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(Part 1)

It was just Jerry, Dave, four walls, a shut door, and a dictionary that night.

"Ya-"
"Ya . . . "
"YA"-;
"Ya-", "Ya-", Ya . . . Yataghan!"
"Yataghan?"
"Yup. A type of Turkish short saber with a double-curved blade and a handle without guard. "

"Hmm. Yet Another . . . T-A-G-H-A-N's an awful lot to work with. "

"Yeah. How 'bout . . . Yankee?"
"Yapok. "
"Yardbird?"

Dave and Jerry were trying to christen this . . . thing that they had created, and it seemed like it had been going on like this for hours. So far they hadn't gotten much further than deciding that the new name would start with Y-A. You'd think that would have narrowed it down a bit.

"Yauld. "
"Yammer?"
"Yardage. "
"Yang!"

"Ha ha. Yang. Very funny. Heh. "

Yang was Jerry's last name. Dave's last name (Filo) had of course been out of the running since they decided on the YA- thing. This prefix (at least) seemed obvious to them, because the names of several software tools that they had used as computer science students began with it. YA- names were usually acronyms, and the Y-A denoted Yet Another. The best-known YA- tool was YACC (pronounced yack), or "Yet Another C Compiler. " YACC was an awesome name. YACC was the role model. It kind of sucked that YACC was taken. Jerry and Dave were determined to come up with something that was every bit as good. They'd figure out what it stood for later.

"Yawn, yawp, yaws, yaxis. "
"Yaxis?"
"Oh, sorry. Y-axis. "
"Y-axis. Like you said, yawn. . . . "

Finally somebody hit on it.

"How's this? Yahoo. "
"Yahoo?"

Webster's traced Yahoo's roots to Swift's Gulliver's Travels. Therein, a Yahoo was any of a race of brutish, degraded creatures subject to the houyhnhnm and having the form and all the vices of man. Yahoos, it seemed, were rude. They were unsophisticated. And perhaps above all, they were vulgar. Jerry and Dave looked at one another. Rude. Unsophisticated. Vulgar. Well, none of the above, frankly. But self-effacement was always welcome on the (then) egalitarian Internet. So Yahoo it would be. Yet Another . . . Hierarchical! (gooood)

. . . Officious . . . Oracle. Whatever. They threw in a ! for good measure, and Yahoo! it now is.

Yahoo!, then, is pronounced YAHHH-hoo, not Yaaaaa-hoo, and it has nothing to do with yelping hicks out on the town. The Yahoo! service itself predated its now-famous name by several months. It started out as a humble little Web site called "Jerry's Guide to the World Wide Web. " For a while, this understated name seemed just fine for the idle, spare-time student project that it was. But then the project became a bit less idle. And the time it took up stopped being entirely spare. Eventually Jerry decided that he'd had enough of Dave doing half of the work and taking none of the blame. So he unilaterally changed the name to "David and Jerry's Guide to the World Wide Web. " He did this mainly to "frustrate David so he'd think of a better name," Jerry recalls. And "Of course, it worked. He said, 'I'm not putting my name on this. ' " The shut door and dictionary followed shortly.

Although it has since evolved significantly, Yahoo! is still, as it was then, a guide for needle-seekers in the Internet's haystack. And as its reverse-engineered name suggests, it is hierarchically-organized. At its pinnacle sit 14 broad categories covering such subjects as Business and Economy; Entertainment; Health; and (inevitably) Computers and the Internet. Beneath each of them lurks a group of subcategories that Yahoo! users (or yoozers, as it's tempting to call them) can access with the click of a mouse. Clicking on Entertainment, for instance, summons a page full of listings like Amusement/Theme Parks; Humor, Jokes, and Fun; and Music. These all lead to other things¬Music, for instance, to categories like Karaoke, Charts, Genres, and Organizations. Organizations then leads to Bell Ringing, Drum and Bugle Corps, Choral, and more. Users click down through the hierarchy until they hit the floor, where categories link to actual Web sites instead of further subject areas. This can lie a dozen or more levels below the surface (although it's not usually that far down). Yahoo!'s hierarchy is deep because of its tremendous scope; the 14 top-level categories trickle down to over 400 thousand unique Web sites, and thousands of new sites are added every week. Users who don't want to dig through all of this can type the subjects or names that interest them into a search window, and receive a list of links to relevant Web sites immediately.

