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Comment by steven2012 | Hacker News Reader

steven2012

This is essentially what happened in my group when I was at Yahoo. Our group spent several months on a redesign that made it significantly more modern and easier to use. After it went live, though, this decreased the number of ad clicks by a significant number, and the people in charge hurriedly reverted all the changes back, since they needed to make their revenue numbers in order to make their bonus.

When you are stuck in a company that can't innovate because a shitty site leads to more money due to inertia, then you know you are on your way down. This leads to your best developers thinking "what the fuck did I waste all my time for?" and they will leave in no uncertain terms.

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I've actually faced a similar situation, and let me tell you it was hard. Companies like Yahoo exist to make money - or, at least, they must continue to make money in order to continue existing. Like Dustin said,

> "This is truly a nightmare scenario for any CEO: do you take the risk and proceed with the better user experience/product at the expense of short term numbers–with no promise that the better design will actually lead to long-term benefits–or do you scrap the new design and start over?"

Would the simplified, modern design have led Yahoo into a new era of profitability? Maybe. Or maybe they'd just have a nicer site that made less money for a year.

Our team made a site that made less per visitor, but we felt like it was a better-looking and more useful site. We decided to stick with it and work out the kinks, but ~6 months went by without reaching our old sites' benchmark. There was a ton of pressure on me to make it work or admit defeat and revert. I nearly gave in as the stress built, but eventually revenue surpassed the old site. I later learned that I was almost fired over it.

My story has a happy ending, but just barely. I have sympathy for the people making these decisions.

There's a lot of room between "exist to make money" and "must make money in order to exist". Like, a staggering amount of room.

there's also a lot of pressure when you're public

I don't really see much of a difference. If a company must make money to continue to exist, then I think it's reasonable to say that company "exists to make money." Of course, that doesn't mean is exists only to make money.

The practical difference disappears when your operating margin is 0. When you have money left over after paying your essential expenses, though, you can do stuff. Like, if you're Microsoft and you have 60 billion in cash, you can have a big R&D department that sometimes engages in blue-sky research.

Do you consider a company like Raspberry Pi or Oxfam to "exist to make money"? They certainly need money to exist.

Lots of bookstores, cafes, antique shops, whatever, are labors of love. And not only things like that. A bakery---a good bakery!---exists to make good bread. It has to sell that bread and cover its costs, etc., in order to do that, but it doesn't exist in order to make the money necessary to cover its costs. If that were why it existed, it would be easier to abandon the end of making good bread!

Exactly, reminds me of one of my favorite quotes:

"We survive by breathing but we can't say we live to breathe. Likewise, making money is very important for a business to survive, but money alone cannot be the reason for business to exist."

interesting

To be fair, revenue could have kept growing with the old design; you still don't know if you've achieved more with the new one!

> Companies like Yahoo exist to make money - or, at least, they must continue to make money in order to continue existing.

Hows that working for Yahoo now?

Actually, that's kind of disingenuous. Google optimises for less clicks per user, because Google is a site for people who want to get stuff done.

Yahoo and Facebook are time-wasters. And unlike Yahoo, I can't see it ever transitioning to anything other than a time-waster.

Time-wasters are basically unprofitable (you're getting clicks from people who are looking to kill time, not find a new insurance policy), but that's what Facebook is. Unless Facebook wants to become the new Linked-In (and they don't - Linked-In just doesn't have the market cap), they just have to be a better time-waster.

If Facebook had a lower valuation, they might be able to move to a position where their focus was on serving people doing stuff, not wasting time, but they can't.

Hows that working for Yahoo now?

Is that supposed to be snark? I realize they're not fashionable, but Yahoo is still quite successful.

Hows that working for Yahoo now?

Pretty well, considering they are still around more than a decade after they stopped being "cool". They're not trendy in tech circles, they are just a business that makes money.

Yahoo and Facebook are time-wasters... Time-wasters are basically unprofitable

Yeah, unprofitable to the tune of $600 million a year. That's Yahoo's net profit last year.

I swear to god, the blindness of people to anything that's not hip right now is amazing. People assume because they personally stopped caring about something that it must have failed.

IIRC, they were the top destination 15 years back. They were the default homepage in most browsers. From that spot to "just a business that makes money" is perhaps not the best thing to happen to them.

At the same time, I don't think Yahoo is purely money-minded. From what I read, they were the only company which challenged the FISA orders last year (even before the Snowden leaks).

How many others of the top destinations from that era are still around?

