I did a little work as a developer for Verizon's ecosystem back in 2007. Let me just say, from what I could see, they were a huge, bureaucratic company without a single redeeming cultural trait. The managers seemed like a bunch of frat boys who had been raised up into positions of authority through some inscrutable lottery, and none of them seemed to possess an iota of analytical capability or human management talent.
I left that position and later worked for a bunch of tech startups and larger companies that, while not perfect, at least had enough good people in them to redeem my view on the human race.
I cannot imagine why anyone would actually work as a mid-level worker in Verizon unless you had absolutely no other options in life.
Out of curiosity, which Verizon did you work for? The former MCI/Worldcom unit ("VZ Business"), the GTE/Bell Atlantic one (Landline, FiOS, etc.), or Verizon Wireless? As far as I know, that company has remained fairly fractured, and operated as if they were three different companies.
vzw actually is a different company, which is partly owned by vz. Fba/fgte are practically separate companies too. I worked for fba (former bell Atlantic) for years and can attest, it's no place for capable doers. It's unbelievable how many layers of dysfunctional middle management are in there, supported only by the fact that vz owns so much legacy infrastructure.
Who owns the rest of it? I know Vodafone used to, but VZ bought their share out a couple years ago.
Totally agreed on BA/GTE. I used to contract on the GTE side of the house, and I saw how little it mattered whether you were good or bad at your job. All reports I hear from the new Frontier sound like it's even worse now.
> The managers seemed like a bunch of frat boys who had been raised up into positions of authority through some inscrutable lottery, and none of them seemed to possess an iota of analytical capability or human management talent.
That's not what parent said. You read what you want to read, but parent only said they're doing "cool work" and that cool work happens to be in Scala/Haskell.
You can do boring work with clay and steel, and you can do cool work with clay and steel. Saying you're doing cool work with clay and steel doesn't imply that "it's cool because it's clay and steel".
There's two ways to read it definitely, but I have a problem when someone decides to read it one way, and complains about that particular interpretation of what they're reading...
There's 10 types of people in the world. The people who assume that you are wrong and interpret your words in the least logical way, and the people who assume that you are reasonable and interpret them in the way that assumes you to be logical.
Unfortunately thats the reality of many 'cool work places' where your years of experience in delivering products will not be important enough if it not in Scala or some such.
I hear similar complaints with other companies. I know at the last large company I worked for there was lots of this but also other groups who were better / different. Hard to stereotype a huge company like Verizon as one specific way of operating.
My employer feels more like 9 different companies. I feel bad for our customers who try to package multiple products, because they have to coordinate our multiple teams to work together.
I work at Verizon Labs and don't see any of what you mentioned here. Verizon as it stands today though, is an amalgamation of many different companies and cultures. I do believe your experiences could absolutely be true in some of the business units.
Verizon Labs is however, Verizon's play for Silicon Valley talent and they seem very aware that you need a certain kind of culture, perks, amount of autonomy etc. to compete in that market. I'm quite enjoying my time here.
Ironically, it makes me log in with my "username or mobile number" even though they know exactly who I am from the unique ID I'm trying to opt out of having :)
Adoption of HTTPS helps somewhat to counter this, but note that advertisers and content sites are also complicit. Carriers wouldn't have injected such headers without demand from content partners and other run-of-the-mill sites.
Highly doubtful. Someone running ads on their site doesn't make them suddenly complicit and knowledgeable about the creepiest corners of ad-tech. This is _exactly_ why knowledgeable regulators should make this illegal - this is a situation where the people on both ends are unaware of an explicit MITM attack happening between them.
I use a VPN (Freedome) by default on the basis that people I'm paying for connectivity should only be providing that, and not any other "interesting" features like DNS catching, invisible proxies, or fucking with my HTTP.
It's run by F-Secure. I've known the F-Secure guys for a long time, and I trust them and I trust the brand. I think they'll use time and resources to fight what they consider to be over-broad surveillance orders, and I think they're competent from a security perspective.
With HTTPS you are protected against this, the EFF is saying, that a "full protection is only a VPN or Tor", because you have no control over whether the website offers HTTPS or not.
In each of these cases the traffic is encrypted, Verizon can read only gibberish and cannot know where to insert its tracking code, while with HTTP it sees exactly where the HTTP headers end and can add another to them.
I think the suggestion that carriers shouldn't do this is wrong and naive and here is why:
User count should not ever be exponential of customer counts. It inescapably results in fundamentally unethical business practices where users are exploited.
That is google's business model and they stand uncontested today.
Carriers that end up doing any amount of content monetization will never disrupt Google, but they can create pressure that drives the cost of ads down, making google's life harder. I think this is so important that I am happily willing to endure the judgement of everyone here. I know this is downvote bait, but I keep thinking at some point everyone here will see the net positive on all possible angles.
> User count should not ever be exponential of customer counts.
This makes no sense.
This is the backbone of the entire internet. Ethics and the value that users get from a company/service are all subjective, there's no hard rule that you can lay down like this.
It makes plenty of sense. I am annoyed that you cast me as illogical simply because you disagree. Something has changed in modern discourse and your reaction has become distressingly common.
This isn't a new idea or theory, it's older than the internet itself. So what?
This is a tired argument that doesn't really make a point. People being "the product" isn't some inherently bad thing. These platforms have so many engaged users because they do actually deliver value to those users, whether you think so or not.
Maybe you want to pay for a social network but others want it free and are fine with the trade-off. Both perspectives are fine and what's important is that you have a choice, but saying that "user counts should never be exponential of customer counts" still makes no sense as it not up to you to decide everyone else's fate. Does that really seem logical to you?
I'm not asking anyone to live to my values. Many others share them.
I think the point that users should not exceed customers is easy to understand. Many people agree with me. Many others dont.
I have turned down an offer at Google because I couldn't reconcile the bad stuff. I wish more people agreed with me, but I don't say that those who don't are illogical. They simply have different values. That is OK if you value diversity.
> User count should not ever be exponential of customer counts.
This is what you wrote. Why make this proclamation? Why should free users be limited regardless of whether they derive value from the service and are ok with being "the product"? The ethics of a company and the value they provide to a user are all subjective and thus you cannot state that the company is unethical or the users are being exploited as a rule. This is why your statement does not make sense.
> Strawman ... I have turned down an offer at Google because I couldn't reconcile the bad stuff. I wish more people agreed with me, but I don't say that those who don't are illogical. They simply have different values. That is OK if you value diversity.
This is actually a good example of a strawman argument - and completely irrelevant to the discussion. I'm not calling you illogical and I don't see how diversity has anything to do with this. You've made a statement and I explained why it doesn't make sense (see above). You're still free to say it and I'm still glad you did as it led to this discussion.
Please focus on the arguments instead of being so defensive and using these passive accusations.
>>The ethics of a company and the value they provide to a user are all subjective and thus you cannot state that the company is unethical or the users are being exploited as a rule.
This seems to me to be the crux of our disagreement. You believe ethics are so subjective that ethical stances should not be expressed.
I reject that whole heartedly.
Businesses with user counts that dwarf customer counts generally are exploitative and bad for the consumer.
They are incented to harvest information that results in privacy violations.
Who is stopping you from saying anything? You expressed it and I said I'm glad you did. Again, please stop being so defensive for no reason, it's not conducive to any discussion.
> Businesses with user counts that dwarf customer counts generally are exploitative and bad for the consumer. They are incented to harvest information that results in privacy violations.
Not really, again you say "exploitative and bad" but this is according to you. It's up to the actual consumer to consider this for themselves, which is why there's no valid way to make a statement as how to how this generally works or that users should always be fewer than customers. You can look at open-source companies that produce software used by thousands but sponsored by a few customers as just 1 of many counter examples.
W/r/t ads: the carriers who are aggregating anonymous useage data and reselling it are not revolutionizing their revenue. They are deflating the value of ads. This cuts into Google profit margins.
The problem is that exponential implies a difference in growth rate. Clearer would be to say that user counts should never many orders of magnitude greater than paying customer counts. I don't agree with this, but it's clearer.
What's the underlying principle there? That infrastructure providers shouldn't be in potential competition with companies that use their infrastructure as part of their own business model? By that logic, should Apple, Google, and Microsoft be required to get out of the hardware business? How would application of that principle affect things like app stores or Facebook's platform, or even Valve's Steam for that matter?
Standard Oil. Extraction. Transport. Refining. Distribution. Sale.
Seemed to result in some issues as I recall.
Mixing common-carrier status with provider-of-goods is quite inherently problematic.
I've got some pretty strong issues with Google's status as both search provider and other services, or with their dominant position in infrastructure, services, operating systems, applications marketplace, and on a growing basis, bandwidth provision.
Some of that is based on actual practices of the company. More is on the basis that when this has been tried before it's come to tears.