The Yahoo! hierarchy is a handcrafted tool in that all of its over 100 thousand categories were designated by people, not computers. The sites they link to are likewise deliberately chosen, not assigned by software algorithms. In this, Yahoo! is a very labor-intensive product. But it is also a guide with human discretion and judgment built into it¬and this can at times make it almost uncannily effective. The experience of an archaeologist whose maiden journey through the Web began at Yahoo! was not atypical. Within minutes of glimpsing both the Netscape Navigator and the Yahoo! hierarchy for the first time (and with little guidance), she had drilled down through Sociology, through Anthropology, through Archaeology, through Fieldwork and Expeditions, to a site that included several pictures that she herself had taken on a dig (and yes, they were appropriately attributed). This was a remarkable find. It may well have been the most personally relevant site on the Web to her. But she hadn't deliberately set out to find it, because she hadn't even known that it existed. Despite this, and despite the fact that Yahoo!'s architects never anticipated her (nor indeed anybody's) interest in the site, the hierarchy's installed wisdom created a path to it that to her was as obvious as a well-marked interstate highway.

This is the essence of Yahoo!'s uniqueness and (let's say it) genius. It isn't especially hard to point to information that many people are known to find interesting. TV Guide does this. So do phone books, and countless Web sites that cater to well-defined interest groups (Links to the seven most vital Web sites for Northern California's Windsurfers!) But Yahoo! is able to build intuitive paths to information that might be singularly, or even temporarily important to the people seeking it. And it does this in a way that no other service has truly replicated. Because while the Web has many other powerful and well-regarded search sites, all of them have highly automated underpinnings compared to Yahoo! Most take key words as input (e. g. , Windsurfing, or Ashkelon), and identify sites and pages that contain them in a relatively rote manner. While the better key word search services have refined this process with proprietary techniques, they remain in their essence machines. Yahoo! alone is a carefully-architected edifice.

Its uniqueness has made Yahoo! one of the most powerful franchises on the Web. Scarcely two years after Jerry and Dave shut their dictionary, their site was serving almost a hundred million pages to millions of distinct users every week. This was more than double its closest competitor's traffic by some estimates, and far more than half of mighty Netscape's. Yahoo! had meanwhile attracted over three hundred paying advertisers. Fueling this explosion in usage and sponsorship was a dramatic expansion in Yahoo!'s service offerings. From its roots as a simple Web directory, Yahoo! had flowered into a nexus of information of all types, including news stories, stock quotes, weather reports, phone listings, and interactive maps.

All this robustness and growth have turned Yahoo! into the Web's seismograph. By executing more searches than anyone else, the company is uniquely well-positioned to listen to the Web and to learn about its users' interests and fancies, and this helps it develop new sites and services that cater to emerging trends and interests long before they become widely evident. Yahoo!'s proprietary view on the Web's evolution has already prompted it to launch several affiliated sites targeted at specific interest groups and geographies. The company is meanwhile leveraging its enormous position on the Web into other media. There are now Yahoo! books, a Yahoo! magazine, and regular Yahoo! appearances on several TV programs. All of this leads Jerry to describe Yahoo! as a media company, not a technology company.

But this doesn't mean that he and Dave were necessarily thinking Viacom back when they started building the humble list of hyper-links that (ooops) became an empire. Far from it. They were instead thinking more along the lines of how hard it was to find anything on the still-teensy Web. About how nice it would be to fix this little problem for themselves, and (maybe) for a few of their friends. Then later, about how cool it was to have something to focus on other than school for a change. In this, Yahoo! is the happy fallout of a hobby, not the calculated product of a business plan¬although Jerry might have been thinking vaguely (very vaguely) about business and economic opportunity when he first came to Silicon Valley. But that journey wasn't really his idea. And it happened a good 15 years before Yahoo! was formed.

