On Yahoo

From the outside Yahoo looks like a vessel slowly listing into the sea. Inexplicably, it still makes a lot of money but it is ultimately doomed as nobody really knows what Yahoo is for, Microsoft included. Its shareholders are furious with Jerry Yang for spurning the $33 per share offer and threatening action as Yang backpedals. Commentators are speculating whether Ballmer is playing a game and wondering if he will be back to the table, the answer is yes - after Yang & Co have twisted in the wind for a while.

Unfortunately when Microsoft get their hands on Yahoo all they will be able to do is manage its descent more efficiently. Yahoo’s real problem is search, being number two to Google is an uncomfortable position as Yahoo has spent a lot of time discovering. Why would anyone use Yahoo search when Google is around?

The reason Google succeeded is because Larry Page saw search differently than everything around at the time and the result was a search engine a hundred times better than anything else. Being 5% better than Google won’t cut it (assuming Yahoo could even get there) and being 5% worse, which more accurately describes Yahoo search, certainly won’t. The good news for Yahoo is that they already own the company which could save them.

Page’s great insight was that the links between pages mattered more than what was on them. He noticed that, in effect, website creators were peer reviewing each others’ sites and built a machine which could analyse that peer review to produce radically better search results. To outdo Google you would have to rank the internet in a completely new way. This may be needed anyway, as a recent post on TechCrunch speculated, the Internet is getting too big even for Google. Schonfeld said:

At a certain point, with billions and billions of Web pages to sift through, keyword search just won’t cut it anymore. It’s a needle-in-the-haystack problem, with the haystacks just getting bigger and bigger every second.

I don’t agree with him that keyword search is necessarily doomed but I think that more human interaction is required to sort the wheat from the chaff. This is the basic reason why even terrible ideas like Mahalo and ChaCha continue to attract funds. They should give up because the best human powered search engine in existence was invented by Joshua Schachter in 2003 and Yahoo already owns delicious.

Michael Arrington has already described delicious as his favourite search engine after Google and I think with some tweaking it could go one better. I am interested in the music business so I have tagged a number of stories on EMI. When I search for EMI on delicious I see all my own stories plus other users’ stories. Search results for the second group are not particularly great but delicious has all the raw information to make them much better. Through tagging I have already told delicious what stories I am interested in and it knows who else has tagged the same stories.

The beauty of delicious is that it can look into the mind of other people with similar interests to me, see what they have tagged and return more relevant results. Another advantage it has over Google is that delicious can also assess the strength of a link between me and another user by seeing how many times we have tagged the same page with the same tag.

All Yahoo has to do is analyse these links between users in the same way Google analyses links between pages and it will have a search engine which thinks differently and gives people a real reason to use Yahoo search over Google. If they crack it Yahoo will be worth far more than the $37 per share Yang wanted and they won’t need Microsoft.