A blog post at 37 Signals today highlighted certain startups that were acquired by Yahoo! over the years and showed that it’s almost a road to ruin for all, if not the majority of them. Among the dozens of acquisitions, Flickr seems to be the only one that can still be considered successful, but even then the co-founders left due to dissatisfaction with internal bureaucracy.
Indeed, the overriding reason for many of these startup deaths seems to be the apparent bureaucratic marsh at Yahoo that sucked in all the energy and spirit of the founders. Many of the founders had decided to pack up and start anew as soon as their contracts with Yahoo! had expired, claiming inability to innovate and improve their products to achieve success under Yahoo! management.
Yahoo could have won the internet
Given the number and nature of the startups as well as engineers that Yahoo! had acquired in the past decade, it would have been easy for them to create many of the currently popular social web services and apps, but they never did. It’s difficult for most observers to point out which acquisitions had bloomed significantly greater under Yahoo! than they would have had they not been bought.
Yahoo! could have created something like — or even usurped — the monster social network that is Facebook. Every component to create Facebook was there but Yahoo! never figured out how to put the parts together. They never had a Mark Zuckerberg.
The Flickr division for example, could have created Instagram but never did, because despite the focus on photography, Yahoo! did not see the opportunity or even the feasibility of such a simple spinoff service.
And then there’s Delicious, which Yahoo! wanted to shut down, despite its users’ wishes. It was forced to reverse its decision on Delicious after coming under public pressure. Yahoo! eventually released a statement that it was going to find a suitable home for the popular bookmarking service as it struggles to find a business model for it.
One web service that could have been spun off from Delicious is Instapaper. Marco Arment’s little project grew to be so popular that it made sense for him to leave Tumblr, the blogging platform which he co-founded with David Karp, and focus on developing his content archiving service.
Out of this Delicious episode also rose Pinboard, a bookmarking service not unlike Delicious but with a paid subscription model right off the bat. These are just two opportunities lost for Yahoo! from a single property it owned since late 2005.
From only the above examples, Yahoo! could have easily owned the entire internet. It could have grown larger and more popular than anyone could imagine but it somehow failed to discover or perhaps execute on those ideas.
Under Terry Semel, Yahoo! nearly captured the search market but everything fell apart when Semel refused to acquire Google for US $5 billion, $2 billion more than what Yahoo! was willing to part with. It later purchased Overture which had a pay-per-click advertising scheme similar to Google’s but took too long to integrate the product. In a series of bizarre fumbles, Yahoo’s sales team even competed with Overture’s.
Koprol’s meteoric rise
Yahoo!’s latest high profile acquisition — at least in Southeast Asia – was Koprol, a location based service developed by three Indonesians who ran web design companies. Often mistaken for being a Foursquare clone, Koprol actually based itself on BrightKite’s original premise coupled with a commenting system from Plurk which was popular in Indonesia for a few months in 2008.
Koprol entered private beta in late 2009 and expanded gradually before Yahoo! picked it up for an undisclosed amount in May 2010. The startup had vague monetization ideas but nothing had materialized, possibly due to the relatively low number of users.
At the time of acquisition, Koprol reportedly had 75,000 users but the buyout doubled that number in just a couple of months. By November 2010, Koprol had exploded to 1 million users and three months later it was nearing 1.5 million users.
The reason for this meteoric rise in popularity? Yahoo!’s aggressive campaign through television, radio, online, and print media from August to October and smart partnerships with Nexian, Indonesia’s biggest local handset maker, as well as Telkomsel, the country’s largest mobile carrier.
Earlier this month, Koprol launched its business outreach program, one that is expected to finally bring in revenue for the former startup. During the launch, a Yahoo employee had revealed to e27 that Koprol is looking to introduce a number of game mechanics and additional features in the coming months, although the source declined to say precisely what they are or how they would work.
Koprol’s chance to shine
Compared to other Yahoo! acquisitions, Koprol seems to be in a fortuitous position, at least for the moment. Michael “Smitty” Smith Jr., the director of Yahoo Developer Network in the region, who has since been put in charge of Koprol as head of product, has been a Koprol enthusiast ever since he found out about it in mid 2009. Yahoo! has also assigned senior product marketing manager Anne Kallus to oversee its operations in Southeast Asia.
MyBlogLog co-founder Eric Marcoulier had noted in an article on ReadWriteWeb that Yahoo!’s projects rely so much on the influence of an executive who holds an interest in the project, that when the product is shuffled away from the executive, it’s almost guaranteed that it will flounder. Koprol’s co-founders would do well to pay attention to his words.
In the last several months, members of the Koprol team had been furiously shuttling between Yahoo! offices in Jakarta, Sunnyvale, and Singapore to discover ways to make Koprol a much more significant property for Yahoo!. Following the relative failures of Yahoo!’s other buyouts, Koprol’s founders are not keen to see its product follow suit.
API becoming a stumbling block
Koprol has so far resisted the push to shift its backend completely to Yahoo!’s web services for various reasons. If anyone is wondering why Koprol hasn’t opened its API to the public, it’s because Yahoo! and Koprol’s internal engineers are still working on creating a more permanent backend agreeable to both parties according to a Yahoo! employee familiar with the matter. Until that happens, releasing a public API would be an exercise in futility and frustration for third-party developers as well as internal engineers.
Demand for Koprol API has been overwhelming from local developers and many had expressed disappointment that after two years there’s still no accessible API. A Koprol staffer had revealed to e27 some time late last year that a small number of developers had been given access to its API but warned that it’s still constantly changing.
Yahoo! and Koprol need to sort out this battle over backend services before external developer interest wanes. Without strong developer support, Koprol could easily fade away just like BrightKite and Plurk. It may flourish the way Twitter has but only if it provides access to third party developers and becomes an essential communication and sharing platform. The founders may not have seen it that way at first but it’s the direction Koprol is heading.
Moving forward
Is it fair to determine Koprol’s future based on Yahoo!’s past acquisitions? It remains to be seen. Koprol is Yahoo!’s first major acquisition in Southeast Asia, a market that is quite different from the US. It is run by a team that, for the large part, did not evolve from Silicon Valley and therefore have different approaches and attitudes.
On the other hand, Yahoo!’s Sunnyvale operations are still seen as the same old Yahoo! that failed to take advantage of its properties despite having lost many of its executives and managers, including having gone through three CEOs in four years, and hired replacements from external sources.
Unfavorable news about Yahoo! had come mostly from California, but Yahoo!’s Southeast Asian operations are seen differently by local consumers and developers and adoption of Yahoo! properties had been positive.
All the other failed acquisitions had years to their development under Yahoo! but Koprol has only been around for two years with less than half of its life inside Yahoo!.
With all these different factors playing a part in Koprol’s development and growth, it seems to have a chance to be a beacon for Yahoo! but only as long as the management and executives refrain from enforcing the same treatment as they have with the company’s previous acquisitions.
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