Standard Oil may have accrued monopoly power, but at least to me it's not a foregone conclusion the company should have broken up. Yes, indeed, Rockefeller consolidated industries and bought many competitors, but he was also a master of efficiency and cost-savings. If it weren't for the break-up we might have had lower cost petroleum and as a result greater economic prosperity.
I'm of somewhat mixed minds on the question myself, though the fact that Rockefeller organised the industry for his own company's, and his own personal, benefit, gives strong pause.
As to the price of oil, I can pretty much guarantee you it would have been far lower, though also quite probably much more volatile. I've posted a few times recently on the Texas Railroad Commission and general tendencies throughout the history of oil, and other extractive industries, for either monopolies, consortia, cabals, or government controls (or some mix of the above) to form to limit extractive activity and drive prices up.
I have concerns about private appropriation of the fruits of this activity. I'm also fairly convinced that oil prices are set low by the market. By something on the order of a millionfold.
Why and what to do about that is a longer comment.
As to the particulars of Standard Oil, the company arranged for rebates, intercepted (and occasionally changed) competitor's communications, engaged in what are now entirely illegal, and were seen then as highly immoral, business practices, and much more. The industry as a whole tended to be organised around such practices, and if it weren't John D. it would likely have been someone else who'd have emerged. He played the game best and/or had some early lucky streaks.
But I really cannot support the methods he used. If power is to accrue, let it be channeled through the democratic mechanisms for managing it: government. Not privately held corporations.
Thank you for the thoughtful comment. I believe I read that John D. bought up smaller companies because he was obsessed with the extractive commodity boom-bust cycle. His intention was to raise prices.
I'm really interested in this comment: "oil prices are set low by the market" Do you mean when externalities are included?
Re: consortia, and cabals - restricting output and raising prices will bring new entrants into the market. Eventually the cartel loses control.
The market considers only extraction costs, not the natural capital's costs of replacement, ultimately measured in either time or energy, or a combined function of the two.
It's as if you came into a windfall account, and could make withdrawals over time, but only counted cab fare to the bank as cost, not depletion of the principle amount.
I'm researching on why that was the case, though a developing understanding of many factors involved seems to be at play.
One book notes that at the present rates of consumption, a single cubic mile of U.S. coal reserves would last 1,000 years. And there were 1,100 such cubic miles, a one million years' supply.
At the time, estimates of the age of the Earth itself ranged from a few tens of thousands of years to perhaps a few tens of millions. So one million years was a substantial fraction of all eternity.
Oil was thought to flow underground in rivers, and the "rule of capture" from English common law held (and still does in some states of the U.S.).
Incentives were to massively over build extraction capacity, absolutely flooding markets, despite crashing prices.
Normal consideration of externalities still fails to properly account for this. It's a flaw in fundamental economic pricing theory. There was a time alternatives were considered. They've been wrongly abandoned.
It's a tendency of capitalism to ignore externalities such as highlighted whenever possible. If we're to have a long term future we need the system to include such costs rather better.
> At the time, estimates of the age of the Earth itself ranged from a few tens of thousands of years to perhaps a few tens of millions. So one million years was a substantial fraction of all eternity.
James Hutton had been investigating the geology of Scotland and forming much of the basis for modern geologic timescales in the mid and late 18th C. By the mid 19th, most of the geological periods, we still use today, had been produced. Of course many geologists of the time had a tendency to believe in unlimited age!
Were it not for Lord Kelvin being so famously wrong we may have got decent estimates quicker. Even Kelvin was in the 30-400m years range.
Yes, this is the history of estimates of Earth's age I was referring to.
Hutton, Huxley, and Lyell famously argued for longer periods, but didn't have a solid basis for their argument other tthan general geological principles. Holmes applied radiologicaal methds and got to the right ballpark, 1-3 billion years. By the mid-1950s, currently accepted estimates of 4.5 billion years were given, with high accuracy, based on meteoric samples as well as very old Earth rock from Western Australia. Note too that plate tectonics, also crucial for understanding fossil fuel formation, weren't accepted until that time.
Age estimates were further validated through Lunar and Martian (meteors found on Earth) rock samples.
My point is that early theory, law, and practices of petroleum and other fossil fuel extraction were made with a significantly incorrect understanding of the actual facts of their origin. I'm rather in the middle of trying to figure out how inaccurate those beliefs were, but the time period was distinctly off.
A fascinating, and my favourite, period of history.
At risk of distracting you there was a good documentary series, BBC's Men of Rock a few years ago. It's all on Youtube if you want to watch. It's maybe a bit light on details at times, but the stunning views of the highlands make up for it!
Yahoo got all cash, which is nice as it gives them more flexibility, the last thing they'd want after the Alibaba spin off fiasco is to have to try and sell 4.83 Billion in Verizon stock.
Bloomberg just put up a head line saying that Yahoo will return all the cash, minus Operating Costs to the share holders. If anyone has any guess as to how much "operating costs" will be, please email:)
So I guess queue Alibaba and SoftBank now to come in and divvy up the rest of the company?
From Matt Levine:
> "Marissa Mayer, Yahoo’s chief executive, is not expected to join Verizon, but she is due to receive a severance payout worth about $57 million," bringing her total compensation for about four years of work at Yahoo to $218 million.
Wow! So I guess the now decade old valley trick off spending a "few" years at google to start your career and leveraging the google name to get another job really is the way to go:)
There has been a lot of debate as to whether she succeeded or failed at her job, but at the end of the day all I can say: I really chose the wrong career path, as I can't imagine a scenario where a dev's comparative performance results in a 218m$ payout. (In more direct terms, I would gladly take the internet-hate-firehose in the face if it means making even single digit millions.)
To make some more reasonable statement to try and add value to this non-comment, more than anything of yahoo's fall, every time it gets brought it it just makes me shake my head at the current state of compensation. For the same reason I can't comprehend what freedom and power $10m+ buys you, I can't comprehend how we change the system such that more of us get more of that.
Here's the quote from the original source[0], it doesn't make it entirely clear but may add some context:
> Later at Stanford, Mayer found herself in a group setting that was less social, more comfortable, and more familiar for her. As an upperclassman in symbolic systems, she was tapped to teach a class.
> She took to it naturally.
> Computer science professor Eric Roberts, still Mayer’s mentor, supervised her teaching. He says she was “unusually good at it” and “extremely effective.”
> After Mayer taught a course in the spring, Roberts took a survey of her students. The results were astounding: They loved her — even if she did sometimes talk “a mile a minute.”
> Roberts asked Mayer to stick around Stanford to teach another class over the summer; she readily agreed.
> During her junior year, she taught a class in symbolic systems, with Eric S. Roberts as her supervisor. The class was so well received by students that Roberts asked Mayer to teach another class over the summer.
as a Stanford alum, I can tell you that undergrads don't teach classes at Stanford. At most she was a TA or was allowed to give a lecture. Outstanding grads are sometimes given the opportunity to teach whole undergrad courses, but only during summer. More rarely, students may give lectures (uncredited) while their professor is present in the class room. I'd love to see a link to a Stanford course page if that's not the case.
Hahaha. I'm sorry if I was unclear, the statement was _slightly_ tongue in cheek. I'm not sure I could have made it in any field other than dev and I do mostly like that I chose it. Bio-engineering maybe? PERHAPS finance, but I don't play too well in that sandbox.
The gist I was going for was more that even in a dev's greatest successes, they will likely never see most of the returns they generate for others without taking on some sort of "other" role (founder, CTO, etc), while to the other side of that coin, we do often get hit by the fallout of a failure (slipping a deadline, etc) and certainly don't get a payout that I would consider MASSIVE.
I've heard many arguments that this is aligned with the respective risk we take, but as my original statement, I'd take a hell of a lot more risk if it meant never working again a day in my life, but that's not even a choice us normal schmucks can really make :) (I'm also not convinced the risk argument is even sound, as that one MONTH's pay at a top exec salary essentially frees me from financial risk for the rest of my life, whereas I'll be working for decades even at a top eng salary to achieve the same)
On the flip side, what percentage of people who go down the management route actually end up as CEO of a company that can pay hundreds of millions? Is that number larger than the percentage of developers who strike it big by being one of the first devs at a unicorn? I don't know the answer to these questions, but I do know that both percentages are small enough to be virtually zero in the terms of a single life. Considering that, I am happy to be doing work that I like for a wage that something like 95% of people in this country would envy.
Getting lucky is a one in a million occurrence. And those who do get lucky had to have at least some base funds to make their startup. So getting lucky isn't available for everyone.
Also getting lucky is on another level than Mayer who simply got a job in the early Google years and surfed on that reputation ever since.
So: Live in the right place, have money, preferrably get out of a very well known school such as Stanford or MIT, get lucky.
