Silicon Valley Has-Beens Strike Back

Yahoo, StumbleUpon and MySpace have been written off as over-the-hill losers. But now they're all fighting back with killer strategies for success.
Posted September 26, 2012

Mike Elgan

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Today's Silicon Valley is dominated by seemingly unstoppable Internet giants like Google and Facebook. But it wasn't always so.

In the late 1990s, Yahoo ruled Silicon Valley. StumbleUpon was tech pundits’ industry darling in the early 2000s. And MySpace was the social networking superpower until the late 2000s.

These iconic companies rose and they fell, out-smarted, out-maneuvered and out-gunned by Google, Facebook and others. In recent years they've all been written off as yesterday's news.

They've always tried to succeed, of course, trying new CEOs, new acquisitions and new ideas without success. But now, all three companies are aggressively re-inventing themselves with creative and credible strategies for re-claiming their dominance.

Each of them is staging a comeback. And I think they could all succeed. Here's why.


Yahoo wrote the book on the dorm-to-riches Silicon Valley story we're all now so familiar with. Started by a couple of Stanford grad students in 1994, Yahoo was a rocket from 1995 to the crash of 2000, a disaster from which it never fully recovered. (In January of 2000, Yahoo's share price peaked at over $118; by September it dropped to around $4.)

Yahoo started out as a hierarchical listing of web sites, quickly adding a search engine and web portal. Drunk on cash, Yahoo acquired company after company, adding a dizzying variety of new services. They made a lot of really good acquisitions, but didn't seem to know what to do with them.

Yahoo became famous for shutting down one service after another. Each closure would send a ripple through the Internet of people saying "Wow, that site Yahoo is killing sounds awesome!"

Since the crash, Yahoo has suffered a chronic identity crisis. "What is Yahoo?" is a question nobody has been able to answer for 12 years. It hasn't helped that the company changes CEOs like socks.

But Yahoo's newest CEO has breathed new life into Yahoo. I have to admit strong skepticism about Marissa Mayer when she was hired as Yahoo's president and CEO a couple of months ago. She's very young, and has never run a company before. In fact, she's only worked for one company in her life -- Google.

But since arriving at Yahoo, Mayer has been kicking ass. She held an all-hands meeting at Yahoo this week to announce the turn-around strategy. In a nutshell, Yahoo's goal is to become the leading mobile personalization company, claiming the sweetest of sweet spots for revenue growth over the next ten years.

The idea is to use some of Yahoo's existing stuff, and combine it with new stuff to provide a totally personalized way to experience everything you want to do (and buy) online, especially but not exclusively on mobile devices.

We can expect aggressive acqui-hires, stunning redesigns and above all some pushing of the envelope in terms of abusing user privacy. (Don't worry, we'll all happily sacrifice our privacy for radical personalization.)

And we can expect the spending of cash to boost morale. Mayer is already handing out free food and smartphones.

The bottom line is that Yahoo finally has a winning strategy, and also someone visionary clearly in charge.


The content discovery engine StumbleUpon was one of the many post-crash startups that stole eyeballs from Yahoo in the new millennium. Launched in 2001, StumbleUpon was a decade ahead of its time.

Its fuzzy combination of Amazon.com-like computerized intelligence for recommending things with its ad-hoc peer recommendation system provides a level of mystery magic that even today many social sites are struggling to develop.

The biggest barriers to acceptance over the past decade have been a combination of overcomplexity, compared to simpler alternatives like Reddit, and also competition from better personalization in Google Search. StumbleUpon has also suffered from a cultural shift to more explicit social discovery of content. Most people discover content these days on their Facebook, Twitter and, increasingly, Google+ streams.

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Tags: Facebook, Google, Yahoo, Silicon Valley, MySpace, StumbleUpon

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