Yahoo: A Retrospective of Microsoft's Acquisition Target

Microsoft has offered to buy Yahoo for US$44.6 billion -- but how did a company that started so small come to be worth so much? That's a story that began in the early days of the World Wide Web, when people were struggling to keep track of the new world of multimedia it offered them.

Early Surfing Habits

In those days people viewed the Web through NCSA Mosaic , a browser that helped popularize the Web; they could check the level of coffee in the Trojan Room coffee machine at Cambridge University using the first Web cam on the Internet, and they could read the headlines on the NandO Times, one of the first "new media" operations.

Yahoo first appeared on the Internet in 1994 when Jerry Yang and David Filo were still at Stanford University -- something that was immediately obvious from the site's first address: http://akebono.stanford.edu/yahoo/ . It wasn't until later in 1994 that the easier-to-type http://www.yahoo.com came along, but even then it redirected to the Stanford server.

But back in 1994 people weren't that concerned about clunky addresses. They'd been living with the text-based Internet for years and the Web with all of its richness had people hooked. Yahoo stepped in to solve an early problem: how could users keep track of the fast expanding World Wide Web.

What Yang and Filo built was revolutionary for the time: a hierarchical index of the Web divided into subjects like "computers," "government" and "society and culture." (The service lives on today as the Yahoo Directory) 

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