I believe he was being a being slightly tongue in cheek. In reply to your question though - never follow the money, follow the path where your interests lie and where your strengths lie. Biggest career mistake I ever made was to move from a job I really enjoyed to another because they offered to more than double my salary.
At the beginning of your career, I think the most important thing is to learn. Any company where you're learning a lot is a good place to be.
But I think you need to be able to learn to like what you're doing, even if it doesn't sound like your cup of tea. Get out of your confort zone. Go into a company that does something that's not just IT (that is, not a company that sells stuff for programmers). Human Resources, healthcare, geology, law, finance, advertising, any other domain other than IT. If I were re-doing my career, I'd try to get into any good situation with not only interesting tech, but interesting non-tech problems to solve.
Getting domain expertise outside of tech + strong tech fundamentals is huge, and a great way to build a really good company later on if that's your cup of tea, or be a great consultant or team member.
That way, you get both an interesting job, and very likely, very good financial rewards if you're good at what you're doing.
The worst mistake I've made was getting sucked into a dead-end path and staying because of the money. If I had gotten out early, I would have taken a financial hit early on, but would have continued an upward trajectory instead of plateauing (and working on stuff with non-marketable skills).
As somebody who started in software at a non-tech company, my first reaction to this was horror. On second thought, it seems like fine advice as long as your first job at the advertising firm is as a brand manager, or at a manufacturing firm you're in logistics, etc. I.e., if you are primarily an entrepreneur who might someday want to start a tech company, then by all means get some first-hand practical experience with fundamental problems of interest to your someday-customers.
My advice is to make sure wherever you are, you're working on the thing that senior management care most about. That's where you'll have the opportunity to work towards ambitious goals with the best mentors and exposure to real-world consequences.
This. I hate my job but tell me some other way I can make $300k (I'm basically doing management consulting). I'm 38 with 3 kids and my wife doesn't earn an income (she homeschools the kids). I suck it up so they're well provided for.
300k is nearly 6 times the median US income, and even the median US income is double that of high-quality-of-life places like Germany. Literally most of the planet has happy families with significantly less money than that.
It's facile of me to diagnose your life over the internet but I often think of the deathbed quote:
"I wish I had earned more money and spent less time with my family" -- no one ever
I think that deathbed quote is more about people who had reasonably successful life and had family. I doubt that 100s of millions in 3rd world dying in penury with no family to talk of would make similar statements. Perhaps their statements would be so pedestrian as not to be noted down.
I dated a Columbian girl (an illegal actually) before I met my wife. I remember one day she slapped me across the face and with tears of anger made it clear how stupid I was. My mistake? Uttering the bullshit platitude: "better to be poor and happy than rich and miserable". She said, "you don't know what poor is, we couldn't even afford a toothbrush. We weren't happy we were miserable. How dare you."
That's just evidence that wages are low. Seriously. If I make 6 times the median, we have a problem in this country. I don't know how you buy groceries for a family and pay for healthcare on 50k / yr.
You say "a problem in this country", but my point is that even the <=50k that literally half the US households make is itself a lot of money compared to the 25k earned in a "rich" country like Germany, and other countries are even poorer.
Universal healthcare in Germany likely helps offset the cost to some extent, but in the US those who even have healthcare usually get it through their employer. Really, it's more just a different expectation about what a reasonable life is.
I always think of how complex a television is, with thousands of little tiny components that had to be mined from the earth and forged and assembled and soldered (likely involving some child labor that we'd all prefer not to think about) and how many hundreds of people were involved. And then how it's just assumed in the US that it's reasonable to be able afford one of these in exchange for doing something simple like working a cash register at a bank for a few weeks, or how your quality of life somehow requires having multiple televisions etc.
You literally can't afford food and you are on hacker news? You can afford a computer, your own web site, ... I mean I suppose if you value technology above eating then I suppose technically you can't afford food after you spend your money elsewhere, but the full picture doesn't seem quite as bad as you originally painted it.
I used to type that post a 2013 MacMini, sort of smuggled in the country, that belongs to my startup (not me personally).
The startup ran out of money, and I took the MacMini with me, so I could continue working.
The MacMini is also currently using a damaged HDD, that S.M.A.R.T. keeps telling me should be replaced and is already critical, because I can't afford actually replacing the HDD.
I was kicked out of the apartment I was living, and now I live with my parents, my parents own a store, and by law, all sales must have a tax form filled online, thus internet is a hard requeriment to have a store, I am using that internet connection.
The maintenance of my websites, cost for me in total, about half a month of food.
Currently my source of food is mostly debt (ie: me, my parents, and other extended family members are taking loans to pay basic stuff).
It is not like getting rid of my computer, would help me, my choosen profession, the unprofitable one, is to be a programmer, so I need it to work anyway.
So, it is not a question of valuing technology above eating, it is that I already have technology because of my work, and getting rid of it won't make food sprout on my plate.
Even if I managed to sell all my belongings, I would still be unable to buy food anyway (my net worth is negative, even if I sold every single object I own, somehow for their "new" non-depreciated value, even my glasses, I would still not pay all my debts).
You want my bank account screenshot too? I can tell you how much it has (positive 37.71 BRL, overdraft is disabled)
I honestly doesn't understand why people think I am coming up with lies, I didn't asked for anything, I just shared an anecdote, I am not begging, not trying to guilt-trip people, I was only sharing personal information, the fact that I made a mistake when I decided to follow my passion (programming), when people advised me to instead take a safer profession (construction worker for example) instead.
It is a guideline, and like every guideline, there are exceptions. If your interests and strengths are comic reading, you are not likely to get a job making money in that direction. However if you really enjoy teaching but think accountants would make more money - rather do teaching. You will earn less money, but you will be way happier and more fulfilled.
I just find it odd that so many people on HN give Mayer a pass for failing to turn it around because no one could turn it around.
I suggest reading the various articles that were written about her in 2015. From what I've read of her tenure, this isn't a case of an MVP who didn't have enough support. Mayer being a bad hire / performing poorly AND Yahoo being at a point of no return can certainly co-exist with one another.
> Mayer being a bad hire / performing poorly AND Yahoo being at a point of no return can certainly co-exist with one another.
Sure they can, but if Yahoo really was at the point of no return, then it ultimately being sold for parts can't (in isolation) be used as an indicator of her performance. I remember when she took the helm thinking that it would take an unbelievable feat from anybody to turn that company around.
She's similar to John Chen (Blackberry) in the task they seemed to be given. Both brought on to captain a ship that was taking on water.
I think it is crazy to say Yahoo was a sinking ship unable to be made buoyant. The number one thing they have going for them is Name/Legacy Habit. People still yahoo just because they still do. You could have let 90% off the company go, destroyed all the technology (but not the data, always import it into the new systems to not alienate long term customers) and started over.
Instead she decided she wanted to be a newspaper/tv channel, instead of a tech company. Look at the trajectory Medium.com has taken, or wordpress, even atavist. Vox Chorus and Gawker Kinja. Instead yahoo chose to continue to compete with about.com as a crappy content mill / 2nd layer newswire.
Yahoo Fantasy and Yahoo Finance and Yahoo Messenger and Flickr were all basically left to die. There was really no reason NOT to clone FBMessenger/Line/WeChat/QQ/WhatsApp. They should have been adding features to Finance and Messenger every week.
I know people who worked like just a few levels under here and they seemed to think some of your criticism of Mayer is true. However, she at least sold the company and will learn from this and will be a better CEO for the next company she joins.
I think that's probably true, but I bet not directly. People know her name because she is a woman who is a CEO (which unfortunately is still noteworthy), and people note her compensation because they know her name. Who has even heard of Tim Armstrong?
Tim Armstrong was in the news a couple years ago, but the only reason I remember his name is because he shares it with the lead singer of Rancid.
And yeah, if you haven't noticed the widespread backlash against executive compensation in the past few years, you really haven't been paying attention.
Yahoo had several well loved properties that they bought and ran into the ground.
You're comparing someone selling a truckload of junk for decent profit to someone who keeps buying expensive stuff, actively breaking it or leaving it to fester then selling it for a loss and being paid off for doing so.
I find it hard to parse "not expected to join Verizon" against Mayer's explicit statement that "For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter":
Unless there's still a Yahoo (with the patents, Alibaba stake, and whatever else is left over), which in that case she could technically stay. I'd imagine most of that is going onto the block too.
AIUI Verizon is buying the brand, so although there'll be corporate continuity from today's Yahoo! to Lucky Internet Investments Inc. (or whatever the China/Japan/patents vehicle is called), "staying at Yahoo" means "moving to Verizon".
wait, so they sold off billions worth of the company, but then instead of re-investing any of it to keep the remaining company afloat, or give them any competitive advantage, they're just going to give it all to stock holders, and move on to the next piece?
In April 1999, Yahoo! acquired the company for $5.7 billion
(or over $10,000 per user) in stock. [...] The company had 570,000 users.
