The Ugliest Girl At The Dance: How Yahoo Destroyed Yelp’s Google Acquisition

http://techcrunch.com/2010/10/01/the-ugliest-girl-at-the-dance-how-yahoo-destroyed-yelps-google-acquisition/

by bdr • 16 years ago

106 54 16 years ago

MaysonL• 16 years ago

Sounds like the Yelp board blew it.

jan_g2• 16 years ago

What I don't understand is this: who has the power to decide such things? In this story it seems like there are two entities who can block each other. Why didn't someone decide for Yahoo, if their offer was so much better? It's in the interest of the shareholders.

staunch3• 16 years ago

There's probably a legal agreement at Yelp that specifies what percentage of stockholders must agree in order to sell. It's unlikely the investors have enough equity to force a sale. That's irrelevant though. Even if it was possible Yahoo would not purchase Yelp if all the key employees where vehemently opposed.

bambax2• 16 years ago

Well if the management team won't work for Yahoo, then it's doubtful the Yahoo offer would stand; therefore there is no Yahoo offer and they should have taken the Google offer.

It's not clear why they even considered the Yahoo offer if it was in fact impossible for Yahoo to go ahead.

ck2• 16 years ago

Yeah, that's a tasteful expression to use in a tech article title.

htsh• 16 years ago

I came here to say the same thing. This sort of misogyny is exactly why the tech world has difficulty attracting / retaining women.

peterbessman3• 16 years ago

I think the title indicates that you are less a member of their target audience than you might have suspected. It was pretty funny and effective to me?

And to the poster who called that "mysogyny"...really? Hatred of women? All women? Not just the ugly ones who screw up your attempts to get with the hot ones? And hate? A little strong.

This article is about how yahoo is pitiable, and something you don't want to associate with. Kinda like ugly girls at dances.

Reality is cruel. Mea culpa.

ericabiz• 16 years ago

"Hatred of women? All women? Not just the ugly ones who screw up your attempts to get with the hot ones?"

You know, it honestly didn't occur to me that the title of this article could be construed as misogynous. But your comment...that type of comment is why I hate the tech industry sometimes.

drags2• 16 years ago

We (i.e. society) have a history of overemphasizing purely genetic characteristics (beauty, birthing of male heirs, etc) when considering the "value" of women. The ugly girl at the dance metaphor seems designed to tap into that strain for some of its resonance.

Ironically, isn't this something MA is implicitly arguing _against_ in the substantive part of the post? That the single quality of price shouldn't be the only thing we consider in acquisition offers? His title metaphor seems at cross-purpose to his content.

SkyMarshal• 16 years ago

Is it really so bad at Yahoo? Or are a bunch of fanbois just blowing things out of proportion?

wh-uws• 16 years ago

I think the universal conclusion is that engineering is good - great but management needs alot of work.

As a former intern... I concur.

Tichy2• 16 years ago

I can't imagine working for Yahoo is so bad - not worse than other big corps anyway. Seems to me they actually provide a lot of cool things, too. For example, YUI, Hadoop, lots of internet services, BOSS,...

Also, I think they came up with internal Hackathons first?

Just to name a few things - I am not a specialist on all things Yahoo, but I don't get why everybody seems to hate them.

staunch3• 16 years ago

Google has vastly more interesting software and services, so if that's the basis for a decision the winner is obvious.

Of course that has nothing to do with their decision. They're probably much more concerned with who's more likely to make Yelp successful going forward. That's also pretty obvious. They'd bet $200 million that Google is a better bet. Talk about putting your money where your mouth is.

Tichy2• 16 years ago

If they are working for Yelp, it seems unlikely that after the acquisition, Google will move them to the core search engine team.

Good point about where are the better chances. They must really care for their product, then. I would assume it is a given that after an acquisition, you just try to get out of the company asap.

gaius• 16 years ago

Google has vastly more interesting software

Well, that's certainly the public perception, but I think the reality is more subtle. Like BigTable and MapReduce are just whitepapers outside of Google, but you can actually download and use Hadoop, and who wrote that?

brown9-22• 16 years ago

Well there likely a world of difference between "working for Yahoo" as an engineer and attempting to run your business (Yelp) within the organization and Yahoo's management structure. If I was management of Yelp, I'd be concerned about the latter, not the former.

jonhendry• 16 years ago

After they buy it, it's not your business anymore.

aristus• 16 years ago

I worked for two startups which ended up acquired by Yahoo. The engineering culture is fantastic. Some of the smartest people I know work there. The rest of the company seems sclerotic and obsessed with turf wars. That's what did it for me. It was difficult to get things done quickly. Every cool & useful project was almost an act of rebellion.

It's galling to see so much latent potential. Don't look at it as "no worse than big corps". The shame is that it's no better.

bigbang• 16 years ago

Maybe working at Google is better than Yahoo!, but both companies are notorious for killing acquired startups. Its hard for me to see any reason for the Yelp management team to take the Google offer when Yahoo! offer was almost 40% more. I suspect there is more to the story.

neilk2• 16 years ago

I'm not sure we should really blame either of them for "killing" startups. In truth, often times, the startup just fails to grow much, or fails to complete a rewrite to be more scalable. But that might have happened anyway.

We can say that they both have a history of not giving startups what they need to succeed, especially social startups. However, at Yahoo it's largely related to internal power struggles on the order of Europe in 1913, and it can seem much more personal.

ErrantX• 16 years ago

The Yelp board of directors, faced with a fiduciary duty to act in the best interests all stockholders, couldn’t approve a Google deal when a competing deal was available at a $200 million higher price.

