When we think about who the next Google or Facebook might be, we’re usually considering startups, fledgling companies, or even ideas that haven’t been properly translated into businesses yet. It’s not often that “the next big thing” is actually an old thing that just still exists. The proverbial phoenix from the ashes. And if someone said that the sale of Yahoo could become this phoenix yet to rise, I would have laughed out loud. Until recently, anyway.
Yahoo has been in steady decline for years, and even though Marissa Mayer seemed a promising savior for the floundering former online king of the hill, she wasn’t able to bear the weight of the sinking ship. Okay, maybe not sinking, but Yahoo isn’t exactly gaining in popularity either. It’s floating around with its head above water, unable to figure out how to move forward. Working at Yahoo is still considered prestigious, but not like working at Google. Customers aren’t leaving in droves, but they are leaving. They have assets and infrastructure, what they need is a vision and some guidance.
So it wasn’t a huge surprise when Mayer announced back in February that Yahoo would be laying off 15% of the jobs at Yahoo and auctioning off its internet business, along with various patents and property.
Could the Sale of Yahoo go to Warren Buffett and Dan Gilbert, founder of Quicken Loans?
Enter the next possible savior of Yahoo, but this time it isn’t a new CEO (although that could happen), it’s a (probable) new set of owners, a consortium that includes Dan Gilbert, the founder of Quicken Loans. While that’s interesting, what’s more interesting is that the consortium is being backed by Warren Buffett. If there’s one thing that Buffett does really well — better than possibly anyone — it’s make a profit. He’s known for buying and turning around companies that are in decline but still have a large customer base, the exact situation Yahoo is in.
Buffett and Gilbert, the founder of Quicken Loans, have been good friends since 2012 when Gilbert signed on to Buffett’s (and Bill Gates’) Giving Pledge, to give away half of his wealth before or when he dies.
The consortium is currently in the second round of bidding for the sale of Yahoo. Gilbert is obviously more suited to the technology space than Buffett, having started Quicken Loans, and is leading the consortium in the effort. Buffett’s Berkshire Hathaway has rarely been involved in technology companies, and Buffett admitted on April 30, during Berkshire’s shareholders conference which Yahoo live streamed, that the company had been slow to adapt to new technology when investing.
But Yahoo isn’t really new technology, as we’ve already covered, and Buffett’s interest in the investment is baffling to some Wall Street analysts. If you’re looking for jobs in advertising, Yahoo wouldn’t be the place to start ‑their advertising growth rate has been nonexistent for about five years. Their revenue has been flat during that same period. RBC analyst Mark Mahaney wondered recently where Buffett’s interest is coming from, calling Yahoo the “most fundamentally challenged” company in the internet sector.
Despite all the bad, Yahoo still draws a billion users to the site every month. Maybe Mr. Buffett has an idea or two about how to serve a ready-made audience of one billion.