You can’t buy internet cool

In many ways it was Yahoo! who pioneered Silicon Valley’s ‘Greater Fool’ business model during the dot-com boom of the late 1990s.

The Greater Fool model involves hyping a website, online service or new technology in the hope a hapless corporation dazzled by the spin will buy the business for an improbably large amount.

Fifteen years later many of those services are closed down or languishing, and the founders who were gifted millions of dollars by gullible boards and shareholders have moved on to other pursuits.

The news that Yahoo! has sealed a deal to buy blogging site Tumblr for $1.1 billion shows the company’s urge to buy in success remains under new CEO Marissa Mayer.

It’s difficult to see exactly what Tumblr adds to Yahoo!’s wide range of online properties except a young audience – exactly the reasoning that saw News Corporation’s disastrous investment in MySpace.

What’s particularly concerning is a comment made by Yahoo!’s CFO Ken Goldman at JPMorgan’s Global Technology Conference last week.

“So we’re working hard to get some of the younger folks,” Goldman said on a webcast from the JPMorgan Global Technology Conference in Boston.

It’s all about trying to “make us cool again” he said, adding that Yahoo! will focus on content that’s “more relevant to that age bracket”.

So they are spending a billion dollars to “make us cool again” – it’s disappointing Marissa Mayer has allowed middle-aged male executives to run free with the shareholders’ chequebook in a quest to rediscover their youth.

Like most middle-aged life crises, it’s unlikely to end well.

For Tumblr’s founders and investors things have ended well. It’s time to buy the yachts and fast cars that those middle-aged execs covet.

In the meantime the quest for internet ‘cool’ – whatever that is – will move onto whatever online service teenagers and 20-somethings are using.

Paul Wallbank‘s latest book, eBu$iness, Seven Steps to Online Success, shows how business can get online quickly and cost effectively using web 2.0, cloud computing, social media and e-commerce tools.


Notify of
Inline Feedbacks
View all comments