Stanford's graduate school. Much like Yang,
he pursued a Ph.D. in electrical engineering. Learning they shared a
passion for sports, in addition to a few more technical pursuits, the pair
became more friendly three years later while on a sixmonth
exchange program in Japan. Upon their return, the campus was abuzz
over the newly available World Wide Web and a software application called
Mosaic that offered rudimentary access to a seemingly endless sea of
computer files. Captivated, Yang and Filo decided to do some work in the
Their first effort combined Mosaic and a software program they
concocted to amass and sort statistical data on players in the National
Basketball Association. Yang also designed some early Web sites, including
one dedicated to sumo wrestling. After about a year, the two were among
those noticing how difficult it had become to negotiate the evergrowing
online world. So, starting with a purely academic goal—locating research
papers at universities around the globe—they built a program to organize
Web sites into appropriate categories. The site they developed to
showcase them, originally called Jerry's Guide to the World Wide Web,
went online in April 1994. It was soon renamed Yahoo!, which, according
to corporate lore, stands for "Yet Another Hierarchical Officious Oracle."
Just as likely, though, the name was picked because it sounded goofy and
had plenty of antiestablishment
As usage increased, Yang and Filo worked day and night to convert
their system into a customized database that could be accessed by even
more people. It originally resided on their own workstations—Yang's
"akebono" and Filo's "konishiki," (both named after sumo wrestlers).
Before long their traffic was straining Stanford's electronic infrastructure.
The two began looking for someplace to relocate, and in early 1995
accepted an offer from Netscape Communications cofounder
Andreessen to move their files to larger computers housed at his
company's nearby Mountain View headquarters. To further emphasize that
Yahoo! Was now a serious business, the company incorporated on March 5
of that year. Along with employee number three, another student named
Tim Brandy, the founders also put together a business plan and began to
One key to Yahoo!'s success, then as now, has been its incorporation
of a human touch into the otherwise mechanical process of selecting and
categorizing site listings. Another has been its longstanding
skip complicated (and computercrashing)
graphics in favor of simple (and
quick loading) basic text interrupted only by the banner ads that pay the
bills. Yang and Filo also suspected from the start that Yahoo! picked up $1
million to put its plan in motion. Tim Koogle, who graduated from Stanford
about 15 years before Yang and Filo and then ran a $400 million company
called Intermec, met with the pair for a Sunday night interview at a
brewpub in Mountain View. He accepted their offer on the spot to become
The team, which remains intact to this day, immediately set about
making their company profitable. Nobody knew then whether an
business was even feasible on the Net, but they tried it
for a quarter and it worked. In response, they decided to go public and
prove that what they were doing could be very profitable indeed. On April
11, 1996, the company completed its initial public offering and raised an
astounding $35.043 million.
Now it was time see what Yahoo! really could do. Working with a
disproportionately small staff—much like most Internet companies—they
created features that drove more and more visitors to the site. They added
regional and specialized guides stock quotes and sports scores, recipes,
and shopping. They acquired GeoCities, a company that lets individuals
create personalized Web sites; Broadcast.com, a broadband
that allows Yahoo! to transmit original shows such as FinanceVision (a live
business program that delivers market news throughout the day); and
Online Anywhere, which enables cell phones, Palm Pilots, and other
electronic gadgets to access the Web.
As the founders predicted, Yahoo! has indeed become a top Internet
portal. Every month, twothirds
of all online visitors click over to the site.
Yahoo! has astutely leveraged these visitors by matching the banner ads
they see with their personal interests and general demographics. Through
such tactics, it has remained profitable since the fourth quarter of 1996.
But even as investors clamor for a piece of the action, and its market
capitalization tops $90 billion—higher than that of Ford or General
Motors—Chief Yahoos! Yang and Filo, and CEO Koogle, must constantly
seek new ways to keep it atop the cyberheap.
The new millennium brought new challenges to Yahoo!, not the least
of which accompanied longtime
archrival America Online's blockbuster
announcement that it was acquiring Time Warner Inc. and thus creating
the world's largest entertainment and communications conglomerate. But
even as other online competitors like Infoseek also teamed up with other
traditional media companies such as The Walt Disney Company—providing
access to deep economic and content resources, as well as a huge
customer base—Yahoo! continued its strategy of partnering with many
companies instead of buying a big one. In 1999, for example, it enhanced
capabilities by teaming with Kmart to create BlueLight.com
and offer online shopping and free Internet access to the brickandmortar
chain's millions of shoppers.
Having come somewhat late to online shopping, Yahoo! now pursues
it aggressively. Rather than selling merchandise directly, however, it
teams up [with others (such as Kmart) and charges a fee for all
transactions originating from its site. It has also hooked up with Ford to
provide online services for the automaker's future models, and with four
specialized firms to tackle the potentially huge arena of businesstobusiness
The tactics seem to be working, as earnings continue beating
analysts' expectations and share prices remain healthy. The company
reported a record 680 million page views per day on average during June
2000, while the number of registered users worldwide passed 156 million.
It has moved into new headquarters in Santa Clara, Calif., where the
cubicles are splashed with purple and yellow. A classic Ford Fairlane in the
same colors sits parked out front, and the conference rooms are all named
for flavors of Ben & Jerry's ice cream.
Like it has throughout its brief but influential history, Yahoo!
continues reaching boldly for the future while keeping one foot planned
firmly in its goofy, antiestablishment past.