1998: How Yahoo Won the Search Engine War
Before its technology was advanced enough, Yahoo won people over by relying on human editors to curate its search results. As its revenue and stock price rose, many outlets declared it the winner of the search-engine war.
But the underlying problems were serious:
Internet content grows infinitely, so the amount of manual labor required grows with it. That means there are no economies of scale—the cost per unit never drops, not even for fixed costs. (Plus, a single company’s marketing budget is limited, and personalized services also depend on human labor; programmatic and automated approaches are the real trend.)
So cutting labor costs is critical and represents the future. Google’s current success confirms this, as does Baidu’s success and Alibaba’s Yellow Pages’ failure in China.
Not all “AI” is created equal. Human labor may deliver a more human touch and higher quality, but it has no advantage on production cost. A small, niche operation can thrive for a while, but expansion typically fails.
Every company should follow the same path: validate a model with human effort first, then automate and remove labor to drive down costs.
Looking at today’s self-media landscape, why do so many creators fail to sustain themselves? Content production costs far exceed their revenue—who would keep going?