Jerry came to California from Taiwan, where he spent his early childhood. His father passed away when he was just two. His mother, a professor of English and drama, raised him and his younger brother Ken alone after that. She ended up moving her young family to the United States because her sister lived there, and it sounded like a good place for the boys to grow up. "There was always talk about opportunities here," Jerry remembers, although nobody was thinking of anything quite as big as Yahoo! Jerry was just 10 when his family settled in San Jose, California. Hardly an energetic organizer and categorizer in those days, he was "lazy," he insists, and had "a very short attention span. " But lazy as he might have been, Jerry did well in his studies. From humble beginnings (his English vocabulary consisted solely of the word shoe on his first day of school in America) he built an academic record that earned him a place in nearby Stanford University's class of 1990.

Jerry liked the rigor of the engineering classes that he took early in college, and was also intrigued by "the fact that the Valley was built on engineers, and Stanford was a big part of that. " Soon enough he registered as an electrical engineering major. Despite the heavy academic demands that this entailed he was always very involved in his dorms and eating clubs. He also joined a fraternity, and sat on a few university committees which dealt with labor issues and other such matters. He spent most of his social time with the guys in his fraternity. But he also kept up with his brother Ken, who matriculated two years after him. Like Jerry, Ken became an electrical engineer. The two of them eventually enrolled in precisely the same Ph. D. program as well. But despite their similar trajectories, Jerry and Ken are very different people. Unlike Jerry, Ken is a vegetarian, "and he's got hair down to here," Jerry says, pointing below his neck. "Basically, he hikes and camps in the High Sierras a lot," he explains. He's very Zen. He's not a Buddhist, but he believes in a lot of Buddhist values. " But while they have always moved in different social orbits, Jerry and Ken are close. To this day, they convene weekly in San Jose to spend time with one another and their mother (and to enjoy some fine cooking).

Despite his nonacademic distractions, Jerry managed to complete both a bachelor's and a master's degree in just four years. He dutifully met with a few suited recruiters when graduation loomed; but he quickly realized that he "wasn't really ready to work yet. I had the degree of a Master's," he recalls, "but I didn't have the experience or the maturity. I was twenty-one, barely. Actually, not even. So I looked for ways to stay in school. " Turning over all stones, he eventually found his way over "to the research side of it. " And luckily, perhaps inevitably, the research side of it was where Dave Filo's bid to stay in school had recently landed him.

Jerry and Dave were acquainted by then, as they had been in the same academic department for a couple of years. Dave was a bit further down the road than Jerry, having graduated from Tulane in 1988. He had in fact served briefly as Jerry's teaching assistant ("he gave me a B!" straight-A Jerry still grumbles). But they still found themselves in a number of classes together. They ended up doing a class project together in one of them. And Dave, God bless him, "basically wrote the whole program," Jerry remembers. "I didn't do anything. So I knew then that I was going to have to work with this guy more often. "

Jerry did of course end up working with this guy plenty, and he and Dave quickly became a remarkably balanced team¬so balanced that it is almost tempting to think of Dave as Dave Yin, as he and Jerry (Yang) complement and contrast each other in so many ways. Jerry is gregarious, a ringleader. Dave is reserved, a thinker, not talker. And while Jerry is technically solid, Dave is technically brilliant. He certainly is the organized one on the screen. Whether it lurks in the Internet's crannies or deep in his own system's files, he can generally find it, process it, perhaps control it (it's "that I'm at my terminal and I can rule the world kind of a feeling," Jerry explains). But walk into his cubicle, where he still sleeps most nights, and it's cyclone city, baby. Jerry is the opposite. His physical space is tidy (well, kind of). But he is less sorted and in control than Dave when he is on the computer. Jerry says that Yahoo! in fact got started partly because he was always "about a half step behind" Dave in online and other technical matters. "Because of his knack of being able to find things," Jerry explains, "I was always trying to figure out how in the hell he knew everything. " And since so much of Dave's wisdom seemed to flow from the Internet, Jerry became eager to build a map of it. A guide. A hierarchical oracle, if you will.

