I've been thinking about this off and on over the past few weeks as the Yahoo-MicroSoft saga was unfolding. There were a lot of opinions out there, some predicting the disappearance (so to speak) of a Silicon Valley Internet legend, but many others wondering about the wisdom of CEO Jerry Yang's refusal to just take the offer. But not being an obsessive blogger, and being somewhat preoccupied with other stuff like work (what's that about?), I hadn't gotten around to sharing my thoughts. Then the MicroSoft offer was taken off the table, ostensibly, and there was another crescendo of opinion, now focusing on the loss to the shareholders, and the predicted futility of Jerry Yang's stated desire to have Yahoo succeed independently. And yesterday I happened to catch a rather sentimental column on the Merc News, one of the few that bemoaned the possible loss of an iconic pioneering company, and I decided that it's time for a post.
First, what's best for the shareholder may not always be what's best for the customer/user, especially when the company is a public giant. In the early stages it is fairly safe to assume that if you do what's right for the customer, you're generally building shareholder value, so Jerry Yang and David Filo could just focus on what they delivered to the user and assume the rest will fall into place. But as you get to the 800-lb gorilla stage, things do change, especially in M&A situations. I'm not a Yahoo shareholder and if MicroSoft's acquisition would have had noteworthy impact on my outstanding mortgage, or savings for my daughter's college, or even paid for a longish luxury vacation, I too might have been irked by the deal falling through - just might though, not sure. But I am a user of Yahoo, as well as Google and MicroSoft, and I use each for different needs. I prefer having different options to choose from and, needless to say, I believe they do better by having to compete. I was so not looking forward to having Yahoo be just another part of the Redmond behemoth which is busy trying to balance its enterprise offerings against the consumer future. The user/customer will be better served by an independent, successful Yahoo.
Secondly, as an entrepreneur, I can totally understand a founder's reluctance to just take the money and run. Based on history, the prognosis for an acquired company, especially the big, established ones, is not very encouraging - the preferred outcome is full assimilation (resistance is futile!), and the persistence of a separate identity is costly. Sure, most startups define success as an acquisition, but the Yahoo folks went the IPO route and have already made their millions (billions). If they're still going in to work everyday it's because they are passionate about the company they've built and they care about its future. So it is not at all surprising that they want to dig in their heels and not fold right away. After all they have the entrepreneurial mojo and could possibly innovate their way to being high-fliers again.
Of course, this is a minority opinion. And other forces, like the the Icahn effort, may make this whole thing moot. Yahoo is an awesome company (and seems to be a nice place to work at too), and this is just one entrepreneur giving props to the guys who built it and understanding where they come from. Maybe it's not too late to buy some stock...
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