-- Wikipedia
These 570k users only listened to audio, seems like the biggest waste ever. Cuban got a bunch of (undeserved?) money and Yahoo lost the same amount. Feels like a pointless transaction.
> These 570k users only listened to audio, seems like the biggest waste ever. Cuban got a bunch of (undeserved?) money and Yahoo lost the same amount. Feels like a pointless transaction
These were the heady days before the dot-com bubble burst. In April of '99, Pets.com had just IPO'd (February) and Webvan was a going concern. The 'information highway' replacing traditional radio was believable enough. I don't think at the time anyone knew it was a waste. Hindsight is 20/20.
Offtopic: Only today did I put 2 and 2 together on the inspiration for Silicon Valley's Russ Hanneman "I put radio on the internet" joke...
I'm not so sure. Here's my reasoning, but I'm just using logic, I'm really not super in-tune to this stuff.
If the company knew thought its stock was 10x overvalued (Yahoo's stock did drop 90% a year or so later) then they really only sold it for $570 million. That is, if Yahoo knew its stock would be worth 1/10 of its current value in a year, buying a company with $5.7B in stock will add value to Yahoo so long as The acquired company ends up being worth >$570M.
That being said, if they knew their stock was overvalued, it would be best to issue additonal shares, as $1 is worth $1 regardless. Similiar to how undervalued companies should buy back their stock.
I think back in those insane dotcom bubble days valuation and stock prices did not play well together. The acquisition moved forward because it was sound business (Yahoo's planned to become a media corp) and increased shareholder value, as the best way to profit from an overheated market was to hoard investors attention relentlessly.
Yahoo! didn't lose anything, only its investors did (as it paid with stock, not cash)... But then, they would have lost a lot anyways, because the whole market was overvalued.
I certainly see it differently. Investors have bought and sold Yahoo! stock all along. Had they bought it when the deal to buy Broadcast was announced and sold it 5 years later, they would have tripled their money.
Are there Yahoo! investors who have lost money? Sure. That is true for every stock that is traded. Are their investors that made money? Sure, same deal.
If one wanted to evaluate the performance of Yahoo! management in 1999 then one way to approach it would be to answer the question, "Given what Yahoo! knew at the time of the acquisition, what would have been a better use for that stock?" I personally can't imagine what that would have been.
It's likely the bigger acquisition was the rights (NBA, NFL, and college) and technology in addition to the users. The bigger question is if that's not a bigger deal in a world where yahoo doesn't destroy startups.
Adjusted for stock returns (since it was an all stock deal), $1.3b. And that includes the huge Alibaba stake that is most of Yahoo's value, if that deal never happened and Yahoo was just what Verizon bought the total would be ~$169m.
Mark was smart and bought puts to protect his stake and then sold it so that he wasn't tied to Yahoo. In retrospect he was really smart.
> Mark was smart and bought puts to protect his stake and then sold it so that he wasn't tied to Yahoo. In retrospect he was really smart.
Also questionably legal. There's this little thing called SEC Rule 144 [0], which forbids this kind of action (attempting to preempt pump-and-dump IPOs and mergers). I have no knowledge of the specific details involved, but I find it unlikely that Cuban was not subject to Rule 144 - especially since you say "bought puts to protect his stake", which indicates he couldn't sell Yahoo shares at the time, and thus was almost surely subject to said rule.
SEC enforcement was a joke (and possibly still is), but illegal actions are only ever smart in retrospect, post "statute of limitations".
Using options to smooth volatility is a common technique after M&A and was likely done for him by the same bankers that made the original acquisition. I am sure it was on the up and up.
SEC enforcement was a joke for years, probably still is. A lot of people are doing this, so, yes it is a common technique, and no, it's not ok - it runs afoul of SEC Rule 144.
No action or inquiry from the SEC is a bet that a lot of people are willing to take, and it pays well for most of them. So does lying to the IRS. Personally, I prefer to pay more taxes, and lose some income (I wanted to protect a 5X exit from downside using puts, and my tax/legal guy warned me against it and introduced me to 144. I ended up with a 1.1X return - I've lost 98% of the profit because the buyer's shares dropped 5 months after the purchase for a reason unrelated to the 5X exit I was a part of. Sums weren't life changing either way, in case you wonder).
This is not the same company. AMD had fabs then (real men have fabs) which were spun out. Interestingly the headline in news now is that AMD stock more than doubled recently based on strong sales of GPUs and gaming :) That ATI IP might be saving their bacon right now.
The integrated GPU really didn't need that kind of power, though. Anyone playing more than solitaire is going to get a discrete GPU anyway. They could have snapped up a smaller chipset maker for a tenth of the price.
Instead they entered both the integrated and discrete GPU markets, when they were already a market underdog that already struggled in the CPU market. They paid way too much for ATI, and then spread themselves way too thin.
I'm not just pointing out the error in hindsight, I was a critic of this deal back when it was first announced as well.
> Anyone playing more than solitaire is going to get a discrete GPU anyway
That's not true. The PC enthusiast market is a small segment of the overall PC market, and that's not even counting mobiles. Lots of people play non-graphically-intensive games.
More importantly, GPUs are hugely important for things that aren't games. Honestly, the fact that video needs hardware acceleration (which is part of the media/GPU block) means that there's a reasonable argument that games aren't even the most important practical function of a GPU.
Current Intel iGPU, and especially AMD APUs are powerful enough to play all the most popular esports games, despite them being quite a bit more demanding than solitaire.
Well NVIDIA wanted to spin off into the CPU market also, they sorta did with them building ARM based SOC's with NVIDIA GPU's.
There were also rumors of them licensing x86 from Intel.
Oddly enough NVIDIA back in the day made what arguable was the best chipset for AMD CPU's - NVIDIA nForce.
The nForce wasn't really their IP though; it was AMDs. The original Xbox was in prototype phase and consisted of an AMD CPU and AMD chipset with some Nvidia IP for the GPU. Intel comes along and offers a PIII variant for really cheap. Part of the deal that Intel struck was that there can't be any AMD logos on the box, but they don't haven enough time to change out the chipset whoelsale, only to switch out the FSB. So Microsoft pays AMD to licence their 7XX chipset to Nvidia, so now it's all IP properly owned by Nvidia. For whatever reason, there were no restrictions on Nvidia only being able to use this for the Xbox, so they continued updating and releasing that genetic line of IP as nForce.
NVIDIA could never have gotten an x86 license, as they would have required a ton of licensing from AMD, too. Plus it would violate the cross licensing agreement between Intel, AMD, and VIA.
NVIDIA used to make an X86 processor long time ago an embedded 386SX.
Around 2010 they were snooping around including trying to build an X86 emulator that would run on their HPC parts which started a small turf war with Intel/AMD which was settled.
http://www.anandtech.com/show/4122/intel-settles-with-nvidia...
The idea was that a CPU + GPU company would be a lot stronger than themselves trying to defend against their respective #1 competitors. Instead, both the CPU and GPU market leaders got stronger and leveraged their massive capital to turn the #2 into a very, very distant #2.
It also changed the decision process from "Pick 1 of Intel and AMD, plus pick 1 of nVidia and ATI" to "Pick Intel/nVidia or AMD/AMD" for companies like Dell/HP etc. so AMD and ATI's weaknesses compounded each other from then on.
Not sure, having the GPU division allowed them to bid for the Xbox and PS contracts.
Having an APU allows them to play in the low end market which was dominated by Intel with their IGP, the vast majority of laptops do not come with a discrete GPU which meant that AMD could not compete with Intel at all prior to their acquisition of ATI unless they would develop their own GPU or license it from some one (they had plans of licensing PowerVR at some point IIRC).
Exactly, there's a reason that Xbox and PlayStation are both using AMD chips. What those systems needed was a lot more GPU power than CPU power, so AMD was well positioned to do that.
It's not a massive money maker for them, but I think that it positioned them well to push open standards like FreeSync, and Mantle/Vulcan. AMD is also fighting back by trying to develop open standards, knowing that proprietary ones wouldn't ever get any traction.
>knowing that proprietary ones wouldn't ever get any traction.
Not unless AMD had a dominant market position. CUDA dominating the ecosystem right now is a major PITA, and so is the insistence on GSync over FreeSync.
AMD had about as much of a Chance at breaking in the to Intel Dominated OEM market as Linux had to become the default operating systems on all Consumers PC's
MS and Intel both put EXTREME pressure and incentives on OEM (and both were accused of Anti-Trust Violations) to keep their defacto monopolies
The Intel advertising campaign kept their branding quite strong in the consumer market and there'd have been an uphill battle to get consumers onto the AMD train for even Dell and other OEMs. With consoles, the branding isn't the CPUs but the console maker's and the audience generally doesn't include grandma & grandpa that only ever watch TV commercials and see an occasional newspaper advertisement when it comes to technology.
