Yahoo was co-founded in 1994 by two Stanford University graduates, Jerry Yang and David Filo (Yahoo Inc.). The Yahoo business model was to be an information provider and internet search engine, making money from display (banner) and search ads.
Was this business model a success?
It certainly would appear that this business model has been a success, a company that started out as a hobby for two Stanford students became a recognized global brand, changing the way people communicate with each other, as well as the way they find and access information online. The company was able to experience rapid growth and secured $2 million of funding from Sequoia Capital in 1995. By 2010 Yahoo attracted approximately half a billion users, or 1 in every 2 people online. The company had 13,600 full-time employees as of December 31st 2010 and 84% of total revenue was generated by display and search advertising. The company has posted in excess of $6 billion in revenue every year since 2006 (Yahoo 2010 Annual Report).
The key reasons why the Yahoo business model appears to have been a success: 1. Yahoo provided an extremely simple platform for users to search the internet. 2. The Yahoo platform was technologically superior to anything that existed at that time. 3. Yahoo was able to secure funding at a very early stage in order to invest in further product development and improvements. 4. The company was able to make a significant amount of money from display based advertising. 5. Yahoo has a strong and talented employee base.
6. Partnerships with MLB, VISA and NFL.
External factors likely to have contributed to Yahoo’s success: The founders of Yahoo were certainly helped by the explosion of the internet, the “dot.com bubble” and technology at the time they launched the company; however it could be argued that they had the foresight to see what opportunity the internet would provide in the immediate years following 1994. The...