Breaking News - Verizon Buys Yahoo - Bonus

In breaking news, Verizon announces that it has purchased Yahoo for $4.8 billion. Now this is a steep, steep comedown for Yahoo, which was valued at $100 billion in the year 2000. Yahoo, of course being pre Google, one of the celebrities standouts of the first Internet age, and they are essentially seeing their bits and pieces auctioned off. It is a bit of an ignominious ending for a once great company. What lessons are we to learn from this? Yahoo famously in the late 90s, had its top people describe itself as a media company rather than a technology company. Google, of course, has always seen itself as a technology company. And the problem of course is if you're a media company, then you are similar to a TV station, a radio station, a book publishing company, and you simply don't see any one book publishing company or radio or TV station valued at $100 billion. Now I saw this with a lot of other technology companies. I will remember a precursor to Facebook, a company called the globe.com Most of you will not even remember. I went in for a job interview. This had to have been around 1998. The founders were a couple of 23 year olds. So at the time, almost 20 years ago, I was still an old man to them. I was in my mid-30s and they looked at me like, why would you want to work here? Your boss would be 19 years old. And that business of course went public. The founders became wildly wealthy for a short time, each becoming worth more than $100 million. Company went bankrupt soon thereafter. This has happened time and time again with Internet companies that start off attract a huge audience, but there's nothing really there. Now Verizon is, and I'm not giving stock advice or guidance today, Verizon is a long term savvy communications company. They previously purchased aol, so this is not their first time purchasing a content company. I also remember just wanted to share with you. There was a company called Sudo. It was kind of the precursor to YouTube. And Sudo prided itself in its Internet, TV, Internet video. That was the thing. I was called in to do an audition and I'll never forget doing political commentary. After the audition, the 23 year old in charge of hiring people said, you know tj, that's not bad, but we're trying to be young and hip so we need you to curse more. We need you to drop the F bomb more. Well, let's just say they didn't hire me. And that company went bankrupt too. After a huge splash and tens and tens of millions of dollars of venture capital raised. So what is the real lesson of Yahoo? Part of it is what's here today can be gone tomorrow in the ever changing Internet world. Part of it, I think, is no matter how established you are today, you constantly have to double down on your research, your development and try new things. Say what you will about Google and YouTube and I've had my beefs with them. They're always investing in the the latest technology. They're always spending money on the best and brightest engineers so they can stay ahead of the pack. Will this ultimately be viewed as a successful acquisition by Verizon? I don't know. What I do know is media companies in particular are susceptible to being hot one day, not the next. Yahoo has spent a fortune on creating content like a Katie Couric interview segment that seems to have gone nowhere. I do think the days of a big company creating a lot of content and trying to make money just from eyeballs and advertising, those days are long gone with a few exceptions. Can HBO do it? Sure. Can a few TV networks do it? But notice you don't really see Google doing that. They're letting their own customers create content for YouTube. I do think that is more the way to go. For those of you who are creating content, the challenge these days, I believe, is not to get some big network to hire you, but instead to build your own audience, monetize your own audience. Do that and you won't be sold for 5 cents on the dollar.