On the business technology side it'd be even harder due to thermal characteristics that have been demanded for over a decade now and Intel destroys AMD there without question.
The market was already dividing out that way honestly, and if you are going to be a low-margin, higher-volume player, you should try to work on economy of scale as part of your market differentiation factors.
Why not? I still don't see why it was an inherently bad idea. There's a lot of overlap in the CPU and GPU business.
What happened was that Intel got its game back and then both, Intel and AMD, missed the mobile train. On the ATI side, they were outcompeted by Nvidia. Bad luck, and bad strategy.
Global Foundries was AMD's chip fabrication business. ATI never had any, and mostly (always?) had their chips made by TSMC. So what were ATI's "huge chunk" of assets that Global Foundries took with them?
>Shortly afterwards, Verizon announced it would start combining data about its mobile network subscribers - which is tied to their handsets - with the tracking information already gathered by AOL's sites.
I was talking to a friend who is in the Telecom industry in Japan, and apparently this sort of arrangement is not legal there. EU is generally wary of such arrangements as well. So this is a merger whose product synergies would not have been possible in other jurisdictions.
In recent years I recall advertisers being skeptical about the quality of eyeballs on Yahoo!'s platform. The pitch to the same advertisers already seems more compelling, though the premise does make me feel uneasy.
And I imagine Mayer will be getting her full 9 figure severance package. So much for rewarding success and having interests aligned.
The problem with yahoo was never quality of the traffic. They have the most coveted audiences cornered. Their problem is the lack of good ad units. They have banners... That's unacceptable in 2016.
Yahoo does a lot more than banners, they have all the major formats today covered, however their quality of traffic is a massive problem and likely 50% fraud or long-tail junk that doesn't work.
The yahoo.com homepage used to command some of the highest ad rates on the entire internet, but now you can buy their crappy inventory for a few cents/click, some of the lowest in the industry, even amongst other junk like taboola and outbrain.
They have banners, search ads, content ads, and native advertising. Some of their inventory is served by bing, so if you use both bing adcenter and yahoo/gemini, you may be competing against yourself.
But I just launched a yahoo/gemini campaign 2 weeks ago, for leadgen on web. They definitely have more than banners.
(Also, I've found banner ads can refer to either the format [728x90 graphic] or the model [pay per view/CPM/CPV]. They offer the gamut just like everyone else, even the small shady players.
To say that yahoo just has banners is very incorrect.
Called "native ads" in the mobile space, which are all over Yahoo!'s mobile apps (see Yahoo! Weather for a simple, relevant example), and offered to other publishers through their Yahoo! Gemini platform.
So not only does Yahoo! run the currently "hot" ad unit (they also do rewarded video), they own it.
I'll do more research on my own, but for the benefit of others reading, would you elaborate on this? Yahoo works with Duck Duck Go, so their privacy policy was good enough for them, it would seem.
Factually true comment being downvoted (as I write this).
DDG is itself a privacy proxy for search. Yahoo's privacy policy doesn't much matter if DDG are proxying (and anonymising) search requests. The substance of search results would matter.
(Incidentally, since the switch, and I believe DDG were using Bing principally earlier, quality seems down somewhat.)
Not quite as much of a no-brainer, if you consider that Yahoo! represents about a third of the competition for the place as default search engine in Firefox. If they can retain this competitor, they might benefit from it more than by cashing in on that billion.
Why isn't this mentioned/discussed anywhere. In 2008 Microsoft offered $45 Billion to acquire Yahoo. Then Yahoo CEO Jerry Yang rejected the offer, saying that the bid "substantially undervalues Yahoo." Microsoft raised the bid to 50 Billion, and it was yet again rejected. After that MS withdrew its bid. 8 years later, at 10% the original offer!
That was for all of Yahoo. This is for the search & advertising part. These are measurably inferior than their competitors (although, by less than you might think) but more importantly, have failed to win at the network-effects game.
Well, YHOO's total market cap is now about $37.36B, so it's not a complete travesty. (MSFT would have gotten the Alibaba investment with the $45B offer)
Eh, it's a pretty complete travesty. 8 years later the stock is still almost 20% below the $45B offer price, which was by the way a 60% premium over the market cap at the time.
I still have trouble wrapping my head around why Microsoft even made the offer, but I have even more trouble understanding why Yahoo rejected it.
In those intervening 8 years, Yahoo sold a big chunk of its BABA stock back to the company. If they kept the number of shares they had at the time Microsoft made the offer, that asset alone would be worth $48B today. If you add in the Yahoo! Japan holdings, the company would be worth at least $56B, even if the core Yahoo! business were worth nothing. It wouldn't have been a bad buy for Microsoft.
Not quite. Yahoo's value at the time was still substantially undervalued. Don't forget Yahoo sold off a piece of their Alibaba stake after the bid - some estimates say had Yahoo held on to it, they would be worth much more today.
To the guys on this thread who talk like they're some mini-pundits who know it all saying this is what Yahoo gets for walking away from larger valuation offers from a decade ago: No one thinks you're intelligent for pointing out something years after the fact. Tech companies come and go, and I would bet that a lot of the hottest tech companies right now will meet the end just like Yahoo did in a decade (or less).
Imagine if Google becomes irrelevant in 10 years, and end up selling itself to whichever hottest tech company that will be around then. Will you say "Told ya! Google should have sold to Yahoo when Yahoo was going to acquire them for $3 billion!"
It's hard to determine when a company is at peak value. Everyone here thinks it's easy - in which case they should spend their lives as short traders, selling the stock of every company that is at its peak, rather than working on their own startups which will see the same success as Yahoo.
Not the OP, but I remember that from a developer's perspective (mine) Yahoo was pretty hot back in 2006-2007. Their dev center and API's were on par with Google's, if not better, while Yahoo Pipes was a very cool and interesting thing which has not been successfully replicated until now. Companies like FB were cool only because they had an exponential user growth and because of the rumors of them poaching engineers from Google or Yahoo for insane financial packages. That started to change around 2010 I'd say, when the FB devs started to open themselves up more to the world.
I think most of the comments were just pointing out how much and how fast fortunes can change, but yes, the only right way to judge a decision is within the context in which it was made.
Were they the right choices given all the information those people had back then? It seems that they were.
It's arrogant to think one can predict any single thing in the world, no matter how successful you are.
You could say the same thing ("Given all the information those people have back then, the best decision would have been to sell") about Apple right before Steve Jobs came back and turned it around. In fact here's what Michael Dell famously said: ("What would I do? I'd shut it down and give the money back to the shareholders")
I remember being shocked when Yahoo spurned MSFT's $44+ billion offer in 2008. Goes to show, when someone offers you 11 figures for a failing company, sell because the offers aren't going to get better.
It's important to realize that the 5B verizon is paying isn't for all of Yahoo. It doesn't include Yahoo's holdings in Alibaba or Yahoo Japan or Yahoo's patent portfolio. So while Yahoo might be worth a bit less now than the 44B MSFT offer the drop isn't all that big. The risk was probably worth it.
To accurately judge though, we need to know how many people/companies are offered large sums and decline, and how that works out. It might still have been a bad decision that just happened to work out.
It's the same story as college dropout entrepreneurs, who became very successful and made million dollars. But, how many college dropouts are out there who are barely earning their livelihoods?
I would assume both are highly situation dependent.
If things seem to be going relatively well, and you've already taken $10-20-50m off the table, what's the point in selling? At that point it's only really cash in a bank account that you then need to manage and reinvest. Obviously, if you feel the wheels are going to come flying off, sell.
Same for a college degree. If you're a self motivated person and a learner, you don't need it. But if you need your hand held, you won't achieve much. Degree or no degree. More than anything this has to with the person and his/her work ethic and intellectual curiosity.
I don't know about other people, but there's a number past which I do not care. N > 10^7 in my pocket after tax, I'm out, regardless of circumstances, regardless of ability to earn more. No ragrets.
With the caveat that maybe you derive deep satisfaction from growing your business and by it impacting the world. I always think, if I had "FU money" and didn't have to work, what would I do? I would probably start working on the greatest possible venture I could image myself doing. If that venture (maybe akin to a Tesla or a SpaceX) becomes a billion+ dollar company, still doesn't matter to me as a founder, there's no point for me to sell it.
That said, a social network centered on photo sharing and a slightly more handy version of email or event sharing is definitely not one of these high impact ventures in my opinion, so yes, I would have sold that long ago and went to work on something more meaningful.
It is always about the money. The more money you have the more money you need to manage the money you already have. So it is always about the money. The Zuck was confident his website was worth way more than a billion. that's why he didn't sell.
If it was about money, he wouldn't be giving away most of his company while trying to retain a controlling stake. The fact that he is giving away his money suggests that he's more interested in being a successful business mogul than he is about being "FU rich."
