Monday, January 22, 2007

How To Throw Away Billions

This is amazing. It's the story of Yahoo vs. Google, and here's how it starts. Both companies discover the concept of targeted ads. Yahoo hires a Hollywood CEO with zero tech experience -- "a guy who doesn't even read e-mail," according to the Wired story -- and the Hollywood guy decides it would be easier to buy two startups and integrate their technologies than it would to build a custom system.

Meanwhile, Google builds a custom system, and it's so much better that most people don't even know Yahoo ever even entered the targeted ads space in the first place. Yahoo bought the company that developed the idea, but everybody thinks Google invented it.

And the thing is, if you think about it, the technology is trivial. The only challenging element in building a system like Google's would be recreating the GFS, and then doing all the analytics and data mining. The system itself is just an auction. It's a weighted comparison. It's algebra. So this is the challenge on each company's plate, and Yahoo's Hollywood CEO fights with his engineers for months to persuade them that integrating outside technology would be easier than coding something from scratch.

What on earth were they thinking? It's just unbelievable. You take a guy who doesn't use e-mail, put him in charge of an Internet company, and he makes bad decisions because he doesn't know anything about building software. How could they not have seen that coming? It's like hiring an atheist to run a church. You can't even blame the guy, it's the people who hired him that you have to wonder about.

If you ever want proof that it's better to be brains in search of bucks than bucks in search of brains, this could be the most obvious example ever. It's definitely one of the funniest.

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