Different as they were, Jerry and Dave found that they had plenty in common from the outset. They held similar views on matters like the classes they had both taken, technology, and certain people. They also shared the same dissertation adviser and narrow technical specialty, which meant that they were often grappling with the same academic questions (like what the hell are we going to do with this degree?). Their cubicles adjoined, so they literally worked shoulder to shoulder. But close as their quarters were, they always got along well. These days Jerry figures that he and Dave "probably couldn't have found two better partners [than] each other in the business sense. We're both extremely tolerant of each other," he explains, "but extremely critical of everything else. We're both extremely stubborn, but very unstubborn when it comes to just understanding where we need to go. We give each other the space we need, but also help each other when we need it. We've been through some rough times [but] we've never had rough times together. Which is unbelievable to me. I look at my girlfriend, I look at my mom, I look at my family. We've had rough times all over the place. With Dave and I, we've always kind of shrugged it off and moved on. There was hardly ever any tension between him and I. It's just a fantastic relationship, and I hope it's a lifelong one. "

Dave echoes all of this, characteristically reserved. "Jerry's cool," he says.

At the start of their doctoral programs, Dave and Jerry had both decided to focus on design automation software. This "was a pretty big industry at the time," Jerry recalls, with "lots of startups. " He and Dave looked forward to joining startups themselves after they graduated. Then in the early nineties, a small number of aggressive companies began to dominate the market, and soon enough, the industry was "so consolidated that there weren't that many startup opportunities left," Jerry sighs.

As this unhappy development unfolded, one of them stumbled across a teaching opportunity at a Stanford program in Kyoto, Japan. Neither of them had been to Japan before, and this seemed like a particularly cushy way to get there, so they both signed up. It was in Japan that their friendship really solidified, "because you go through so much there together," Jerry recalls, "just being foreigners. " They taught, worked, drank lots of Sapporo, and watched hours of sumo wrestling. Sumo soon became a minor fetish for both of them. "It was an explosive sport, and we just thought it was the coolest thing," Jerry explains. Somewhere in the midst of all this, Jerry met a young Costa Rican woman of Japanese descent named Akiko. Akiko was also in Kyoto with Stanford (although as a student, not a junketing teaching assistant). She and Jerry started dating shortly after their return to the United States, and were engaged in the summer of 1996. It was also in Japan that Dave and Jerry met Srinija Srinivasan, another Stanford student. Srinija¬Ninj for short¬was to figure prominently in their lives, as she became their first ontological yahoo. But that wasn't for a while yet.

Back at Stanford, Jerry and Dave set up a tiny office in a university trailer (they also had homes, but spent little time in them). They named their workstations after their favorite sumo champions in commemoration of their cool journey (Jerry's was Akebono, Dave's Konishiki). But other than this nostalgic nod, they were back to their full-bore existences as Ph. D. students out on the periphery of a fast-consolidating industry. Things got back to normal dismayingly quickly. But then after a few months, something happened¬Dave discovered Mosaic. Keeping to custom, he nonchalantly paraded his new find before Jerry straightaway, and things haven't been quite the same since.

Jerry and Dave quickly became Web aficionados. They posted their own home pages (Jerry's included vital information like his golf scores). They surfed the Web for hours. And hours. At some point their Ph. D. work started falling by the wayside. But their adviser was conveniently out of the country on sabbatical, so they got away with it. Somewhere in midst of all of this, Yahoo! took root. It began when Jerry and Dave started building little lists of links to their favorite Web sites. Jerry was of course very interested in Dave's links, as he suspected that they were the source of his omniscience. And Dave was interested in Jerry's links because, well, Jerry always found some neat stuff too. Soon they were passing links back and forth daily, then hourly, then continually. Eventually they decided to pool their links together in a "more digestible form," Jerry recalls. And so their little private lists of links became a rather unlittle shared list of links which they christened (gotta call it something) "Jerry's Guide to the World Wide Web. " And when the unlittle shared list became unwieldy, they broke it into categories. And when the categories got too full, they broke them into subcategories. The core concept behind Yahoo! arose in no time, and it hasn't changed much since.