Interesting to consider the reasons for the past valuation -- before everyone realized Alibaba was blowing up (I believe it was < $1bn of that $44bn deal).
So, in 2016 dollars we're talking $5bn for their core web business vs. 50bn+ (2016 dollars) for the 2008 MSFT offer.
Why the heck do people use 'bn' for billion and 'mm' for million? I've seen VC @fredwilson use 'mm' many times on his blog (avc.com), and IIRC I read some reasoning for it, either there or elsewhere, which made some kind of sense (they said Roman numeral for 1000 is M, so for million we use MM, though not sure if that is quite right logic), but why then the inconsistency between 'mm' and 'bn'?
I used to work in finance, and there is a bunch of obscure terminology and conventions, adopted from different cultures (eg you can trade a "Lakh" of silver).
See how the currency sign for GBP looks like a capital L? and the currency sign for shillings and pence was "s" and "d"? (now the uk use "p" for pence since decimalisation). So "Lire", "Soldi" and "Denarii" were the denominations of Italian currency in the the late Renaissance, and this obscure terminology was because originally the bankers in London were from Lombardy.
So I always thought MM was the same. For something like "Mille Mille" (ie one thousand thousands). I don't have any reference for this, that was just my own theory, and it's slightly undermined by the fact that the Italians have a word for "Million" ("Milione").
Loads of Latin and Italian words were modified across the world, not unlike what happens today with English; it's perfectly possible that accountants trading predominantly in the New World or some other remote area could have come up with their own approximation for a word (milione) that is not from Classic Latin and is actually pretty recent (wikipedia says XIII to XIV century, whereas lira and soldo are much older and denario goes all the way back to Rome fighting Carthage).
Ha, interesting. Didn't know about soldi. Coincidentally, had blogged (as an aside to my main post topic) about denarii recently. Here's what one looked like:
Good point. Yes, lakh (sometimes spelled lac) in English is from the Hindi word laakh, which I think is from Sanskrit laksha. (Many Indian languages are descended from or influenced by Sanskrit.)
The way to consistently use 'm' as thousand and 'mm' as million is if you assume a Latin derivation, with 'm' short for mille. https://en.wiktionary.org/wiki/mille#Latin ('mm' thus being 'thousand thousand', since roman numerals don't compose that way -- MM would be two thousand).
That doesn't mean that that's the way it evolved, but it's a way to categorize it mentally so it makes sense. While there's no logic for it conflating with 'million' and 'mega', at least 'mm' is fairly unique, unless you measure your money by its length.
That's true now but not in all historical periods. In the original system, m. was an abbreviation for mille, and not a composable component of the numeral at all. In effect, it served as a comma does in English text today, to separate the thousands from the units -- both of which were encoded using the composable letter system we are now familiar with.
Later, of course, people assimilated the operation of the M to the other letters, esp. on the dates of printed books. However, if we are discussing manuscript practice in the 15th century, the medieval approach and not the modern approach to Roman numerals would likely be in play...
In any event, using mm. to represent mille mille (a thousand thousand, a million in modern parlance) would create no cognitive dissonance as it does today.
"The US telecoms giant is expected to merge Yahoo with AOL, to create a digital group capable of taking on the likes of Google and Facebook."
Can someone explain how combining two "past their prime" entities like Yahoo and AOL, with the Verizon telecom bureaucracy is going to produce anything "capable of taking on the likes of Google and Facebook"?
Telecom companies have a pretty horrible culture. It is not one of innovation or agility. They are bloated bureaucracies based on tenure and not merit. I speak from experience. To give one small example I have have been on conference bridges where Verizon project managers fell asleep and began snoring. I have many more of such anecdotes with these folks. All similarly illustrative of the culture.
Note that Verizon has a division - Product Innovation and New Business - that is run separate from the telco business that you are mentioning.
In recent years Verizon has acquired technology companies EdgeCast Networks (CDN) and upLynk (Video Streaming) which form the core of Verizon's Digital Media Services [1].
Combining these assets with AOL (AdTech) and Yahoo (if the deal happens) gives Verizon an end-to-end platform for the creation, delivery and monetization of content (with focus on video) in the Internet.
Disclosure: I work at EdgeCast and we operate as a technology company, hate bureaucracy and try very hard to innovate and stay agile.
Yeah, this is all about digital media. Cross device tracking (see aol deal) will be helped by this purchase and tying it in for a video platform with those ridiculously high video CPMs seems to be what they are going for.
I know Edgecast well, I worked on a couple of projects for you guys. I remember being very surprised on hearing the Verizon acquisition news since EC was such lean and nimble engineering shop. It's good to hear your feedback and that its business as usual post acquisition. Great company and great CDN.
Yeah, they have billions to spend on buying companies like Yahoo, but they can't upgrade all their rotting copper to fiber optics. That's Verizon for you.
Any place that doesn't already have fiber within Verizon's footprint probably can't accommodate it profitably. The margins on the places that do already have fiber are already thin. No business wants to invest in new infrastructure that isn't going to make it any money. It's not like anybody else is chomping at the bit to build fiber in those places.
It can accommodate it profitably. But any such undertaking is a long term investment, and Verizon doesn't operate in such categories. They want to rip profits faster.
Also, they have internal conflict of interests. I.e. their execs are all about wireless, and simply don't care about landline business. Splitting it in two could actually help, since then they'll care about improving.
> It's not like anybody else is chomping at the bit to build fiber in those places.
Verizon stopped building out fiber everywhere. Only when they have a contract, they do it (very reluctantly). Some areas are indeed less profitable because of population density and other such factors. But others are not.
Verizon's wireline unit is making low single digit operating profit margins with its existing footprint. I'm pretty sure expansion into less favorable markets would push that into the red. There is a reason Google only enters carefully-vetted markets that waive the usual roadblocks to fiber buildout--it's the only way to make money in the industry.
And Verizon is a public company. Investors are pushing it to ditch wireline entirely. If the wireline unit was spun off, would those same investors suddenly be eager to give the divested company billions to build a bunch of marginally profitable infrastructure?
> Verizon's wireline unit is making low single digit operating profit margins with its existing footprint.
Because they never cared about improving its efficiency. They actually noted, that when they upgrade to fiber, their expenses drop. A huge drain on their landline profits is their copper network which is falling apart. Their fiber is profitable.
Investors want them to focus on wireless. As I said, if it would have been split off, investors would have cared about how to improve their landline profits.
When Verizon replaces copper with fiber, the investment gets booked as a capital asset, which doesn't count against profits. But any operational savings achieved by that will goose short term profits. So if Verizon is focused only on goosing short term profits, as you claim, they'd replace all the copper with fiber!
More generally, Verizon is legally required to keep serving the places it already served with copper. If it could save money by switching that with fiber, they'd do it. You're accusing a money-grubbing big corporation of leaving billions of dollars on the table each year.
They would. Except they can get even more profit by investing in wireless. So again, typical conflict of interests. Removing it could help.
Their execs indeed have no clue how to mange landline business or they simply don't care about it. Their whole background is wireless and they are trying to get rid of landline (selling it off).
Seidenberg was landline man through and through. He cared about improving it and moving it forward. McAdam has no clue about it and doesn't care.
> So Verizon is too incompetent to make money on wireline so it's looking to sell it.
Yes, or rather they aren't interested in getting that competence, because they are too focused on wireless.
> And Google isn't chomping at the bit to buy it because?
Google might at some point. They can have different reasons to wait. For instance Verizon are still obligated to build out in some areas. Or Google want to avoid dealing with unions and such.
Cable companies. DOCSIS 3 makes DSL look like dial-up.
But there's evidence that Verizon made deals with cable companies to bundle wireless services, so Verizon could keep caring less about rotting infrastructure.
Everything about this smells like Yahoo! is being run by idiot MBAs with some spreadsheets somewhere totally misunderstanding that technology can empower people to do fantastic things including those working within Yahoo! - instead it's been hamstrung by each property not being held accountable to it's competitors effectively.
I would have started competitors (startups) internally for all of Yahoo!'s key products (buy Y.com and test them under that) and told the current product owners if their products were not better faster than these startups could build them they'd be replaced.
The decision to sell search because they were not able to match the investment Google and Microsoft were putting in is another example; if you can't beat someone financially you need to be better than them. To have just given up based on "only" having a few billion to invest is absurd.
I don't think you can put this all on Mayer. It's basically a tug of war between two different groups of key investors, with the concerns about the IRS also playing a role.
One group thought that Y! had a shot at a viable business. The other group wanted out, but didn't want to sell until they got their cut from the Alibaba/Y!JP investments (which also propped up the stock price for the whole thing). Mayer was hired by the first group to try and turn the tide. The second group agreed in the hope that it would also bring the stock price up a bit and make the non-Alibaba part of the company more valuable.