Look at Lycos. Excite. Altavista. Even the nominal survivors like AOL are largely shadows of their old selves. Frankly, it's fairly impressive that they've held out. Consider their starting point: Just a directory.

The bubble in retrospect makes them look faded and tired, because they're "only" $36bn today. But $36bn is $36bn...

And being "the default homepage" with an audience so much smaller was a much less impressive position to be in than their current reach.

$600 million? So they're doing a bit better than AOL, then.

When I last heard, Yahoo seemed to have a net value of less than zero (http://www.bloombergview.com/articles/2014-03-17/is-yahoo-s-... ), once you exclude their minority stakes in alibaba and Yahoo Japan.

That could just be investors / analysts being stupid (either the ones valuing alibaba too highly, or valuing Yahoo too low). But Yahoo doesn't make a ton of money off its core business.

It's still quite possible for them to turn it around. They are really very good at what they, and they have the eyeballs.

Since Alibaba doesn't pay them dividends, owning a share of it has no effect on profit & loss.

I can't find any links ("Yahoo finance 2013" is exceedingly useless) but wasn't that $600M partially/mostly from them selling off stakes in things like AliBaba and not from the core business?

No. None of that $590 million came from the sale of Alibaba shares, as the Alibaba sale took place in 2012, not in 2013.

In addition, $590 million is not Yahoo's net income, but their pretax income from operations. In other words, excluding Alibaba.

Here's the breakdown for 2013, in thousands:

    Income from operations         589,926
    Other income, net               43,357
   -----------------------------------------
    Provision for income taxes    (153,392)
    Earnings in equity interests   896,675
   =========================================
    Net income                   1,376,566

"Earnings in equity interests" is Alibaba.

See 10-K at Yahoo's investor relations site: http://investor.yahoo.net/sec.cfm

It appears that $80M of that $590M came from a one-off patent sale - which was the kind of thing I was talking about.

That's a ~14% (artificial) boost in profit that takes them from "$65M down on 2012" (bad) to "$23M up on 2012" (adequate).

Nobody jumped on your "time-waster" comment. I think that's an interesting concept. Is your startup a "time-waster" or a "time-saver"?

2 things about Yahoo:

1) I'm still paying for their email service, and have been for 10 years. Their UI redesigns have been horrendous at times, but email lockin is powerful.

2) I really don't think dominance on the internet should be expected or desired, just because its possible. There's an example below about Yahoo Japan "owning" auctions in Japan. Sure, eBay has cornered peer-to-peer non-local vending in the US (let's not kid oursevelves what "auctions-buy-now" really are), but why should they be the preferred platform in Japan? Yes the internet allows it, but in the end, for a variety of historic and social reasons, different companies will fill different niches in different places, even if the internet looks like one gigantic niche and place. In other words, there is very little benefit seen from dominating auctions in US and Japan. Sure a few people would be able to order items more easily across the Pacific, but that effect pales in comparison to other internal factors. Maybe some local website had a marketing deal with a popular franchise in a certain country and got more popular initially, and then dominated that local market by network effect.

To summarize: I think it's normal to have local companies cornering local markets at the country/cultural level, even though the internet and e-commerce could theoretically be dominated globally. Google and search is a unique case, and expecting all companies to be like them in every market is misguided. I think that leaves a lot of space for Yahoo and many other similar companies to survive.

I also have no interest in using Yahoo, but my (Japanese) wife loves using the Japanese-language version to browse news, etc. I wonder if they are making most of their money in Japan.

Quite likely, given that their online auction platform dominates the Japanese market (ebay eventually gave up).

If you're talking about Yahoo Japan, that isn't Yahoo. It's an independent company, which Yahoo holds a 35% stake in.

It happened www.lifehacker.com a few years ago.

But I think they really made it worst after the updated UI, I never got back there.

Nearly everyone has bought into the utter bullshit that advertising makes the web free. This delusion buries not only the fact that we have made a deal with the devil, but also that the deal really sucks. What we traded our souls for we don’t even get. The web would be both cheaper and better if we just paid for what we use straight up. And more importantly, society would be better. I'll explain all of these.

IT'S NOT FREE

We’re not Facebook’s customers, advertisers are (more on this below). But we are the advertiser’s customers, and the cost of the "free lunch" is simply shifted to the price of the things we buy from them. In other words we still end up paying for the full cost of Facebook (and even more, as I'll get to next). Costs may even shift regressively, to advertised products predominately consumed by those with lower incomes, in which case the poor are subsidizing the better off.

IT'S MORE EXPENSIVE...

