Exposing Yahoo's Strategy Through Flickr And Startup Acquisitions

There are three levels to Markus Spiering's love of Volkswagens. The first is in his garage: He owns a 1977 VW Campmobile and a 1972 VW Karmann Ghia sports coupe, which he restored inside and out. The second is on his hard drive: He loves taking photos of other VWs--fitting, given that he's the German-born head of product for Flickr, Yahoo's once-neglected and now-resurgent photo service. The third--and for his employer, perhaps the most important--appears in the acclaimed app that his team released late last year. It's clearly visible when he flips to the app's Group tab, bringing up a list of the nine VW groups that count him as a member, from the geeky "Analog VW Aircooled" to the more-inclusive "Volkswagen Beetles/All VWs."

There's A Graph For That

In coining the "social graph," Zuck created a jargon monster.

The Knowledge Graph

GOOGLE

Launched in May 2012, the Knowledge Graph attempts to better understand the meaning of search keywords and associate them with specific people, places, and things. That helps Google differentiate between Rio the city and Rio the casino. Profiles of more than 570 million "understood" objects now appear with search results.

The Music Graph

SPOTIFY

The service's new discovery feature connects users based on their music choices. By following friends (or influencers like Justin Bieber and Barack Obama), you'll be able to see which songs and artists they're queuing up.

The Health Graph

RUNKEEPER.COM

Through integration with more than 100 partners, RunKeeper tracks not just runs but also nutrition, sleep, workouts, and body measurements. By doing so, it can provide a diagram of personal health.

The Student Graph

CHEGG.COM

Once primarily a textbook vendor, Chegg has spent the past few years populating its marketplace with services such as homework help for students. It wants to create a social network built around education--and to offer advertisers a way to connect with students.

Within Spiering's obsession and devotion lie the seeds of Yahoo's turnaround strategy. CEO Marissa Mayer has been deliberately vague in her pronouncements about the company, opting for opaque mission statements such as "Yahoo is about making the world's daily habits more inspiring and entertaining." After spending time with the team behind the revitalized Flickr and analyzing moves Mayer has made, one gets the sense that the future of Yahoo is hiding in plain sight. If Facebook's value is in cataloging everyone you know personally, and LinkedIn owns your relationships with all your professional colleagues, Mayer wants to create a complete profile of everything you love, which will result in more personalized content--and more lucrative ads surrounding it.

This ambitious gambit has been tried unsuccessfully many times before, and she's entering into competition with the likes of Pinterest, Tumblr, and Twitter. But if Facebook's social graph, as the techies call it, is worth almost $70 billion in market cap, what would Yahoo be worth--to advertisers, investors, and, of course, users--if it can build the "interest graph"?

Flickr's revamp sheds light on how Mayer and Yahoo plan to use their product strategy to chase this ambitious goal. At first glance, the photo service's much-needed mobile upgrade could be mistaken for an Instagram clone. But it is not about filters or sharing. "Flickr stands for photos," says Spiering, and photos, when they're divided into more than 1.6 million hyperspecific interest groups, reveal what you love. The new iPhone app is designed to get users uploading their interests to Yahoo again (and then sharing the images elsewhere), to create an experience good enough that users will return to Flickr daily. Make no mistake: Daily is the most significant word in Mayer's mission statement.

After the new release, users uploaded 25% more photos to Flickr. But perhaps even more important, they increased their interactions with those photos by the same amount. "That cycle of user behavior is really what we want to accomplish," says Adam Cahan, whom Mayer tapped to be Yahoo's SVP of mobile and emerging products, reporting directly to her.

Flickr was the first interest-based property that Yahoo tackled because it was the most extreme example of a product users wanted to love again. But Mayer is sitting on a trove of products that her predecessors mismanaged, neglected, or even abandoned. Groups, a hub for users to congregate based on shared interests, hasn't been updated in more than 10 years. Yahoo has areas devoted to such advertising-friendly cash cows as news, sports, finance, movies, and games, and each one already offers users an opportunity to experience the content their way. My Portfolio creates a dashboard of stock holdings and news about them; My Travel catalogs the places you've visited and provides deal alerts.

With Flickr as a guiding light, CEO Marissa Mayer wants Yahoo to be a hub for all things that interest users.

Now it's a matter of harnessing all those disparate areas. In February, Yahoo launched a news feed on its mobile and desktop home pages that analyzes user behavior in order to promote the most relevant content. Along with an infinite scroll, the stream adds sharing options to each story--yet another way for users to express their interests. "What you need to be successful in the land of personalization is users investing in us, giving us more and more of their interests," says Cahan, "but then also having ways for us to provide [more and more of their interests] back to them."

The first app Yahoo acquired under Mayer's watch, Stamped, kept track of restaurants, books, movies, and anything else users liked. Another, Snip.it, clipped and shared news articles in a Pinterest-like format. And a third, Alike, made restaurant recommendations based on users' previous preferences. In a statement after Yahoo acquired Snip.it, Yahoo's VP of product, Mike Kerns, revealed exactly what Yahoo has in mind when he said, "They will help us build experiences that bring people with shared interests together." (All three apps were shut down following their acquisitions.)Cahan joined Yahoo when the company, under former CEO Carol Bartz, acquired his startup IntoNow, a service designed to connect users around the TV shows they watched and loved. Mayer's acquisition strategy thus far has been to find other design-savvy, mobile-first technologists, like Cahan, who are obsessed with mapping users' interests.

Mayer's strategy makes perfect sense, but it's also rife with challenges. Her team has to figure out how to translate very precise, user-defined interests into advertising opportunities, and it has to present them on mobile devices in a way that doesn't alienate users. Yahoo knows Spiering, for example, loves VWs, but that doesn't mean he wants to buy a new one. So what's the ad to serve him--and where?

FastCompany