Group 6 Nguyen Lam Thanh Truc - MA2N0229 Tran Le Yen Ha – MA2N0235

Introduction Founded in 1994 by David Filo and Jerry Yang. An Internet site that provides hierarchically organized of link to site on the World Wide Web. The name of YAHOO including: Yet Another Hierarchical Officious Oracle

Question 1: What make Yahoo an attractive opportunity ( not just a business idea)?

Answer: It solves a problem: At that time, the Web browser Mosaic allow people to book mark interesting pages. However, with the popularity of the Web increases, so does the number of sites, which lead to the increased number of interesting pages they want to bookmark. The list of bookmarked pages would go long and unsorted. Yahoo solve this problem by introduce a software that allows users to group their bookmark into subject areas.(p572)

Answer (cont) observing trend, (the technology advance) The opportunty arrives as the popularity of the internet increases and there are many internet users want to surf the internet to find out its content New product, made by human not by machine

Answer (cont) Huge demand:  approximately 40 millions of users of the internet  8 millions of users have access to the internet and the world wide web  40% of home and 80% of business in the US will have access to the internet  200 millions of user of the internet by the year of 2000.(p 581, Business Plan excerpt)

Question 2: HOW WILL YAHOO! MAKE MONEY?

Yahoo offer free service for users, that means it doesn’t charge a fee for using the website. So the price for using its service/product would be zero. However, Yahoo still can make money by selling advertising space for other company.

It has been improved to become one of the search websites and provide users the greatest mailboxes as Yahoo! mail. Yahoo! may generate revenue through advertising banners.

Yahoo! cooperate with other companies like Window (Window Live Messenger) in order to launch an biggest messaging community in the world.

In 2013, Yahoo has paid 1,1 billion USD for purchase Tubmlr, the most favourite social network website at that time. Thereby, Yahoo! also capture revenue opportunities to profit through advertising business in social networks like Facebook or Myspace.

Question 3: Identify the major risks in each of these categories: Technology, market, team and financial. Rank order them

Technology risks: Using any innovation technology architecture to expand and adapt to the needs of users and the rapid change of technology may adversely affect business.

"The number of inquiries to Yahoo increase dramatically. Within a month, the number of hits jump from thousand to hundred thousand daily. The Standford university – where they use the server- start to get overloaded. If the demand of traffic outgrow the bandwith the server, the response rate may be slow, lead to customer disatisfaction.” So they have to find a way to increase capacity of the server.

The idea of expanding technology or applications, new software was invented, easily to be stolen or destroyed by hackers. Personal information of users easily stolen by the obsolete security services, not catch up with the development of modern technology.

Financial risk: Need fund to expand. Fluctuations in foreign currency exchange rates affect to operating results in U.S. dollar terms. Yahoo's stock price has experienced a dramatically fluctuation since Purchase Tumblr with $ 1.1 billion can bring great financial risk for Yahoo! Unstable economic situation also affected the profitability of Yahoo!.

Market risk: Yahoo! faces fierce competition with other strong companies like Google, Microsoft. Maintaining reputation by buying other companies couldn't help revive Yahoo after the failure.

Market risk: No innovation in business strategy, and Yahoo! become obsolete and lost support in the market. “The growth of the internet industry slows significantly, and the use of the internet as a platform for advertising doesnot grow as predicted.”

Team risk: The staffs and the new CEO of Yahoo! that can help companies increase profits, if they have the new direction for the operational model of Yahoo!.

Founders of Yahoo are two graduate students, who:  strong background in technology  really know what people want. However, they may not have the business knowledge nessecary to operate Yahoo when it grow further.

Question 4: The advantages and disadvantages of each funding option they could pursue.

Option 1:Accept Sequoia’s offer and launch Yahoo as their own business. Advantages: Sequoia is a company with long tradition of success in the venture capital Provide a substantial amount of money to survive and develop. Offer help to assemble management team. Disadvantages: give up 25% share of the company for the fund, which is quite significant.

Option 2: Cooperate Sponsorship Advantages Offer money, stock, possible management positions. Retain 100% ownership of Yahoo Disadvantages potential taint that goes with the sponsorship because Yahoo! Has started as a free- commercialization.

Option 3: Merge with an existing cooperation. Advantages: Nescape is close to its IPO so it can provide a lot of money for the founders in next couple of years Nescape has high profile founders and backers that would guarantee the success of the company. Disadvantages Become part of Nescape and cannot decide its own fate. Opportunity cost

Option 4: Wait for future opportunities Advantages: Can get a better offer Disadvantages: Lose current opportunity