Samuel Yeung co-wrote this blog post with Alex Southworth.
In the information age’s infancy, two Stanford graduate students created a simple directory to help users navigate the Wild West of the internet. They called it “Jerry and David’s Guide to the World Wide Web.” Within a decade, the duo’s pet project would become valued at more than $100 billion and would rebrand itself as Yahoo. Yahoo’s search engine, e-mail service and newsfeed covered almost all of the major services needed by the millions of new PC owners, and as a result, it was one of the hottest companies on the NASDAQ. Yet the next decade would see this icon of the industry be surpassed by younger startups, and in July 2016, it was bought out for just $4.8 billion.
Technological innovation breeds new products and go-to-market strategies by providing huge opportunities for companies to come in and disrupt the establishment. At the same time that Yahoo was on the ascent, the shift in enterprise computing from mainframes to PCs allowed companies like Hewlett-Packard and Dell to burst out of garages and dorm rooms, and usurp the traditional hardware manufacturers. Part of their competitive advantage lay in their expertise in client-servers technology, which formed the digital backbone to any company’s workforce. The other part of their advantage was their go-to-market strategy, which was tailored for these new products. HP developed a strong indirect sales ecosystem, and Dell pioneered the low-cost telecommunications/web sales model in order to gain unprecedented market penetration while at the same time changing the economics of the industry.