Keith Watanabe * NET 2.0

I was reading about the new potential Yahoo with regards to their strategy of openness.  I like basic concept because it's what I've been saying for years that Yahoo needs (needed) to do.  Of course with the pending Microsoft deal, it's hard to say whether or not this strategy will have legs, but let's ignore that possibility for now and focus on this current core strategy.

In Techcrunch's article, it's mentioned that:

Yahoo wants to turn itself into one big social network-driven site, and simultaneously open many of its core services to get users and developers thinking of Yahoo as their Internet hub.

I think Yahoo should avoid utilizing the buzzword "social network" at all cost.  It's passe and screams to me of lost revenue.  They had long lost the grounds on this to other competitors, most notably Facebook and Myspace.  The whole "let's share" and "add as friend" thing are just fancy groupware motifs re-packaged for investors.  And Yahoo doesn't need investors at this point (well, they need a missile to hit Seattle for their sake, but that's a different story).  However, opening their core services is the start of where they should be going (and probably if they pushed it about 4-5 years ago, they could've had a huge leg up Facebook and Google).

The other part in the Techcrunch article that's good to point out is this quote:

There are three components to the additional news announced today - platformization, opening services, and portability.

These ares are definitely the direction they want to move in.  Unfortunately, Google has already done these things whereas Yahoo is in the proposal stage and this screams of "they just copied Google!" I do like the fact that Yahoo is focusing on PHP (actually SecurePHP) as it will help a PHP guru like myself actually be able to get started quicker than say with Google (and again make someone like me more apt to use Yahoo than Google).  They call their engine YAP (Yahoo Application Platform).

It seems the chief purpose in this is primarily for user retainership.  Not sure if that should be the chief purpose, but it's what they want.

Now, let me show you a counter strategy to Google's based on my limited view of what Google is doing with things like Google Apps Engine, etc.

Originally, I was saying that Yahoo needed to become an infrastructure platform for businesses, kinda like what you're seeing Amazon's EC2, Google Apps Engine, Sun's N2, etc.  The problem is that the majority of businesses trying to use the internet as a platform just have bad practices.  Too many outages, the high cost of setting, maintaining and improving that infrastructure to scale and (here's the key point for myself) simply re-inventing the wheel each time.  Companies that do provide this level of scale can eventually monetize that knowledge through re-selling their platforms.  As a side effect, you get to reduce your IT department size, since you no longer have to worry about dealing with a data center and can hopefully focus on business development by outsourcing the infrastructure component to a competent entity that utilizes best practices.

That's the start of the future for Yahoo.  But there's more....

I view Yahoo's future strategy as inverting their existing system.

Right now, as users, we land on their homepage and utilize only certain aspects.  A lot of the crud that goes on their homepage is unnecessary cruft whose value and mileage varies on a per-user basis.  And a lot of the current stuff seems like legacy portal content.  In opening up Yahoo, they need to reverse that aspect and expose all that content for developers like myself.

They've partly accomplished this through some feeds.  But we need more as I have been saying.  I think Yahoo needs to leverage the numerous partnerships with whomever they're getting their content from and allowing people to access that content without fear of repercussion  from a  lawsuit.  Imagine if someone wants to develop a music application.  That person could utilize Yahoo's service and create something without getting sued by the RIAA.  That's a move that Google clearly has not implemented (yet).  We need to be able to access deep, specialized levels of information and reutilize existing things on Yahoo.  Imagine for instance, a developer/homepage creator being able to take images, audio and video from Yahoo to create a fanpage for their favorite artist.  If a developer can host such an application on Yahoo but legally be able to  utilize such resources without fear of a lawsuit because of some legal clause Yahoo can provide as part of their service offering, that means Yahoo services can potentially be revenue, socially and technologically driving.  I see this as a positive pro-active stance on what so many companies shy away from.

I mean people talk about Mashups all the time, which to me are nothing more than something like a DJ splicing together bits and pieces to create a mix.  But for this to work there needs to be something protecting people so that these services can truly flourish.  Can Yahoo be the key to provide this type of service for developers?  Perhaps cut a revenue sharing deal with those artists, studios, producers, and content producers to allow developers to do such things.

Another part, and I think this is a key piece to Yahoo's long term survival (without Microsoft) is empowering the users on the ad front.  The big problem I have with ads is that people who want to use them are powerless to the randomness of context based algorithms.  Certainly what Overture/GoTo.com originally did was innovating and helped create an industry of its own.  But the fuel for those days is depleted and they must find a new source.  My major complaint about context ads simply is this: they suck.  I never feel like there's enough control and that web programmers are forced into some stupid SEO madness that really has no ROI, except for those who have high traffic.  It's always just been up to the webmasters to manage this.  Of course, the argument for this area is that people simply don't have time to manage these things (it's almost like managing being a day trader).  But at the same time the automation algorithms used to analyze one's site sucks and it's mostly what seems to be pure chance and high traffic where one can earn money for this.

But in the end, people just aren't clicking on ads and people instead are turning to other solutions (some which are nefarious) to handle this aspect.  Which in the end implies that the solutions provided by Yahoo Search Marketing, Google AdWords, Microsoft AdCenter only can survive because of the size of these companies, not by the quality of the ad service provided.  Thus for me at least, control and the ad quality are what Yahoo need to improve upon.  If they can open up these services and allow developers to better tune ads to their advantage rather than relying on Yahoo's algorithms, there's a better chance for Yahoo to excel in this aspect.

