Yahoo and SBC: a match of mutual desperation
Three years goes a long way for these two former industry dogs.
Yahoo and SBC extended their deal today and expanded their reach into set-top boxes, cell phones and home networks.
I recall on November 15, 2001 when Yahoo was fending for its life in the eyes of disenchanted Wall Street analysts. The day was significant not only because it announced its partnership with SBC, but it was also Terry SemelÂ’s coming out party during his first analyst day as CEO. Considered a recluse compared with YahooÂ’s former black-turtle-necked CEO Tim Koogle, Semel remained a mysterious appointment given his former life courting Tom Cruise rather than building e-mail products.
YahooÂ’s deal with SBC was groundbreaking for two reasons. First, it gave Yahoo a means of piggybacking on DSLÂ’s rapid growth. Secondly, it became a life raft for YahooÂ’s collapsing advertising business because it offered a cut of every new SBC DSL subscription using the service. SBC was getting clobbered by cable, leaving it so desperate that it agreed to share revenue with Yahoo, albeit only $2 to $3 per subscriber, according to sources.
Semel now seems like a genius. In many cases he is, given the sorry state of Yahoo after the dot-com bust. In essence, the company was in the midst of transforming from the fuzziness of the boom years to a more cold-blooded corporate mentality needed to right its ship. But success rides on the coat tails of good fortune. Semel was the right guy at the right place at the right time, rather than some visionary praised by engineers in the Silicon Valley bubble. Who needs fortune tellers when thereÂ’s money to be made.