The need that Jerry and Dave were addressing for themselves was apparently widely shared, as it wasn't long before dozens, then hundreds of people were accessing the Guide from outside the trailer. This was a surprise, as their Guide wasn't really designed with an external audience in mind. But there was no real reason why it couldn't support one. After all, it was a Web site like any other. And Akebono (Jerry's system) sat on an open part of the Stanford network. This meant that anybody who knew the Guide's address could access it almost as easily as Dave could from the adjoining cubicle. Dave and Jerry E-mailed this address to just a few friends at first. But their friends were wowed, and word can travel fast when messaging moves at light speed and postage is free. Jerry's Guide acquired a broad and loyal following almost overnight.

And so without really meaning to, Dave and Jerry quickly had¬ooops!¬an audience. And without really knowing why, they soon found themselves responding to its needs. At first they accepted, then started soliciting site submissions from their users. Then they started to expand their Guide with little featurelets, like "What's New" and "What's Cool" listings. The Guide's audience cheered every embellishment with a trickle, then a torrent of encouraging E-mails¬digital applause that Jerry and Dave found to be enormously gratifying. Much of this applause came with constructive advice, so it also helped shape Yahoo!'s evolution. Today, Jerry believes that "if there was no feedback, if it was in this dark secret lab, we wouldn't have done it. "

An unspoken understanding quickly arose between Jerry and Dave that more attention and traffic were somehow better, more fun, and cooler than less. And so they started bidding for more traffic by continually providing more and better service for free. They got so good at this that by the winter of 1994, Dave remembers that he was "kind of hoping it wouldn't grow so quickly. " It was getting hard to find time to eat or sleep. And oh yeah, they still had their Ph. D. s to worry about¬at least for another year or four. But the Web was just entering one of its fastest periods of growth. And Netscape, its mighty catalyst, was just getting started. This made for a lousy time to rein in a service that was fast acquiring a secular exposure to the Web's expansion. By the time of their summer naming session, Jerry and Dave had effectively hoisted the white flag and become full-time Yahoos (or rather Chief Yahoos, as Jerry's business card now reads¬or perhaps Cheap Yahoos, as Dave's reads). And as their traffic surged and the digital applause roared louder, they both began to think seriously about turning Yahoo! into a business.

On the surface this was a sketchy proposition. The two of them had about 17 years of higher education and little else in the way of resumé credentials between them. Yahoo! also lacked an obvious revenue model. Charge the users, it seemed, and they'd go elsewhere. Charge the listees, and they'd shrug and pay nothing. Sell advertisements, and incur the wrath of Internet old-timers who were still adamant about keeping the Web free of commercial taint. But despite all of this, the notion of a commercial Yahoo! still made a great deal of intuitive sense. It seemed that any large, loyal audience had to be worth something to somebody. And Yahoo! was certainly drawing the faithful crowds. By the summer of 1994, Jerry reckoned that their site was logging tens of thousands of visitors daily. And the traffic just kept building.

Equally validating, there were competitors out there. Dave remembers WebCrawler at the University of Washington; Lycos, a project at Carnegie-Mellon University (Lycos later incorporated and went public); and World Wide Web Worm, which came out of nowhere, then "died off really early on. " There was also a paid-access service called InfoSeek, which was started by a seasoned entrepreneur named Steven Kirsch (Kirsch's prior successes included Frame Technologies, which Adobe Systems eventually acquired in a $500 million merger). Most of Yahoo!'s competitors maintained indexes of Web sites, which they scanned for search terms that their users typed in. These indexes were built and refreshed by "spiders," or programs which scoured the Internet and sent back detailed reports on their findings. Spiders can run through a lot of sites quickly, and of course they work for free. For this reason, the index search services tended to be far more comprehensive than Yahoo!

But Yahoo!'s hand-built hierarchy had its own advantages, because key word searches often betray their mechanical roots. An index search for information on the band Oasis, for instance, can easily generate as many references to Egypt's lovely Siwa Oasis as to the British quintet. A search for information about the Olympic games could likewise end at a site promoting Olympic Paint. The power of indexes naturally grows with the range of content that they cover. But so do their native pitfalls. Almost every imaginable English word and name now has countless roosts throughout the Web. This makes it all too easy for index searches to be comprehensive beyond the point of usefulness. A recent index query to a fine search service called Excite yielded 115,396 references to the word "Oasis," while a query to Yahoo!'s database produced only 151. The far more manageable and (it turned out) relevant list of Yahoo! results was also framed in the hierarchy's context, which made it easy to sift through them. A hierarchy category, Entertainment: Music: Artists: By Genre: Rock: Oasis in fact appeared at the top of Yahoo!'s list of links, and it was plenty obvious that all of the 23 sites attached to it (Fowzry's Oasis Tribute, I Hate Oasis Anti-Fan Club, etc. ) dealt with a band, while the sites listed under Regional: Regions: Africa: Society and Culture dealt with patches of water in dry, dry places.

