"A few hours before the Yahoo acquisition was announced in June 1998 I took a snapshot of Viaweb's site [1]. I thought it might be interesting to look at one day." [2]
With all the talk about Yahoo acquisitions I thought it might be a good time to remind everyone that back in 1998 Yahoo acquired a three-year old Viaweb.
With that exit money the Viaweb founders (Paul Graham, Robert Morris, and Trevor Blackwell) went on to start a rather well known seed accelerator and a popular hacker news aggregation site.
Hey Imran, if PG could see the sorry state that his old company is languishing in today, he would be saddened.
Yahoo stores, once the pioneer that unleashed ecommerce in US, is a joke in ecommerce inner circles. It could have dominated ecommerce, had it not been for Yahoo management's complete and utter neglect of the platform after acquisition.
The main reason Yahoo Stores is in business today is because it's difficult to move your ecommerce platforms, once you are beginning to grow. Despite that stickiness, there is a daily bloodletting of Yahoo Stores defecting to the new, nimbler and customer-centric enablers such as Shopify. Users are frustrated at the zero innovation at Yahoo Stores.
Marissa Meyer has never brought up Yahoo Stores as one of Yahoo's key properties. I suspect it's because Yahoo Stores is so small today that it just doesn't register at her level. That should not be. There are probably only 40,000 Yahoo stores today (the business started 18 years ago). Compare that with Shopify (started 9 years ago), which is slated to sail past 80,000 stores this year.
Also worth pointing out that in 1999 Yahoo bought Geocities for $3.57 billion in stock. Geocities had a similar audience and premise as Yahoo - it made building and hosting simple websites easy.
Yahoo! bought Geocities on or about Jan 28th, when their stock was at $44. Two and a half years later, after peaking around $108, their stock was trading at $4.
Hope the Geocities founders cashed out in time (and weren't locked into unvested shares). I'd hate to get a tenth of the agreed upon price for my company.
Even if they were 'locked' into the shares, they could have always collared them as Mark Cuban did (he was stuck in his Yahoo position when the market imploded, but was protected via the collar he set up with Goldman Sachs to limit the downside).
In many public companies, employees (even rank and file) are prohibitted from shorting or buying puts on their shares.
Some companies even prohibit selling covered calls, regardless of strike price. (A deep enough in the money call behaves somewhat like a put.)
I'm a little surprised that Cuban would be locked out of selling the shares but able to enter into the collar. I'm sure it was legit (since it's well known), but still...
It remains one of the largest hosts of online stores in the world, powering more of the top 500 internet retailers than any other hosted store platform.
As pg once joked, Yahoo Stores still hosts pg's blog. (I presume that by that, Paul is referring to his paulgraham.com site, but I may be mistaken about which site he had in mind.)
It was also completely rewritten. It kind of boggles the mind. They didn't keep any of the branding or any of the code. What exactly did they buy? Users?
I rewrote some parts for scalability in the first couple years after the acquisition, and a lot was changed after I left. But I believe a lot of it is still there 15 years later. Perhaps a current maintainer could elaborate?
Many codebases end up pretty different after 15 years. It doesn't mean the original codebase wasn't a useful starting point. It's lower risk to adapt and improve based on customer feedback than figure out, "what should a build-your-own e-commerce tool do?" in the first place.
That's exactly what they bought. These days you can clone a lot of sites that exist out there (HN or reddit are great examples) but you wont get anywhere without the community
PG's thoughts on why he immediately saw that Yahoo had problems upon entering the company have provided some really important context for me. The startups in my town tend to be well funded for no discernible reason or non-existent, and almost without exception I see founders who don't have any immediate problems that force them to find PMF or die. As a result, they mostly die.
To be clear: MOST startups die. I'm not hating on my community or well funded startups that die, that happens. I think it tends to be that if a startup has found PMF or is desperate to find it AND has money, they tend to grow not die.
Almost boggles the mind how far the web has scaled.
"Internet-based selling is expected to quadruple in the next few years from $2.4 billion last year to $12.1 billion by 2000, according to Forrester Research."
Compared to (from March 13th):
"Forrester: U.S. Online Retail Sales To Rise To $370BN By 2017"
Hmm... do you think a SaaS web store could charge $100/mo for 50 items for sale today?
----
Small Store $100/month
For $100/month you can have up to 50 items for sale (plus as many additional information pages as you want). You can upgrade to a large store at any time.
Large Store $300/month
For $300/month you can have a store with up to 1000 items.
Larger Stores
Larger stores cost $300/month for the first 1000 items, plus $100/month for each additional 1000 items. So a 5000-item store would cost $700/month.
Worth noting: Yahoo's share price on June 8, 1998 (date of the acquisition article) closed at $6.84. The stock closed at $35.83 just one year later on June 9, 1999. Then again, one year later, the stock closed at $72.00. The peak was $108.17 on December 31, 1999.
Ignoring how much of the deal was in cash vs. stock, if they held on for just a year or two more, their payout must have grown considerably.
I recently re-read pg's Hacker and Painter again. Some of the ideas are so true if you look at today's computer technologies. Functional programming, statistics in data classification (spam email filtering), web applications etc.
A more extreme example of this would be that when Disney bought Pixar, Steve Jobs became Disney's largest individual shareholder (7%) and joined the board.
[1] http://ycombinator.com/viaweb
[2] http://www.paulgraham.com/vw.html