Why I think Marissa Mayer should buy Automattic

September 12, 2012 | 9 comments

WordPressPandoDaily reports that Yahoo! has sold half its stake in Alibaba for $4.5 billion. Their take is that Yahoo! needs one or two big products to turn the company around, and that Marissa Mayer should look to successful large acquisitions like PayPal and YouTube.

I agree. And I can’t think of a better company for them to buy than Automattic, the company behind WordPress.

For every 100 new domains names in the US, 22 of them run WordPress. Around 10% of all websites in the world run WordPress. Those are two amazing statistics.

Automattic’s CEO, Toni Schneider, worked at Yahoo!, and actually created the Yahoo! Developer Network. Meanwhile, the open source WordPress now contains Jetpack, a tool that links each disparate installation to the WordPress.com hub.

Automattic makes around $45m a year, with a valuation of $300-500m. Yahoo! can afford that, with or without the Alibaba transaction.

What would it get, beyond a connection with the platform powering between 10-20% of the web? Well, let’s think about Yahoo!’s origins: a curated index of the web. Not algorithmic search, but edited channels that were the best of the web for any particular topic.

In the mid-2000s, Yahoo! acquired Flickr and Delicious. It no longer has the latter, but it’s started hiring again for the former. Flickr’s a great way to find photos of things or collections of things. (And of course, Delicious was too.)

Yahoo! also has a pretty cool set of semantic API technologies under its belt, for extracting meaning from free text, for example.

By curating content from blogs, Flickr, its Hollywood connections, plus integrating with its APIs and content-specific grouping and filtering tech, it has the potential to be how we find new content online. (Google, of course, is how we find specific content that we know we need, Facebook is how we keep in touch with our friends, and Bing is trying to be Google.)

Is Yahoo! a technology or a media company? It could be neither: a platform company, in the truest sense of the word. It can provide a platform for content creators to find an audience, and for audiences to find interesting content. That’s still, really, missing in 2012.

Going back to WordPress, what if Yahoo! integrated its own ad platform with WordPress, allowing bloggers to make money from their content quickly and easily, while simultaneously finding an audience through curated topical channels? What if it then acquired the OpenPhoto Project (run by another Yahoo! alumnus) and pulled the same trick there, integrating those photos with Flickr and allowing photo owners to pull the Flickr trick of allowing licensing through Getty? Rinse and repeat for video and other partnerships.

Yahoo! could embrace the distributed, creative anarchy of the web while at the same time consolidating an ad presence, declaring once and for all what it actually does, and – I would argue – positioning itself to take over from other, declining media models.

WordPress, meanwhile, would gain from Yahoo!’s resources, assuming the Automattic team and the WordPress open source community retained control. And an unconstrained Matt Mullenweg would make both companies fly.

A pretty good day for Marissa Mayer: why Yahoo! could still win

July 16, 2012 | 5 comments

Not only was she named as the new Yahoo! CEO today – but she’s also announced that she’s expecting her first child. That’s up there with Mark Zuckerberg’s graduation-IPO-wedding triple whammy earlier this year.

At the time of writing, Yahoo! is worth over $19B. It’s certainly languished for the better part of a decade, and some of its leadership choices have been questionable. But it’s huge in Asia, its news and sports sites are the #1 in their respective categories, its APIs are widely used, Yahoo! Mail remains more popular than Gmail, and it still owns sites like the much-loved Flickr (which I’ve been using for years).

There’s a lot of potential energy in Yahoo!, ready to be converted into success.

I wouldn’t be at all surprised if, under Mayer, it became the new, friendly home for broadcast media. Here’s CNBC’s coverage of the CEO announcement, and here’s the corresponding coverage from Fox Business. Both are hosted on Yahoo!’s Screen portal, which also has deals with ABC News, MLB, the NBA, the NFL and the NHL – and I’m picking names out of a very large hat here. It’s worked hard for its friendly status with the content companies, and if you combine that with its content analysis technologies, aptitude for smart feeds and real social tech, as well as true hardware agnosticism, you’re looking at what could be a very interesting platform for 21st century content consumption. (Don’t believe me? Jason Kilar, Hulu’s CEO, was under heavy consideration for the leadership post until he bowed out.)

That focus would also sidestep Yahoo!’s biggest bugbear: the perception that it’s a search engine / web index directly in Google’s space. Yes, its origins lie there, but Google’s emphasis on algorithms would be an uphill struggle to beat – and while the Yahoo! Directory still exists, it’s clearly not the company’s prime focus. (Also, it’s worth considering that Mayer likely still has Google stock.) Better to embrace the spirit of Yahoo!’s early years and provide a space on the Internet that’s more about DNA than data.

Yahoo! won’t be an algorithm; it won’t be a click farm that tricks the user into building their own direct marketing profile. It’ll be a curated series of channels full of the stuff you care about. That’s its strength, and that’s what it should concentrate on.

Delicious: not so tasty now

December 17, 2010 | 2 comments

Logo of DeliciousHe’s dead, Dave. Everybody’s dead. Everybody is dead, Dave.

It’s the end of the road: Delicious, one of the darlings of the “Web 2.0” movement, is being shelved. The social bookmarking site was famous for its simple interface, which introduced tags and cloud services to the world, not to mention creative use of available domain names, bookmarklets and social networking for a purpose. Its creator, Joshua Schachter, is a smart guy whose opinions about software design are worth taking seriously.