If it became clear that the management would not work at Yahoo (for whatever odd reasoning) then surely the best interests of the stock holders is to take the deal that works..

Rather than let it go down the pan!

coryl• 16 years ago

Not when you're selling your stake in the company. $200 million is a helluva lot of money. They're tabling offers left and right, shoulda woulda coulda.

rms• 16 years ago

I agree with you, but the courts of the State of Delaware do not.

skorgu• 16 years ago

I don't doubt that this is true but do you have any more information on precedent for this type of thing?

slowpoison• 16 years ago

Isn't it part of management's job to not make decisions based on emotion? Can't the shareholders hold them (or their boss) accountable for making a decision that reduced company value?

hackoder• 16 years ago

I interviewed at Yahoo and I didn't think it was that bad. I met some really cool/smart people and the technologies that they showcased were, again, really cool.

I felt very little difference between the engineering culture at Yahoo vs other "popular" companies. And Yahoo's products are good- think YUI, Yahoo Mail (client side stuff), Hadoop, etc.

They asked me one thing that Yahoo! could improve upon and I suggested that they focus on making one service really really great, which can then, in turn, drive traffic to other services. And to drop poking their head into everything (My yahoo, groups, games, social networking etc can be dropped).

Its sad to see how Yahoo's value has fallen recently, since internally it seemed very vibrant and had the kind of atmosphere I would've liked to work in.

raganwald• 16 years ago

You're describing Yahoo's engineering culture. Have you looked into their management culture?

ahi• 16 years ago

For some reason Yahoo has incredibly talented engineers, all working on things that don't make Yahoo any money. When it comes to the paycheck, Yahoo is just a web publisher; not much more tech focused than AOL or IAC.

kscaldef• 16 years ago

For some reason Yahoo has incredibly talented engineers, all working on things that don't make Yahoo any money

My observation was that that was because the divisions that did make money were a cesspool of internal politics, back-stabbing, and constant re-orgs and re-writes as different managers gained power. For a while Yahoo held onto some good engineers in those divisions by throwing lots of money at them, but in the long run I think that just enabled those engineers to negotiate fat compensation packages at other companies.

statictype• 16 years ago

I find this story a little hard to digest.

I would think that the board of directors are supposed to act in accordance with the company's best interests and in a way that Enhances Shareholder Value.

In this case, since management supposedly refused to join Yahoo, it was in the shareholder's best interest to take the deal from Google. If it's true that the directors squashed the deal then they dropped the ball and failed at their job.

unexpected2• 16 years ago

Google would enhance the long-term shareholder value, to be sure, but what about the short-term value?

Yelp's board is probably mostly composed of top Yelp management and the VC's that put the initial money. If the initial VC's can cash out early for $200,000,000 more, why wouldn't they? Long-term, it wouldn't matter what would happen to Yelp (if it was all cash) - they'd be able to wipe their hands clean and give themselves the biggest exit.

It'd kind of like selling your house. If you were moving from Seattle to SF, you would try to sell your house for the biggest price. Say the best offer comes from someone with a bad history - they want to tear down the house, build a mcMansion, whatever. If this offer was 25% higher then the next competing offer, you wouldn't care - you would just sell it, move on, and then let the neighbors deal with their new problem.

Kudos to the Yelp team that cares about the 5-10 year value of the company, as opposed to the 1-3 month valuation!

pbhjpbhj• 16 years ago

>If this offer was 25% higher then the next competing offer, you wouldn't care - you would just sell it, move on, and then let the neighbors deal with their new problem.

Love you neighbor.

It's possible that someone somewhere amongst those simply trying to screw these businesses for every last cent they can get is someone who thought beyond capitalism and decided that being bought out for more was not the be-all-and-end-all but that they should hold to some other moral.

Sadly, I find that unlikely though.

gvb• 16 years ago

Assuming Yahoo was aware of the top management's threat of leaving if sold to Yahoo, it quite likely would have torpedoed the Yahoo deal.

Even if Yahoo wasn't aware of the threat, I would think the Yelp board would be in trouble if they sold a "furnished house" to Yelp at a 25% premium, but it turned out that the house's furnishings all disappeared before Yahoo took possession.

kujawa• 16 years ago

I had a very promising interview at Yelp right around that time last year. I have a feel for this sort of thing, and I was damned sure I got the job. Great fit for my experience and skills.

Never heard anything back from them.

I'm gonna guess that this was at least partially related.

neilk2• 16 years ago

Could this be a rational financial decision from an employee's point of view? I'm not smart about financial things, so perhaps someone can school me.

As I understand it, startups are usually acquired through stock swaps. So that $X million really means $X million in company stock.

The investors cash out immediately, but employees vest years afterwards. So the employees are the only ones who care about the future value of the acquirer's stock.

If Yelpers had calculated that 3 years hence, the difference between Yahoo and Google stock moves would have erased the difference in initial price, then does the Google deal become the rational choice?

The difference wouldn't even have to be that large. If we assume a three year vesting period (with no partial vesting earlier on), and that growth rates are constant, then by my calculations the Google deal works out better for employees if (for example) Google grows by an average of 6% per year while Yahoo shrinks at 3.5% per year.

But this is just my rambling, I don't actually know much about this stuff. Informed comment?

cwalcott• 16 years ago

To me the most interesting part of this article are the comments: many people questioning Arrington's impartiality since Yahoo is a competitor to AOL. It'll probably subside over time but still interesting.

The Ugliest Girl At The Dance: How Yahoo Destroyed Yelp’s Google Acquisition

Related Stories