Strategy

1. To what extent was the evolution of strategy at Yahoo planned? To what extent was it an emergent response to unforeseen events?

Yahoo!  started in a Stanford University campus trailer. It was founded in January 1994 by Jerry Yang and David Filo, who were Electrical Engineering graduate students when they created a website named "Jerry and David's Guide to the World Wide Web". The Guide was a directory of other websites, organized in a hierarchy, as opposed to a searchable index of pages. In April 1994, Jerry and David's Guide to the World Wide Web was renamed "Yahoo!". The yahoo.com domain was created on January 18, 1995.

Venture capitalists saw record-setting growth as dot-com companies experienced meteoric rises in their stock prices and therefore moved faster and with less caution than usual, choosing to mitigate the risk by starting many contenders and letting the market decide which would succeed. The low interest rates in 1998–99 helped increase the start-up capital amounts. Although a number of these newentrepreneurs had realistic plans and administrative ability, many more of them lacked these characteristics but were able to sell their ideas to investors because of the novelty of the dot-com concept.[citation needed]

A canonical "dot-com" company's business model relied on harnessing network effects by operating at a sustained net loss to buildmarket share (or mind share). These companies offered their services or end product for free with the expectation that they could build enough brand awareness to charge profitable rates for their services later. The motto "get big fast" reflected this strategy.

During the loss period the companies relied on venture capital and especially initial public offerings of stock to pay their expenses while having no source of income at all. The novelty of these stocks, combined with the difficulty of valuing the companies, sent many stocks to dizzying heights and made the initial controllers of the...