As a result, it was widely used: I directly know people who have relied on it in academia, public arts bodies, private companies and in their personal lives. Delicious served a genuine user need. The trouble was, Yahoo! didn’t make any money running it, despite having paid between $15-20 million for the privilege.

Money: get away. Build a service that will pay, and you’re okay.

That’s not Joshua’s fault, nor an intrinsic fault with Delicious (although they could probably have tried harder to drive direct revenue and cement their sustainability). Yahoo has a track record of mismanaging its web properties, going back to the first dotcom bubble – leading to 600 job losses a few days ago.

More generally, it’s arguably a symptom of Web 2.0 fever around five years ago; lots of great services were being funded, despite not having any business models to speak of. It’s only a matter of time before many of the remaining services from the era go the same way. Be smart: look at how to save your data now.

Near; far; wherever you are, ensure that your data lives on.

What’s next for the site’s 5.5+ million members, and their 180 million bookmarks? Lifehacker has a guide to exporting your data from Delicious into your web browser, but that’s not going to be good enough for many users.

Other bookmarking services are available. There’s even a spreadsheet doing the rounds comparing Delicious alternatives. But I’d like to suggest that it’s only a matter of time before many of them, too, are shuttered.

We know that the cloud is useful and important – but it’s no longer enough to put something out there. Responsible developers should know how their product is going to continue to exist, for the sake of their users. Here are some questions to ask when picking a service to house your valuable data:

  1. Does it have a sustainable business model? Are you being directly charged, or is your data being sold somehow? (Advertising on its own is not a sustainable business model in most cases.)
  2. Do the owners have a track record?
  3. Is there a way to get your data out and move it somewhere else? If not, can you buy the software and host it yourself, on your own infrastructure?

I would suggest that if the answers to any of the above are “no”, you might want to move on and look at something new.

Delicious logo render by Bernard Goldbach, released under a Creative Commons license. Title apologies go to the Red Dwarf team, Pink Floyd and Celine Dion respectively. I’m so sorry.

Public IT project hell: let’s make government work for us

December 3, 2009 | 1 comment

Why does it cost $235 million to integrate a few IT systems?

Johannes Ernst contrasts the Yahoo/Facebook deep integration announcement with the US government’s announcement that they will spend $235 million on integrating incompatible healthcare IT systems, and asks some pertinent questions:

I assume we all agree that an environment in which leading-edge companies innovate on their own to the benefit of their customers is better than one in which the government has to spend large amounts of money to drag along kicking and screaming “participants” — as it is so common in health IT. How do we turn US healthcare IT from the latter to the former?

One might equally substitute education, or local councils, or law enforcement. It’s a widely-accepted truth that public IT endeavors suck, and that enforcing data standards across disparate public bodies is like herding confused, angry cats into a very wet bag. It’s also true that commercial web services have been very good at integrating for the good of their customers, often without any money (let alone $235 million) changing hands.

I do think there’s a false distinction that’s been made here: public bodies and government departments tend to be swamped in a sea of bureaucracy that prevents them from moving or changing as nimbly as many commercial companies. (Of course, as companies begin to become institutionalized through age and size, they also become less nimble: take Microsoft and IBM.) Many of these restrictions are necessary for the simple reason that they’re using our money, and some regulation is required to ensure tax funds are being spent wisely and benefit the wider public good. We don’t want people to just walk off with it.

Our tax dollars at play

It’s also widely-accepted that our tax dollars are not spent wisely, and often don’t benefit the wider public good. Public bodies are full of inefficiencies, in part because of the bureaucracy involved. I’ve certainly worked within university environments where entire departments of people could reasonably be described as incompetent, but had integrated themselves so well into the system that they had become a required port of call in the bureaucratic workflow. I’ve also seen fully private companies formed using university money and resources earmarked for public research, and government grants essentially spent on beer and travel. These are the kinds of inefficiencies and sanctioned fraud that must be stamped out.

Public bodies and private companies are different in one major respect: their stakeholders. It is a legal requirement for shareholders in a company to have access to the company returns, board minutes and so on (although a wider cloak of privacy is often necessary). In a public body, the stakeholders are the public, yet we often don’t have access to details like financial statements, minutes and decision-making rationale. In Britain, an attempt to get government departments to work like commercial companies has resulted in a ridiculous system where departments must pay each other and the British taxpayer often doesn’t have a legal right to the information they produce.

The public is the board

Ultimately, in a democracy, the public should be the board of directors. Genuine public oversight hasn’t been possible before, but transparency and accountability are now possible via the Internet. We don’t need political parties and administrations to be our eyes and ears any more; we need them to be our hands, and act on our behalf. We need to be able to see the inner workings of public bodies: not just the numbers, but the actual internals and decisions. With genuine public oversight in a way that ensures the bodies know they’re being watched, and governments obligated to maintain these bodies for direct public benefit in a way that’s responsive to the public, costs should go down. It’s not perfect – and Switzerland has recently shown us the dangers of having frequent public referendums – but given the spending, inefficiency and fraud inherent in the system, we can no longer trust the government to do this on our behalf.

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