Even in Yahoo!'s earliest days, the better index search sites of course offered tools to make their output more meaningful. Boolean logic was (and remains) a popular method for narrowing searches (e. g. , Olympic AND Sports; Oasis NOT Desert). Most index services also ranked the apparent relevance of the results that they returned to the user's query. But Boolean queries are far less accessible to novices than Yahoo!'s intuitive hierarchy, and their syntax varies from service to service. Also, relevancy ranking systems commonly tally the frequency with which search terms appear in the "header" files and bodies of the sites that they scan. Aware of this, index-savvy page designers have developed arsenals of tricks to heighten their sites' apparent relevance to common search terms (e. g. , many header files have the word sex written in them dozens of times). None of this means the index search services are useless, or even necessarily less useful than Yahoo! Index searching is rather an undeniably powerful tool, and many Yahoo! loyalists indeed turn to other sites for this service regularly. But a well-ordered hierarchy offers distinct advantages of its own, and by creating the Web's best hierarchy, Yahoo! laid early claim on a niche that it now largely has to itself.

But Yahoo!'s hierarchy was not alone on the Web in the early days¬not by a long shot. Dave and Jerry remember a number of close competitors, including one called EINet Galaxy, and another called the World Wide Web Virtual Library. But since "there was no gain from being the coolest directory out there at the time other than [that] you can go out and say, 'I created a cool directory,' " Jerry remembers, the competition was hardly savage. Perhaps because of the lowness of the stakes involved, most of it also faded out fairly quickly. By late 1994, Jerry estimates, Yahoo! had become the de facto leader in the hierarchy space.

This success was sweet. But it had its downside. By the autumn, Jerry and Dave's every day had become a headlong rush of categorizations. Their E-mail accounts were meanwhile filling up faster than they could empty them, and their phones were ringing constantly. Their site had its first million-hit day in the fall of 1994, which translated to almost 100 thousand unique visitors. But while they were excited about this milestone, Dave and Jerry knew that things couldn't go much further without snapping. "That was the point," Jerry remembers, "at which we said, we've got to do something about this, or we're going to shut it down. "

Luckily, the time to do something about this was ripe. Netscape had just released the first beta copy of its Navigator. HotWired had meanwhile launched the first ad-supported Web site. The popular press was starting to clamor about the Internet Phenomenon, and the venture capital community was all over the Web. Dave and Jerry may have been overwhelmed, underresourced, and unpaid. But their service was already legendary in Internet circles. With Net mania building as it was, this made Yahoo!'s iron very hot. And so, almost as soon as they decided that they were ready to meet with them, a long procession of corporations and financiers began to march on Dave and Jerry's humble trailer.

The first major media company to come calling was Reuters. Reuters is a $5-billion purveyor of general news and financial information services headquartered in London. Although it is less known in the United States than some of its rivals like the Associated Press, Reuters' scale and pedigree (it has been in the news business for more than 150 years) place it in its industry's top echelon. Reuters discovered Yahoo! through the initiative of a marketing vice president named John Taysom, who had transferred from London to its Palo Alto office largely out of a fascination with the business possibilities that the emerging Web might offer. He read about Yahoo! in the local press shortly after his arrival, and was soon a regular visitor to its site. Taysom recalls that it quickly occurred to him that "Yahoo! was all about lessening the distance between information and the people seeking it. " The information in this equation was strictly Web-related at the time. But it seemed to him that integrating Reuters' news feeds with the Yahoo! service could "both draw repeat viewers and add context to the news. " Affiliating with Yahoo! could also help Reuters start building a distribution network in an important new medium.

Part 1 | Part 2 | Part 3