Not only are you still paying for the full cost of the Facebook product you use, you are paying for all the advertising overhead: the costs of its advertising technology and infrastructure (huge, btw), the agency and creative costs (Don Draper and company have to pay for the hookers and scotch somehow, not to mention what’s-his-name who basically just lounges in his office barefoot thinking Japanese), and the advertiser's big marketing departments (that often outnumber and outspend the people making the product!).

The best minds of my generation are thinking about how to make people click ads. That sucks. – Jeff Hammerbacher, fmr. Manager of Facebook Data Team, founder of Cloudera

So in addition to the original product cost and the ad overhead costs, you are also paying the opportunity cost of an inferior product (as Dennis Curtis points out in the OP) as well as the engineering costs of figuring out how to optimize ad revenue, because that’s what happens when websites have to design to please advertisers over pleasing us, the users. Dalton Caldwell makes this point comparing Sourceforge to Github[1]. As ergo says in a comment[2], “If the new news feed is making their advertisers happy (and bringing revenue into Facebook), then that's what they optimize for.” As jfoster says in a comment[3], “Ad-supported models untie the relationship between UX and revenue.”

Furthermore, our identities and privacy are bought and sold to the highest bidders. And where do the bidders get their money? From us of course! A double whammy! We're trading our privacy for free product? Bullshit. We get personalization? Bullshit. Personalization means optimizing something for me, not optimizing for the advertiser. Again, we're not the real customer. We’re certainly not Google’s[4][5].

WAIT. IT'S EVEN WORSE...

Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need. – Tyler Durden, Fight Club

Think of the social costs of advertising. The web is infested with misinformation and manipulation. Beside the lying ads themselves, relying on a revenue stream entirely dependent on how many ads are seen severely affects the moral choices of those who decide what gets produced and how its presented. What are the costs of a misinformed and variously manipulated citizenry, of distortions to the free-market?

Knowledge and discourse are the lifeblood of both democracy, free markets, progress. The web, from the little scammy websites to the big brand ones that so many blindly trust, has a huge influence on who we vote for, what we buy, and most importantly, what we believe.

There is no free lunch, and there is no free web. This "free" ad-"supported" web we have is much too expensive.

—

[1] http://daltoncaldwell.com/an-audacious-proposal

[2] https://news.ycombinator.com/item?id=7484075

[3] https://news.ycombinator.com/item?id=7484442

[4] Lloyd made his pitch, proposing a quantum version of Google’s search engine whereby users could make queries and receive results without Google knowing which questions were asked. The men were intrigued. But after conferring with their business manager the next day, Brin and Page informed Lloyd that his scheme went against their business plan. "They want to know everything about everybody who uses their products and services," he joked. - Wired, http://www.wired.com/wiredscience/2013/10/computers-big-data...

[5] Google's once famous clean and neutral search results are now cluttered and biased (http://arstechnica.com/business/2013/10/new-banner-ads-push-...).

This is the most insightful comment that I have ever read in HackerNews.

Advertising is not the worst. In-App purchasing is. It turns the whole thing into endless ad stream. Every purchase confirms the success of previous efforts as ad, then what to do next? hit the f*cking user harder!

Yesterday I was sitting with a friend's young boy who was showing me some math games on a tablet. These are games designed to teach simple addition, subtraction, etc to young children.

What amazed me was how intense the push for in-app purchasing was! Every one of the several games had a popup after each level or activity that would offered some in-game "power-up" for just $0.99 or various amounts. It wasn't just that you could make an in-app purchase, but that the app was very aggressively pushing it. He told me, "my mom says I can't do that", but the "no" button was much smaller and harder to press than the yes button, visually.

His mom indicated that he had made such purchases before, and so far she hadn't found a way (on this particular tablet) to disable in-app purchases.

I would think you could defund the account...? I am not familiar with iDevices, but with Google I could just remove payment information from my account, and that would pretty much put a stop to accidental purchases.

This is why I donate to PBS. Their content is unrivaled and unimpeachable. What is the name of the app your friend's son was using, they deserve a special place in hell.

The sad truth is if the developer had priced the game at say five dollars they most likely never would have been discovered or if they had the user's conditioning would have kicked in: "Must find free alternative! Dumb greedy developers trying to rip me off, entertain and teach my child for free. FREE I SAY!"

We (as app users) brought this on ourselves, or at the very least we're half culpable.

The day the app store stops being the primary marketing channel for apps the better off we will be.

I stand by my original comment. Yes, developers deserve to make money, that doesn't mean you have to be an asshole, especially when they probably go around claiming to be "educators".

