Less than a year later, Sequoia Capital backed the venture with $2 million. In May 1995, Messrs. Young and Filo were joined by Timothy A. Koogle, who left Litton Industries to be the business brains behind the online operation. Shortly afterward, Netscape Communications Corp. gave Yahoo! distribution on its popular Web site and access to millions of users.
In April 1996, Mr. Koogle took Yahoo! public, issuing 2.6 million shares at $13 each, which eventually climbed to more than $300 a share. Yahoo! used its IPO to buy into some Internet service and content companies, including $5.7 billion for the video service Broadcast.com, which was used to create a broadband version of Yahoo! and $4 billion for Geocities, which aided in the building of personal Web sites.
Making a profit
In 1998, Yahoo! was one of the first dot-com companies to turn a profit, reporting $15 million in profits on $245 million in revenue. By 2000, profits topped $280 million on more than $1 billion in revenue.
In 1996, Yahoo! was the first major Internet company to turn to TV to build consumer and advertiser awareness of its brand. It began with a $5 million irreverent campaign handled by Black Rocket, San Francisco, that showed regular people using Yahoo! to improve their everyday lives. Yahoo! radio spots ended with the brand's signature yodel. The marketing strategy positioned Yahoo! as vivacious and approachable, cultivating a loyalty that was reinforced by the "myYahoo!" personalization features and consumer support services.
In addition to its marketing programs, the company struck deals with content providers and distributors to extend its reach. It also offered consumers free access to its service and free e-mail, paging and other personal features.
Yahoo! came to be known as the common person's home in cyberspace.
In 2000, however, the bottom fell out of Internet stocks. The biggest blows to Yahoo! came from the weakening of the overall ad market and the collapse of dot.com advertising, which had been the dominant source of Yahoo! ad revenue.
While rivals such as AOL sought out merger partners, Yahoo! remained stalwartly independent, resisting a deal estimated at $20 billion to align with Walt Disney Co. Though its stock price was a fraction of its all-time high, Yahoo! maintained a market capitalization of $30 billion, making it a rich buy for nearly any company.
In 2001, Mr. Koogle turned over day-to-day management of Yahoo! to Terry Semel, a longtime Hollywood studio mogul and Warner Brothers chief. However, plans to reposition Yahoo! were stalled early in 2002 by the volatile stock market and the worst advertising slump in history.
Moving into search
In March 2003, Yahoo! acquired the Inktomi Web search provider; at the same time, it launched its Yahoo! Platinum service, an audio/video subscription service that included news from more than 90 sources, exclusive video from CBS' "Survivor" and Fox's "American Idol II," college basketball and other content. Two days after the launch, Yahoo! added ABCNews Live to Platinum.
In April 2003, Yahoo! relaunched its bread-and-butter Yahoo! Search with added features, supported by a national print and online ad effort. Black Rocket Euro RSCG handled the print effort; Simple Design, San Francisco, did online creative. In August 2003, Yahoo! ended its relationship with Black Rocket, moving its U.S. ad account to Soho Square, New York, then a new unit of WPP Group.
In October 2003, Yahoo! acquired leading search provider Overture Services in a deal worth approximately $163 billion. Overture brought 88,000 advertisers, an extensive distribution network and bidding and fee structure. The purchase, along with the acquisition of Inktomi in March, gave Yahoo! the power to be one of the two major search heavyweights against Google.
In February 2004, Yahoo! introduced Messenger for Mobile, a downloadable instant messaging application available on Sprint PCS Vision cell phones.
Seeking new ways to monetize search, Yahoo! in March 2004, launched SmartView, offering consumers a way to search for local businesses.
Proving that spam makes strange bedfellows, in March 2004, Yahoo! along with major competitors America Online, Earthlink Inc. and Microsoft Corp. filed the first major industry lawsuits under Can Spam, the federal anti-spam law that went into effect in January. Each Internet service provider filed its own group of lawsuits, but announced their legal actions with one voice.