There is a dimension of tech beyond that which is cherished by investors.
It is the middle ground between failure and success, between innovation and stagnation, and it lies between the pit of man’s fears and the summit of man’s knowledge. This is the dimension where activist investors and private equity firms prey. It is an area which we call the twilight zone.
And this twilight zone is where Yahoo has been stuck for nearly a decade now. The company’s core operations have been struggling to stay relevant in an online-ad market that was dominated by first Google, and now Facebook. The harder Yahoo raced to catch up, the further it found itself slipping further back in the race – a mythic, archetypal nightmare played out in real time on the stock market.
Yahoo’s reality, for a while now, has been this: In tech, there have been three tiers all along. The clear winners, that is, the Googles and Facebooks, which write the rules others must follow. The clear losers, that is, the incumbents and me-too startups that can’t adapt to or abide by the new rules and fall by the wayside. And the very, very unclear middle tier – the companies that are clearly not winning but can’t be labeled clear losers either because they still see some profit growth and, in a good quarter, some decent revenue growth.
The tech press and most tech investors love the top tier and even the bottom tier. They are coherent narratives you can fit into a headline, or even better, a cell in a spreadsheet. But nobody wants to deal with the middle-tier, which always involves too messy a narrative. The company won’t die. But it won’t thrive either. It aspires to innovate, doing so in intermittent flashes. Yet things never quite gel, nor do they quite fall apart. And so on…