The IRS finally ruled that Yahoo can't just divest Alibaba &co. without paying a huge bill, and Mayer hasn't been able to do anything about the rest of the company. Which means the second group of investors is basically winning out and spinning off all the assets so they can close out their price at the value of the Alibaba stake and make their profit.
It's difficult to say that Mayer is 100% responsible since a good chunk of the board/investors didn't care or were actively against her from day one. Also, she didn't have all the tools that a turnaround CEO has at other companies because she had to protect the share price around the value of the Alibaba investments or that second group would simply fire her. It was always a longshot IMO.
She lost support of the investors when it became clear that the turnaround plan was a complete failure. Initially she was given a lot of latitude to make whatever moves she deemed necessary including blowing a lot of money on failed acquisitions and key hires that didn't work out. Now maybe Yahoo was beyond saving, and it was going to fail anyway, but Mayer's execution didn't seem to help it at all.
This reminds me of JC Penney, where investors also brought in an exec from abother successful company in the hope that they could replicate that success. In that case it was Ron Johnson from Apple, who tried to replicate Apple's retail strategy at JC Penney with devastating results, and certainly not for lack of being given the latitude to implement whatever changes he asked for.
The situation at Yahoo is pretty similar. I wouldn't blame the board and investors for finally trying to cut their losses.
>I would have started competitors (startups) internally for all of Yahoo!'s key products (buy Y.com and test them under that) and told the current product owners if their products were not better faster than these startups could build them they'd be replaced.
If only those in charge of Yahoo and other failing companies knew of such a cunning strategy...
They could have spun up 3+ internal teams making competing Yahoo Fantasy products, at let the best team win. They should have been making harder plays at instagram/smugmug with flickr. Y!Messenger was left to flounder while FB adds new features every week.
She chose to try and become a content/adtech company without first rate tech, features or user interfaces.
>a) startups aren't better at building websites than big businesses
Who said they are? That's a huge "citation needed".
>b) Yahoo! management came up with something better...
They did come up with $5 billion dollars (plus other assets of huge value not included in the buy) -- as opposed to a hypothetical scenario which could have just as easily exhausted their resources, alienated their employees, and killed their current value for not much to show for.
She got paid to spend Jerry Yang's money. Sold Alibaba's shares at $13 per share for $7billion when it's worth 6x that. Then turns around and spends it on junk like Tumblr. Who uses that nowadays? Jerry Yang invests $1billion in Alibaba years ago, a global powerhouse, and she spends $1 billion for Tumblr? A stagnant platform...
She could have taken the $1 billion and invest in a few hundred up and coming startups. At least it will do some good for Silicone Valley
I'm guessing Mayer had a mandate to take a few moon shots to revive the brand knowing they were likely to fail, but at least had a chance of going viral. The upside was big, but the downside wasn't so bad because they were already so deep in the doldrums. I doubt they were worth much more than $5B when she joined. The ship had sailed a while ago.
I had the same thing to say (https://news.ycombinator.com/item?id=11916156), it just amazes me they didnt attempt to netflix themselves (replace dvd mail with streaming.) They had literal piles of money from good investments, and a HUGE userbase of people who still use their product out of habit. They almost couldnt have been in a more perfect place to reinvent themselves, and dominate multiple markets.
2 guys who spent 20 years at Yahoo, started WhatsApp and sold itself to Facebook for $19B. and this huge company sold for 1/4th of that price. Management vs. Product Visionaries.
How much revenue/profit does Yahoo generate? How much does WhatsApp? Facebook paid handsomely for a lot of hype and to gamble at poaching users.
The Yahoo deal seems way more down to Earth, compared to an astronomical offer by a company with cash to burn and a desperate desire to keep growth going up.
Facebook realizes that it's smarter to be a communication company rather than a communication platform. Brand management is a key to P&G's success, and Facebook is smart to emulate this in the tech. sector.
why do you think WhatsApp is not that much worth it?! I think its probably worth more. all the text/video data FB uses for its Machine Learning to drive next generation of AI. its almost equalant to FB itself. that many messages, calls goes on it every day using its user base. I think its worth it (but not many people realize it. but FB sure knows what it can do with it)
I hope yahoo mail sticks around. I've been using it since forever, and would hate to change to gmail. Yahoo mail is kind of slow, but gets the job done, gmail is too chaotic for me. Maybe I'm old school about that, but I'm all in on yahoo mail.
I didn't believe you that Gmail was more chaotic than Yahoo, so I signed into my never-used yahoo account.
The Yahoo Mail interface is much cleaner than I remember, though I don't enjoy the purple theme, the loading times, and the persistent "Try Firefox" banner in the top right.
Plus my mailbox is full of spam from Yahoo itself, like weekly emails from Yahoo Movies.
yahoo mail is incredibly valuable -- it's a feeder (clicks and identity) to all of their content sites. It's really one of yahoo's gems. The new owner will probably take better care of it than yahoo did.
That was my take and when Mayer took over I was hopeful she'd sink some resources into the servers and fix the performance issue. Nope. Its as bad and slow as ever, all my clients that use it complain but there is nothing I could do save moving them to gmail. This was a major misstep in my opinion as Yahoo mail is the company "face" to many users. The Yahoo home page was horrible when she took over but at least she had the sense to put an end to the zooming cars and flying coke cans & etc that marred the user experience. Unfortunately, the home page news links have deteriorated to People Magazine level of coverage which has also hurt their brand. Want to know what the Kadashians are up to, the latest Taytay breakup new? Go to Yahoo.
Mail is and has certainly been a priority at Yahoo. All employees have to dogfood it. Ads are included in corp mail and POP3/IMAP access is disabled. You have to use the web and mobile clients.
When layoffs were announced Mail was spared and actually grew.
I don't know why it hasn't improved. It's not for lack of trying.
> Ads are included in corp mail and POP3/IMAP access is disabled. You have to use the web and mobile clients.
Ah, that's why Yahoo has gone to hell — emacs users don't stay with the company. You see, emacs has 8 different mail clients: rmail, gnus, mh-e, wanderlust, mew, vm, notmuch & mu4e — and no true emacs user (not to be confused with no true Scotsman …) would want to read email in anything but his favourite text editor.
Yes, scary. And given Mayer's penchant for numbers your suspicion is almost certainly the case. It reminds me of Henry Ford saying "If I asked people what they wanted they'd say a faster horse". Mayer was suppose to lead the company not be a poll-following huckster.
Being a visionary takes a lot, lot more guts and risk-taking than people tend to think. It's not clear what the Yahoo board wanted in its CEO. Perhaps the board had mostly given up on Yahoo reclaiming its branding status in higher value markets and just wanted a way to stabilize stock prices before selling and making it an attractive acquisition target. We really don't know as outsiders.
I'm curious how this will play out for AT&T internet customers, given that their email is currently hosted by Yahoo. Is Verizon going to host their competitor's customers' email?
if att has a contract with yahoo and yahoo doesn't file for bankruptcy, it will have to continue to provide support or pay the contract cancellation.
... or, now it being Verizon, they will just drip one email per day into the inbox and say that they only advertised up to 100% of email, but that the contract only really guarantees 0.01% of the advertised speed.
Can someone change the title to include the fact that this purchase is for the search and advertising operations part of Yahoo? Everyone here thinks it's for the entirety of Yahoo. It's like they didn't bother to read the article.
I'm not yet convinced that isn't a case of inaccurate precis by the BBC. Other sites are reporting it's all Yahoo's tech/content (i.e. not China/Japan investments).
At one point, the headline was changed to read "Syrian migrant 'behind German blast'". But at that point, the fact that there was a German blast was widely known; the unconfirmed portion was that a Syrian migrant was behind it.
So if anything, the headline should have been written "'Syrian migrant' behind German blast". But the BBC didn't do that, because all indications are that BBC journalists pepper their headlines randomly with quotation marks.
Randomly peppering headlines with quotation marks absolutely is not standard practice. Most American newspapers don't do it.
I wonder if Verizon worked out a deal with the mozilla foundation over the search bar exit clause? That's basically a billion dollar pay out over 3 years if Mozilla decides to trigger it.
One of the keys to having a valuation that's higher than your discounted cash flow is whether or not people think you can grow. Twitter, LinkedIn and Snapchat are all growth-stage companies so there is less relation between their valuation and the sum of their assets. Yahoo! is much closer to a mature company so their valuation is better determined by a sum of assets minus liabilities.
With LinkedIn you had an obvious path to continue growing as well as a pretty obvious path to profitability whenever they decided to stop growing.
Snapchat actually has pretty big growth prospects and has shown that they can monetize very well, so they can command a much higher multiple of their current earnings.
Twitter's market cap is just over 2x what Yahoo! sold for, so it's not like people think they are THAT much more valuable, and their stock has taken quite a beating over the last year because they're showing that they don't have a path to growth.
