It's very interesting living in Silicon Valley. On this day in October 2007, I have lived through cycles of irrational exuberance and low, dark days of high unemployment. The rise and fall of companies as they, much like celebrities, are cheered and hailed as the next "coming" and then jeered and booed and found fault with while on top, poked with schedenfreude on the way down, and amazed and supported in any successful rebirth. 

Just a few years ago it was Microsoft who was the big bad bully on the street (even though they weren't even headquartered here). Now Microsoft is "irrelevant", Yahoo! is "on its way down," and everyone is finding fault with Google. The fanboy of the day is Facebook. 

This hyper-driven mindset that cannot stay focused on the long-term, that loves hot deals and sound bytes, can be really frustrating for someone like me who came from big, corporate America and now am working at a newly formed company. This sensationalism certainly draws readers, attention and traffic, but half the time seems more like journalistic nonsense than rational thinking or analysis.

Yahoo is on a rapid decline? Microsoft is irrelevant? Google is evil? Facebook is the next Microsoft? Google is scared of Facebook? This stuff makes me laugh (too). Microsoft is sitting on wads of cash and last time I looked they are still pretty much on most computers from here to Timbuktu - literally! According to Microsoft-watch.com:
For the fiscal third quarter (2007), Microsoft forecasts a revenue range of $13.7 billion and $14 billion, which includes recognition of ...$1.68 billion deferral. Microsoft expects income between $6.1 billion and $6.3 billion. That's billions. Per quarter. There's hardly anything irrelevant about that.

Last time I checked, Yahoo is still the #1 most visited news website in the world. We're looking to hit our first million - Yahoo is dealing with traffic from it services, that according to its media relations pages, "... offers a comprehensive branded network of services to more than 274 million individuals each month worldwide." (italics mine).

Big companies can lose their way and even eventually lose relevance or go away (Excite, Netscape, AOL, not to deliberately mention those together, they're just some of the most obvious tech ones outside of the dot-com crash).

I am not in town to attend the O'Reilly Web2.0 conference today, which is disappointing, but am watching the feeds from the show. I am listening to the hype, the next big thing, and who's being labeled desperate. Josh Catone of ReadWriteWeb did a nice writeup of Jerry Yang's "back to basics" speech you can read here:
http://www.readwriteweb.com/archives/yahoo_plans_return_to_its_portal_roots.php#more

I've been a long term fan of Yahoo and it pains me to see them losing their way and struggling to redefine themselves lest they slide towards the dreaded "irrelevancy". So here's my advice for how Yahoo should refocus, stream and tap into a sizeable audience that's still looking for a guide.

According to the SBA, small businesses are the backbone of the United States.

Small Business Effects on the Economy

The estimated 25.8 million small businesses in the United States: Have generated 60 to 80 percent of net new jobs annually over the last decade Employ 50.6 percent of the country’s private sector workforce Represent 97 percent of all the exporters of goods Represent 99.7 percent of all employer firms  Generate a majority of the innovations that come from United States companies Source: U.S. Small Business Administration, June 2006.

Small Business Survival Rates

Small Business Openings & Closings: There were 671,800 new businesses, and 544,800*business closures.  Two-thirds of new employer firms survive at least two years, and about 44% survive at least four. Findings do not differ greatly across industry sectors.

So small businesses account for more than half the national work force, and 99% of all employer firms. Yet roughly half or more of them fail within the first five years.

This means they do not have the tools, money, experience they need to create the marketplace for their products and services by sticking it out for a long enough haul. They make too many bad decisions, spend too much money on the wrong things, and can't market themselves well enough to thrive before running out of their own financing.

Yahoo, we're calling you to make this happen. Create the world's larges small business network platform and you will have a very powerful system. Google doesn't have the tools. Ebay would be the closest one to doing this, but I feel that Yahoo has a better understanding of many of the tools that users need to create their small businesses and advertising this a huge market network.

