Yahoo! 1995
Would you invest in Yahoo! at this point? If you were Yahoo!’s management team, which financing option would you take?
I would definitely invest in Yahoo! at that point.
I would choose Sequoia Capital. What makes Yahoo! a true opportunity and not just a good idea? What is the vision and value of Yahoo!?
At that time, the use of Internet increased rapidly and it was estimated that by 2000, 40% of homes and 70% of all businesses in the U.S. would have access to the Internet. The trend is the same in Europe and Japan. The businesses needed to use Internet to do their commerce by managing information and to communicating, and the individuals would use it for entertainment and learning. As an early-entry company, Yahoo! provided the related services for all of them. According to their analysis, there was a huge potential market for them. Hence, it is a true opportunity. Its vision was to remain the most popular and widely used guide to information on the Internet. Its value was to help individuals easily find useful information from millions of pieces of information scattered globally on the Internet. What is its business model and strategy? How will Yahoo! make money?
Business model- Yahoo! created enormous following l Generate following through its strong brand and momentum created l The interest-area based structure of Yahoo! made it an easier and more enjoyable way for users to find relevant information, generate following l Through its editorial efforts, it provided a combination of comprehensiveness and high quality.
Strategy
l Continue to build user traffic and brand strength l Develop and integrate the leading technology l Extend the reach to a broader audience l Extend the reach and appeal to international users l Retain the users of Yahoo! l Rapidly extend the product line
Making money l Through targeted advertising based on enormous following l New premium service l Explore broad-band service (from 2004) Analyze the Yahoo! opportunity by identifying the major risks and rewards in each of these categories: opportunity, context, and people. risks rewards Opportunity
That the growth of the Internet industry as a whole slows significantly, or that the adoption of the Web as a significant platform for advertising does not grow as projected
The growth of the Internet industry provides a huge market
Context
Ability to introduce key new products faster and better than the competition
Ability to develop an international presence and leading brand internationally before the competition
The introduction of competitive products internally developed by access providers
New and competitive products and strong brand consolidates its leader position in the Internet industry People
Ability to increase traffic and enhance its brand
Ability to scale the support of both the traffic through our main site as well as mirror sites of our affiliates
Strong brand and the growth of traffic help generate enormous following What are the advantages & disadvantages of each of the funding options Yahoo! could pursue? How do Dave & Jerry’s personal goals and vision for Yahoo! align with each of these options? Which do you recommend? Why?

Advantages
Disadvantages
John Taysom
Reuters was a London-based media service, which could help publicize Yahoo!
It wanted to integrate Reuter’s news service into Yahoo!, which would prevent its free development
Yahoo! was in a poor negotiating position since it did not generate revenues
Randy Adams
Yahoo! would get a chance to generate some revenue
Yahoo! would become associated with a shopping network
Netscape
Netscape was planning its IPO and had tremendous publicity and momentum behind it, which would help Yahoo! generate revenue
Netscape’s company culture was in tune with the founders of Yahoo!
Yahoo! would be purchased by Netscape
Partners
The companies offered money, stock and possible management positions
The potential taint that came with such sponsorship
Lack of control
KPCB
Excellent reputation
Successful investments
Invest just 0.5M
Architext
Increasing press coverage
Venture capital partners
Yahoo! had to merge with Architext
Sequoia Capital
Money (1million), management
25% of stock share to Sequoia Capital Since its vision was to remain the most popular and widely used guide to information on the Internet, Yahoo! should not choose those who had the potential of preventing its free development. Hence, it should choose one from KPCB and Sequoia Capital. Because the latter would invest more money and help them complete their management team, I think Sequoia Capital would be a better choice.