Here is math for people wondering about price of Yahoo:
Y! market cap is $36.38b. Have in mind that Y! is selling only its core biz so we would have to subtract values of Y! shares in Alibaba and Y!Japan, which are worth $33.74b and $8.56b respectively. However thats pre-tax and Y! could not get that money for them. There for adjusted values (-38% tax)are $21b and $5.4b again respectively. There are also cash & marketable securities worth $6.8b and convertible debt of $1.4b.
So final math looks like this:
$36.38b-$21b-$5.4b-$6.38b-(-$1.4b)=$5b
Spot on. Only thing missed was potential price of the patents (which arguably that price will pay for core sale taxes). Only real bet on yahoo stock right now is whether the board can avoid some of those taxes on an alibaba or yahoo Japan sale.
"US telecoms giant Verizon Communications is to buy Yahoo's search and advertising operations"
First, I was surprised to see search operations mentioned, since they farmer that out to Microsoft. Second, if this is only search and advertising, I wonder what will happen to things like Flickr and Tumblr.
It should be interesting to see what is actually in the announcement.
It's turns out valuations are imaginary numbers that mean nothing?
I once sold a $1 beer to a friend for $2. Let's back-of-the envelope that:
100% markup, $1 profit. If I buy and sell 1 billion beers per year, that's a profit of $1B/year. Ok, so given a 5 year return on investment, that means my beer business is valued at $5 billion.
Nice! Anybody interested in investing please get in touch I'm raising a series A.
Strangely enough, this happened last year. Ballast Point was somehow able to sell six-packs of beer @ $16 when all it's competitors were fighting each other around the $10-12 price point. Keep scaling those margins up then get bought out for $1 billion: http://www.latimes.com/business/la-fi-ballast-point-beer-dea...
>I once sold a $1 beer to a friend for $2. Let's back-of-the envelope that: 100% markup, $1 profit. If I buy and sell 1 billion beers per year, that's a profit of $1B/year. Ok, so given a 5 year return on investment, that means my beer business is valued at $5 billion.
And if you've convinced enough people that this is the case, so you get at least a few million dollars in investment, that would mean your company indeed has some value.
But selling $1 of beer of $2 to a friend once never got anybody anywhere.
You seem to conflate what happens in micro-micro-scale with what should be shown to be able to happen in the macro-world, for a valuation like $5 billion to start involving people investing lots of real money.
In other words, sure, valuations are based on extrapolation, but it's BS to think they're the same as (or based on) any small-scale extrapolation of an statistically insignificant transation (selling $2 worth of beer).
When the volume/sales/eyeballs/etc get so many that people start actually investing big money according to a large-sh valuation, the company has already passed a lot of basic tests...
I was being facetious. My point was to deminstrate a business that is clearly not worth 5b, but calculate myself a $5b valuation. Most real workd examples are more grounded than mine but still these are imaginary numbers.
They are definitely not imaginary, they just have probabilities baked into them. Many people traded around that valuation which is much different than your example.
Valuations of public companies aren't always rational in my opinion, however they are (again in my opinion) better assessments of value than any one person's estimate. If you disagree and think you are able to make a better prediction, then by all means don't leave a reply here, just short the stock (and with leverage - use options, etc).
Nah, you have to have explosive growth numbers with little context implying it will continue. So, cut deals to sell it at a restaurant, then a local event, and then one stadium. Numbers in individual beers will be multiplying. Clearly it will be millions or hundreds of millions of units in a year or two. So, maybe $5 billion to buy it while it's hot?
While Flickr has decent export tools (you just get your photos without tags, descriptions - literally anything else), Tumblr's have always been non-existent aside from an unofficial, macOS-only tool by Marco whose download link (https://marco.org/2009/12/10/the-tumblr-backup-app-is-ready-...) no longer works.
Anyone recommend a Tumblr export tool? The best, as far as I can tell, is jekyll-import (http://import.jekyllrb.com/docs/tumblr/), but I'm running into errors and getting weird results.
A fair amount of FreeBSD's infrastructure in hosted in Yahoo!'s datacenter in Santa Clara.
I'm curious how this will affect that relationship, if at all. It's not like Yahoo! is going to stop using FreeBSD overnight or anything but Verizon may decide they don't want third-party infrastructure in "their" datacenter.
Every time I hear about Yahoo these days, I am reminded of the movie Frequency. At the end of the movie, the protagonist is driving a fancy mercedes with "YAHOO" as the license plate, implying investments in Yahoo made him rich. How ironic that since the movie came out, Yahoo started its decline.
Who are the AOL users? Are these folks in rural areas out of the reach of broadband? I've heard that there are still dial up users. This however would be odd with Verizon business plans as they have been divesting themselves of copper plant.
I know two people who are now on Verizon Fios and still start up their internet by going to AOL.com... They are about as far from a technical user as you can get.
They will receive about $5.27[1] per share of YHOO stock they hold (or perhaps an equivalent amount of verizon stock if they do the deal that way) in exchange for the portion of the business being sold. Perhaps a bit less than this if there are transaction fees or taxes that must be paid.
They will then continue to hold their Yahoo shares which will represent their holdings in Alibaba and Yahoo Japan as well as Yahoo's patent portfolio.
1. $5B / 948.25M outstanding shares ~= $5.27 per share.
Wait?! is that really how this works? What if people want to keep owning the online part of the business? Are they hooped? Seems like you could really royally screw shareholders like that (i.e. sell all the good parts and leave shareholders holding the bad parts).
Their share price is about 39 USD right now, that means they sold off a huge chunk of the biz for 13% (5.27/39.38 = 0.1338) of the stock's current valuation, right?
Forgive my incredulity, I genuinely didn't know how this kind of thing worked.
Deals like this are made by the board of directors, who represent the shareholders and have a fiduciary duty to them, as well as being shareholders themselves. So that's your guarantee of it not being a crap deal.
If you do a sum-of-the-parts valuation of Yahoo, you can end up seeing that the core business has a negative value. So holders of YHOO will trade something worth -1$bn for $5bn in cash, that's a pretty good deal.
Sum of parts for yahoo is a terrible way to calculate it's actual value. If you look at the balance sheet you'll see billions in deferred taxes. That relates directly towards selling alibaba and yahoo Japan in the open market. The play on yahoo now will be is if yahoo board members can save money on those taxes. If you think they can, you win. If not, stock is trading roughly around the fair price.
When you sell part of a business, the owners of the business (the stockholders) receive their share of the proceeds. Management (the CEO and other senior leaders) is hired by the stockholders to negotiate these sorts of deals (among other things). The stockholders are always free to fire management for poor performance if they don't like what management is doing.
You are correct to note that Yahoo's actual business represents only a small portion of the value of the company at this point. The majority of the value of the company is Yahoo's holdings in Alibaba and Yahoo Japan (a similarly named but completely separate enterprise).
Frankly, I'm a bit surprised that they managed to get $5B for their core business. I think YHOO shareholders are getting a pretty good deal here.
It's search and ads, which may or may not be their "core" as they've got a number of other properties (mail, tumblr, flickr, media). Not to mention that their entire shareprice is basically propped up by the value of their Alibaba investment.
I was under the impression their other properties are included (mail, tumblr, flickr), and only patents and Alibaba holdings are excluded -- is that not the case?
In my country, Car makers own dealerships, well actually only a small number of them, most Dealerships are franchises, so we have a mixed model that works pretty great for all involved. New makers that arrive to my country expand with their own dealerships, and after they gain traction they start to sell franchises, when well stablished car makers want to expand to new markets they usually do it with their own dealerships too.
Trailing-edge users are those people we might otherwise make fun of, but they don't run adblockers and they don't constantly question the services they use. These people have used Yahoo Mail for a decade and will continue to for the rest of their lives.
5th most visited web property in the world(source : Similarweb). Mail, Flickr, Tumblr, Finance, Sports , Fantasy sports still used by a lot of users. I think it's a pretty sweet deal for verizon. you don't get a age old web property which everyone know off for this money.
Note: this acquisition does not include their $30+ Billion USD worth of shares in Alibaba and their stake in Yahoo Japan which is about $12 Billion USD.
Yahoo Japan is an entirely separate company. It's actually an e-commerce platform closer to Amazon than Yahoo proper. Yahoo just has an investment and a cobranding agreement. Otherwise it's entirely separate.
I misread that on my phone's tiny screen as a "$4,88" deal. Even then I thought it was a lot to pay for... er... whatever it is that Yahoo does these days.
They weren't at the time, someone was marking all the early submissions then putting a link to a two day old thread. It looked like someone was picking what source would make the front page.
I left that position and later worked for a bunch of tech startups and larger companies that, while not perfect, at least had enough good people in them to redeem my view on the human race.
I cannot imagine why anyone would actually work as a mid-level worker in Verizon unless you had absolutely no other options in life.