Let's take a look:
1. Marketing - 
    a. Yahoo has a built in adcenter to help with PPC and ad distribution etc. Panama, which is getting better by the way, that can integrate right into the sites.  
    b. It has its own search engine which can feed results (SEO). For many, Yahoo's search engine results are often better for many small businesses of certain types due to differing user demographics than MSFT or Google searchers.

2. Resources - Pictures, Chat, Yellow Pages, Yahoo Answers, Email, Domain registration, Hosting, Alerts, Calendars, Pictures, Video, Mapping - Yahoo has the requirements already!

3. Personnel - Yahoo owns HotJobs and has many deals already in place with several local newspaper chains.

4. Connecting - Use Yahoo's social networks (360 or whatever they're changing to) to create social networks for like users to connect with interested parties, buyers, mentors, and others with shared interests.

5. Tools - Yahoo has all the tools people need to create and function a small business. 
    a. Yahoo Small Business - increase these features to make it SUPER super simple for anyone with the barest of computer skills to create a standard website, all part of the bigger network of Yahoo. 
    b. create or integrate a simple to implement payment system for anyone anywhere to buy some small business's products. 
    c. Create the marketplace through built in marketing of it.
    d. Help sellers find buyers, market their goods, and sell.
    e. provide the market place for small businesses to find manufacturers, distributors, service providers, as well as solicit feedback from others who have "been there done that."

Yahoo has it all. Now it just needs to streamline it all together, make it SO simple to do, and market this marketplace.

Small businesses currently waste a lot of precious time and energy (and money) trying to figure out how to market, how to get themselves online, how to find resources, making a lot of the same repeated mistakes those before them did. Even when they are able to put together a website and get an online presence, the chances of JoeBlow customer running across exactly what he needs from Small Company X who can't afford any PPC or the like is quite iffy.

Consider my mother as an example. She has a hobby of creating custom wool mittens through a long process of boiled wool and custom designs. She sells them at craft fairs, little craft shops and the like. Her reach is very limited. She tried Ebay, but wasn't able to deal with the constant auctions and so on. She knows the basics of a computer, and with clear instructions could figure out how to take pictures of her mittens and put them on a website.

Now here's the problem. She'd pay $10/month to host her site IF it would drive traffic to it. If it's worth her time and money. So IF it were part of a huge network of small businesses selling their wares, it would be worth it. If Yahoo would make it very simple for her to create a basic website with a payment portal, notify her of questions, orders, and so forth, shield her personal contact information from the general public, provide resources for her to handle complaints (thru a 3rd party or whatever, just make it easy and available) - and create the environment for her to sell her product, she'd be there. Don't nickel & dime the sellers with fees for every little thing - create bundled packages so there are no surprises. Small businesses live and die by a few dollars.

Dealing with hosting, marketing, selling, shipping, customer questions & complaints is way too much for most small businesses to do well if they have to piecemeal the parts together and try to manage all of the moving parts while saving money.

But most importantly, a world bazaar online where all of these little shops are linked together, easily navigated, easily found, easily discovered.

The power of 25.8 million small businesses in the US (alone) is nothing to sneeze at. Some of the search engines are trying to do a bit more of local search but if I want to find "mittens" I can't go to the phone book, but I also get way too many results to wade through (many of them irrelevant) doing a random online search. If I were going to a marketplace destination where I could peruse lots of different sellers of lots of different mitten types - well, it's a market that's currently not being served. Yahoo should be the one to do it.

Updated: I forgot to post Mathew Ingram's link to his article about laughing at Google being scared of Facebook:
http://www.mathewingram.com/work/2007/10/16/google-scared-of-facebook-puh-leeze/

Updated 10/26: Microsoft's numbers are in: profit up 23%, a reported net income of $4.29 billion, or 45 cents a share, revenue of $13.76 billion, an increase of 27 percent from a year earlier. (That's the kind of "irrelevant I'd like my company to be!)