Chapter 51 Section 5 Red Giant

What is the future of Yahoo?I often compare the current Yahoo to a red giant. A class of objects known as red giants, which are planets in their twilight years, is described in astrophysics.It has two characteristics. The first is that it is large in size, trillions of times larger than the original volume. When the sun becomes a red giant, its diameter will extend to between the earth and Mars.Of course, since the planet's mass has not increased, its density is very low.Second, its temperature is much lower than before, and it is dark red, so it is called a red giant star.Because the density of the red giant star is too low, its gravitational field can no longer attract all its own matter, so it throws a lot of matter into the universe every moment.

Red giant stars not only exist in the universe, but also in industry.There is a joke circulating in Silicon Valley. The CEO of a multinational company said at the year-end summary of the results that in recent years, the company's total talent (tenant) has doubled, and the number of employees has increased by more than ten times.There is no doubt that this company can be called a red giant. In late 2006, Yahoo executive Garlinghouse published what he called the "Peanut Butter Manifesto" about Yahoo.He pointed out that (1) Yahoo spread too much.For everyone wanting to do everything and play all roles.Every project is superficial, and the resources are spread thinly, like peanut butter.The company is fragmented, rarely collaborating on a clear strategy, but arguing over ownership, strategy, and tactics.

(ii) Massive waste of resources throughout the organization.We are now in a very bureaucratic organizational structure - although it was created with good intentions.For many, many employees, it is possible to find a colleague with a high degree of similarity and overlap in responsibilities. (iii) Lack of decision-making capacity, because there is no clear division of power, making decisions either impossible to make or opportunities to be missed.Because there is no clear and focused vision, no clear division of power, we do not have a macro perspective to make decisions. This "peanut butter manifesto" has actually shown everyone that Yahoo has now entered the red giant stage, that is, a stage of twilight years when photosynthetic heat has been consumed.The media's response to the Peanut Butter Manifesto was almost one-sided.A spokesman for Yahoo under Samuel put gold on his face, saying it represented the company's open culture, while avoiding the problems.

If we take a closer look at Yahoo's product line, we will find that, except for Yahoo's e-mail, which is not very profitable, it is the first in the world in terms of the number of users. Other services are all second and third: search second, IM No. Third, job hunting is the second, travel booking is the third, and so on.Every project takes a lot of manpower and resources.It reminds us of the fragmented Motorola of the 80s.And its fate is likely to be the same as that of Motorola.Yahoo's top executives actually rejected Garinhu's proposal-to shorten the front line and lay off a large number of employees. CEO Samuel was misleading investors with his hopeless Panama until a month before he was ousted, but he did not escape the fate of resigning after all.

Yahoo's successor to Samuel is the founder Jerry Yang, but the actual work should be presided over by Chief Financial Officer Decker.We mentioned earlier that Decker can cut expenses and increase Yahoo's profits in the short term, but she actually knows nothing about Internet technology. It is hard to imagine that she can lead Yahoo to embrace the new Internet revolution.What's more, with the rise of Internet 2.0, Yahoo has far more opponents to deal with than Google.Several emerging Internet 2.0 companies such as Facebook and Myspace are also encroaching on Yahoo's turf.Yahoo is now like a red giant star that has entered its twilight years. Its light and heat are getting weaker and weaker, and it is still losing matter.

Now there are not many opportunities left for Yahoo. Its founders Jerry Yang and Filo only control less than 10% of the company's shares, and its two largest shareholders are investment companies Legg Mason and Capital Research and Management Company, Each accounts for about 8.7% and 7.6%, and most of the rest are controlled by Wall Street. If Yahoo's performance declines further, Wall Street is likely to demand the sale of Yahoo to recover their investment.For Wall Street, it doesn't care who is the master of the Internet, profit is the first for them.In fact, Microsoft has already discussed the acquisition issue with Yahoo.

However, if Yahoo changes its way of thinking, returns to its traditional media field, and cooperates with Google in technology, it can stand tall as a powerful media company in the Internet industry.In fact, if Yahoo killed the entire search engine and search advertising division (which may account for a quarter of Yahoo's people and half of its devices), go back to four years ago, and Google provides these two services, Yahoo gets a share of the advertising revenue. The income is far more than the income generated by doing it yourself. (In the second quarter of this year, Google's search advertising revenue from its own website was 2.5 billion US dollars, and Yahoo's search volume was estimated by Nelson and Comscore to be about one-third to half of Google's, but its search advertising revenue was less than One-fifth of Google.) In this way, Yahoo can not only greatly increase revenue, but also cut nearly half of its expenses, and turn the corner from now on.Today, Internet advertising only accounts for less than 10% of the entire advertising industry's revenue. There is a lot of room for growth, and it is developing at a very fast speed. This market can fully accommodate Yahoo and Google.

Maybe five years from now, Yahoo will cease to exist as an independent company, and while that might sound alarmist, it's possible.More likely, Yahoo is returning to its original core as an Internet media company rather than a technology company.Regardless of the outcome, Jerry Yang and Filo will forever be recorded in the annals of history as pioneers in the entire Internet field.