Yea. PBS's content is truly unrivalled and unimpeachable. Its a wonder they've maintained it for so long now.

It is maintained by contributions from U.R. Lissners. ;-)

This is a plague of a problem. Developers who put IAP into their games frequently, in no uncertain terms, try to trick young kids into pressing the "buy $100 worth of database bits with your parents' credit card!" button. It's despicable.

AppLock on Android solved this issue for me and my kids (since any intent that goes to the Play store will get intercepted and challenged for authentication), but it's very frustrating to them to have to try to navigate these screens that have 12 big, bright "goes to the lock screen" buttons and 1 small, uninteresting button that does what they actually want.

IAP/microtransactions are a plague.

There was no way for me to buy anything online until I turned eighteen (no longer true now that Canada got with the program and started issuing visa debit cards). I'm very grateful for the opportunity I had to use the Internet to learn and communicate for free.

And it's not just children. How would people in poor countries afford to pay the same amount as a Westerner for access to StackOverflow or a motorcycle repair forum or whatever?

I don't think it's such a clear win to make the Internet for-pay.

Ads already paying less for users from poorer countries, so a pay-for system should be priced also by country.

I don't think you got what I was saying. Try a closer read. The internet is for-pay; we are paying for it, and there's no way around it. The question is how we pay for it.

In your pre-eighteen-year-old case:

* Most likely you (or your parents) bought stuff from a company that advertises on the web. So you (or your parents) were paying, just not directly. And as I point out, you were paying extra.

* If you didn't buy enough of the advertised products, your internet was subsidized by other users who did. Same for people in poor countries. But these subsidies are wasteful, as the advertising overhead takes a huge cut.

* You still paid for the opportunity costs of an inferior product.

* Most importantly, you still paid for and will continue to pay for the damage to society that advertising and an ad-supported web inflicts. Ads are dishonest and manipulative. An ad-supported web is driven by click-rates, not user satisfaction, so we get the proliferation of link-baiting empty (if not manipulative) content that we all see today.

But you are right in that if we ditch advertising, we need some way of distributing the costs progressively, and make sure that people who have little still have plenty of internet and internet content access.

thanks eevilspock for your great comment. It's a perfect plea for app.net.

Macroeconomically, it is true that the resource, human, and energy costs of the internet sum to the integrated time discounted expectation of future returns for communication sources (advertisers).

This does not preclude the possibility of mutual growth, though. A system interested in long-term stability will optimize minimally for short-term advertiser revenue, and primarily for long-term attention provider satisfaction.

One counterfactual of the current model that can be instructive is the following. Assume a system whereby all communication is happenstance -- there is no advertising or selective filtration (which is what advanced advertising becomes). Such a system degrades in much the way twitter does -- manual (attentive) classification and differentiation are not used universally enough, people don't sufficiently filter their own attention sinks, and the attention eventually dries up in the vacuum of entropy.

It would certainly be possible to move to such a manually filtered system, but it would require a massive reconstruction of social norms. The best system would be one that could passively or subconsciously negotiate filtration strategies in a decentralized runtime environment. It will need to be spatially collocated with the conscious being, eventually, or the latency will be unacceptable.

Eventually, then, we'll find that such filtration will actively seek out opportunities for novelty or for the satisfaction of latent (either unrecognized or frustrated) desires, and surface them to attention. This is precisely what advertising becomes.

Finally, you are right that we're approaching the equilibrium from an oblique angle, but it is a direction from which we can make progress at every step of the way, and the endpoint is ultimately a fairly ideal state.

I think I can see both sides. If all meaningful stats you are collecting are going down, I think something is definitely wrong. There are basically three options:

1. Fix/revert the update so that those stats increase again. This is probably the easiest/quickest option, especially the revert, but it obviously sucks to have "wasted" time on the updates.

2. Collect new/more stats that you deem meaningful and see if those have increased. This is the one that I like best from the perspective of a lowly programmer who worked hard on the updates, because it provides the possibility that even though existing stats have worsened, the updates are still empirically better. Of course, it's hard to figure out what new stats to look for, and whether or not to deem them truly meaningful. An oversimplified example would be if all you're looking at is ad conversions, maybe you should start looking at user retention as well, because even if ad conversions decrease, a large increase in retention can in the long (or even short) run lead to more revenue.

3. Ignore the numbers on the prediction that the numbers will increase over time. This one is also appealing, but will and probably should be rejected by management.

Something that also needs to be recognized is that "significantly more modern and easier to use" is a subjective claim, and is not necessarily "better" for whatever definition of "better" the company is using.

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