Yahoo to GeoCities: Drop Dead!

The web continues to mystify and amaze me. Just today I read that Yahoo is shutting down Geocities, even though the network of websites attracts more than ten million visitors a month. And the company paid billions in stock to buy the site in early 1999. On today's WebProNews, the story was told with incredulity.

Chris Crum speculated as to what the reaction would be if, say Facebook or Twitter were acquired and then suddenly shut down. "Sure these things seem unlikely now because these services are still fresh. Well GeoCities was once the "it" thing too."

If you were still a loyal GeoCities user, how would you feel to know that you've got to move, or you'll disappear from the web? Yahoo pitched them on their own cheap web-hosting, but there are other mysteries here. For example, about a third of the referrals that bring people to GeoCities comes from Yahoo's arch rival, Google.

"Yahoo seems to be turning its back on a large amount of traffic. Moreover, it's turning down free traffic from its biggest competitor." I've never thought the people at Yahoo were very smart. Especially when they couldn't agree to take $33 a share from Microsoft and then sank down to about $12, and now are barely breaking $17.

"It was perhaps the first mainstream example of an open, participatory and personal Internet," writes Mark Milian with the LA Times. In early 1999, Yahoo purchased Geocities for about $3.57 billion in stock. Now a decade later, Geocities is no more.

Sometimes You Need a Geek, not a Deal Maker

Fred Vogelstein writes in the current issue of Wired about how Yahoo is losing (or lost) the war with Google over search advertising. It's brutal.

"When Terry Semel became co-CEO of Warner Bros. in the early 1980s, he was steeped in the marketing and distribution plumbing of Hollywood. So it's no surprise, in retrospect, that his legacy is as one of Hollywood's biggest innovators and risk takers. He grew Warner's revenue to nearly $11 billion when he left in 2001.

But now, despite Semel's achievements in Hollywood and early success at Yahoo, Silicon Valley is buzzing with a familiar refrain: Wouldn't an executive with a little more technology savvy be a better fit? Semel has been Yahoo's CEO for nearly six years, yet he has never acquired an intuitive sense of the company's plumbing.

He understands how to do deals and partnerships, he gets how to market Yahoo's brand, and he knows how to tap Yahoo's giant user base to sell brand advertising to corporations. But the challenges of integrating two giant computer systems or redesigning a database or redoing a user interface?

Many who have met with him at Yahoo say he still doesn't know the right questions to ask about technology. "Terry could never pound the table and say, 'This is where we need to go, guys,'" one former Yahoo executive says. "On those subjects, he always had to have someone next to him explaining why it was important."

One could have made a convincing argument two years ago that such deep technical knowledge didn't matter much. But now we have empirical evidence: At Yahoo, the marketers rule, and at Google the engineers rule. And for that, Yahoo is finally paying the price."