Opening search is a must.  Google shot themselves in the foot by killing their old web service and forcing everyone to move towards their branded AJAX search.  I know what Google was thinking, but it was a bad long term move.  It is true that I use Google as my primary search engine, which naturally makes me inclined to prefer Google as the number one candidate if I would want to write some search function.  However, closing search and limiting it to a branded AJAX search just sucks.  Yahoo easily can compete here by providing unlimited queries with an XML response.  I don't think the results returned are going to be that much different in quality either these days.

And here's some radical but (Google) killer ideas for Yahoo in terms of being innovative:

They need to not impose any limits on queries returned from their results.  I think Google's use as an Apps Engine is limited simply because they impose limits.  Some of Yahoo's services, like search, already does this.  Amazon has limits too but they're smart enough to understand how to monetize their services for the enterprise (which to me means of the three, they'll survive in the long term).  Still some of their services are limited like Amazon's Web Service function has a limit of 1 second per query per IP address.  For a site that intends to be high volume one day, this imposes a huge restriction on being able to do things like threading queries, this is an impractical limit.  It's like what I said about Google's DB only being able to return 1000 results at a time: the most serious application you can write in truth is a local pizza ecommerce site.

Here's where Yahoo can easily differentiate themselves again from the competition by removing such limitations on their services.  If Yahoo could provide the equivalent of Amazon's Web Service search for their content without the limited query response, I'd switch in a second.  The natural goal for any website is to scale up; so if the bottleneck becomes these services' limitations, then developers will end up being forced to shop around for someone who offers a better version.  And that's a great place where Yahoo or some major content providing company can enter.

Finally, and here's the most radical idea that I think companies like Yahoo, Google and Microsoft need to move towards in attracting us developers is that they need to become something like VC funds.  I'm certain that many developers like myself dream of the day that our little service will one day get bought out by Yahoo, Google, Microsoft, AOL, etc..  I've known people personally who had this happen.

What has been killing someone like myself is simply that I can't focused all my energy on my own stuff.  I've got to take a day job and can only put in 4-10 hours maximum a week on my own projects.  And even those hours are not guaranteed. 

I'd love to see someone like Yahoo or Google just toss money at me to develop the next killer application.  And there's no doubt in my mind that others feel the same way.  This would be crazy as the flood of applications would be unlimited and you'd be creating a huge hot zone for an even faster push on the technology side.  This would be like a renaissance of computing (things are already happening like this but a lot of what we get is crap).  But given the potential of services provided by Yahoo, the openness of their feeds and usage of infrastructure, etc. the quality level might be a lot higher.

There are some catches to my idea, but as with everything, there's a method to my madness.  And there's a nice way for Yahoo to monetize this nutiness:

• The venture money would come in tiers.  So it all depends on the ambitiousness of the project.  It might range from $50 for a silly localized pizza site, to $1500 seed money per week/month all the way up to $60,000 for a one year contract on a project.  I'm certain Yahoo already does something like this internally where budgeting for projects get proposed and then later killed.  This probably is a far cheaper solution.
• There would be a review process on applications based on the scale of the project.  People who want the highest ($60k) tiered project must receive a review of their site/business plan with their business development groups.  This helps potential businesses work with people who specialize in growing businesses.
• Periodic code reviews with internal Yahoo developers will go on consistently.
• Now, here's where Yahoo gets the money back: depending on the success of the site, Yahoo would get an automatic level of ownership of the business/application, revenue sharing, etc. guaranteeing that they would get a return on their investment.  Again, it's a VC fund so Yahoo essentially gets first dibs.

The thing is that this is a new form of ecommerce, risk taken to the extreme.  There's too many punk kids like myself who just don't want to deal with the ego slamming of venture capitalists (in my case because we've seen how typical VCs operate and simply because most of us don't have an MBA).  But you gotta ask yourself (that is YOU Yahoo!) did Steve Jobs, Bill Gates, Paul Allen, Larry Ellison, Steve Wosniack, Sergie Brin, Larry Page, and even your own David Filo and Jerry Yang have MBAs when they formed some of the most powerful companies around?  No, they just had dreams like myself.  A lot of it was talent and there certainly was tons of luck involved in all of that.  Now, as a fellow tech dreamer, I want the same and many of my friends do too.  But we're all scared of leaving our day jobs in doing something crazy.  Still we want it.  And we need guarantees.
The thing is that this type of thinking is socially changing.  It's social engineering at its best.  It's the thing that's needed by Yahoo to inject into it's public image as being friendly and appealing to the common man.  Think of the benefits:

• A monstrous new playing field of applications and technology that will driven by the sheer competition.
• Switching the landscape of venture capital.
• Practically guaranteeing the success and expedient adaptation of Yahoo's services.
• A definite win on both sides in terms of ROI; Yahoo gets money and control back for their services; punk kids like myself don't have to go to an office every day and might make it big.
• The creation of new industries as a result.
• The continual elevation of importance of developers within Yahoo.
• Providing best practices to the industry at large.

This is real innovation at its best.  I mean, why should Yahoo spend several hundred millions of dollars in acquisitions when they can pay independent developers a few thousand a month to do this?  The money translates to the same thing so rather than on focusing on an existing acquisition strategy with and unforeseen return on investment, you're getting immediate control for what people want and helping to mold it.

I see this strategy as being a monstrous success for the sustainable growth of Yahoo.  It's my analogy of selling cigarettes/marajuana to minors; gradually, you upgrade them to crack and heroin.  But the difference is that the heroin is socially beneficial.

So Yahoo, make THIS happen.   This is the real vision for what you want.  This is partly what you're doing through your overpriced acquisitions.  This is what poor starving developers (rather than poets as the proverb goes) like myself want.  This is what the industry needs.  And most importantly, this is SOCIAL.....SOCIALLY CHANGING.