“Yahoo’s journey illustrates how a company with an early advantage can disappear without continuous innovation,” Scout explained, while also providing hyperlinks to other websites supporting its thesis.
Scout may have to come up with a different interpretation if Yahoo CEO Jim Lanzone can leverage AI to expand upon a worldwide audience of 700 million users who have stuck with the company’s finance, sports, news, fantasy and email services, despite a history of folly that nearly destroyed a brand once synonymous with the internet.
Yahoo has “always been the white whale of turnarounds for me,’ said Lanzone, who has a track record for salvaging internet wrecks. “I always thought I could do something with this thing.”
Verizon never would have gotten the chance to buy Yahoo’s online operations if not for the company’s perpetual blundering under seven different CEOs in 16 years.
Although Yahoo’s checkered past didn’t destroy the company, it left a stigma that makes it unlikely that it will ever come close to what it once was, said Jeremy Ring, who was among Yahoo’s first employees when he began selling ads for the service from his New York apartment in 1996.
“Even though Yahoo isn’t what it once was, it hasn’t turned into a Blockbuster or Radio Shack story either,” said Ring, who delved into the company’s ups and downs in a 2018 book, “We Were Yahoo!” “What is going to enable them to compete against all the bigger companies using AI? I am not convinced all the best engineers in the world are suddenly going to come work at Yahoo.”
Once he got the cleanup work down, Lanzone began overhauling what remained — a process that has resulted in an upgrade of Yahoo’s popular fantasy sports division and a major overhaul of its email service that still ranks as the second largest on the web behind Google’s Gmail.
With the recent introduction of Scout to its 250 million users in the U.S., Yahoo is leaning into the AI movement with the hope that the s technology will simplify online search and produce more personal results tailored to each user’s interests. Lanzone is also hoping Scout turns into a flywheel, continually spinning traffic through its other services.
In a tacit admission that it’s behind the curve, Yahoo is running Scout on AI technology licensed from Anthropic.
Unlike other AI chatbots and answer engines, Scout doesn’t simulate human conversations so users can “have a fake personal relationship with it,” Lanzone said. “The product is very unique, even though we didn’t invent AI in the first place.”
Yahoo’s pursuit of more online search traffic has been largely an exercise in futility since the late 1990s, a descent that started just a few years after Stanford University graduate students Jerry Yang and David Filo founded the company as the internet’s first comprehensive directory of websites.
But as the internet began to play a bigger role in entertainment and commerce, Yahoo shifted its focus from sending traffic elsewhere to building an all-purpose website that people wouldn’t want to leave. That strategic pivot opened the door for two other Stanford University graduate students, Larry Page and Sergey Brin, to create a search engine called Google.
After turning down a chance to buy Google for just $1 million in 1998, Yahoo poured even more resources into creating a one-stop destination while paying so little attention to search that it turned to another company to provide that technology in 2000. Yahoo not only hired Google as its search engine but also promoted its brand on its website. By 2002, Yahoo was offering to buy Google for $3 billion, but Page and Brin wanted $5 billion. The negotiating impasse launched Google on a trajectory toward an internet empire now valued at $3.7 trillion under corporate parent Alphabet Inc.
If Yahoo’s bet on Scout pays off, Lanzone concedes it could lead to the company returning to the stock market more than 30 years after completing a 1996 initial public offering that intensified the dot-com fever gripping investors back then. Lanzone believes another Yahoo IPO could still get people excited.
“We still have one of the biggest audiences on the internet, and that audience has been pretty loyal through a lot of ups and downs,” he said. “If we just ‘super-serve’ them, good things will happen.”
