Paul Graham: “What Happened to Yahoo”

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I didn't leave out a question mark or anything; Graham's not asking what happened to Yahoo, a company whose brightest talents have all left and who's best chance for long-term survival is as a unit of Microsoft. He's telling us it's because they didn't hire enough hackers:

Microsoft (back in the day), Google, and Facebook have all been obsessed with hiring the best programmers. Yahoo wasn't. They preferred good programmers to bad ones, but they didn't have the kind of single-minded, almost obnoxiously elitist focus on hiring the smartest people that the big winners have had. And when you consider how much competition there was for programmers when they were hiring, during the Bubble, it's not surprising that the quality of their programmers was uneven.

In technology, once you have bad programmers, you're doomed. I can't think of an instance where a company has sunk into technical mediocrity and recovered. Good programmers want to work with other good programmers. So once the quality of programmers at your company starts to drop, you enter a death spiral from which there is no recovery.

This is largely true, but Graham isn't an objective outsider—he is (or was) one of the hackers who, like the Flickr or Delicious folks, found himself inside Yahoo via an acquisition and chose not to stay around.

Is he saying Yahoo didn't have good programmers? Or is it that they had them but didn't listen to them? That's different. If it's the former, then how is it Yahoo's vast network of web apps hasn't burst into flames after 15 years of running at massive scale? How is it that some of the most influential books about web app performance have been written by current/former Yahoo engineers?

Clearly, Yahoo engineers are pretty smart, they're just usually not making the business decisions, and the "suit people" who are making them make bad ones. It's not that Yahoo hired suits. They hired dumb suits.

Google and Microsoft do hire the "smartest" and "best" people in the academic sense. Google is especially notorious for their college admissions-like hiring process, and the extent to which academic achievements (SATs, GPA, degrees with honors from Ivy League or similar) are valued over practical experience. That's not surprising, since Google was founded by a pair of Stanford guys who love being Stanford guys. And yeah, Google makes a shitload of money.

But they make nearly all of that money from targeted advertising, nearly all of which comes from search. Google has dozens of products now, but as far as I know the majority of those quietly lose money, and a few (like Buzz or Wave) have turned into embarrassing failures because it turns out that not all human beings are smart like Google engineers. So Google wins, but not all the time, and not because they're "smarter" in every respect.

And speaking of wealth, if that's how we're defining "win", let's not forget that Paul Graham made a fortune selling his startup to Yahoo. He's a smart guy and a good writer. But the reason we know his name is because he made a shitload of money from a company that apparently wasn't smart enough to survive.