Our Facebook error, by the Yahoo! boss
Toby Coppel, the former head of Yahoo! Europe, tells us about not buying Facebook, the Microsoft partnership and his project to aid Palestinians.
Toby Coppel, a former MD at Yahoo!, admits they “missed some trends”
Hindsight is a fine thing. Just ask Toby Coppel, a former senior executive at global internet company Yahoo!
In March, Mr Coppel stepped down as the managing director of Yahoo! Europe, where he was CEO of the company's European and Canadian operations. One of his biggest regrets, he says, is not buying Facebook, the leading social networking site. “We should have figured out a better strategy,” says Belfast-born Mr Coppel, 37, who has spent the past 12 years based in Silicon Valley, California.
“It is quite well known that we were bidding for Facebook at one point.” In 2006, the firm was in serious talks to buy the site, estimated to be worth more than $6.5bn, for $1bn (£527m).
“I think we had the right ideas — we just were not able to execute them satisfactorily. “We had some really tough challenges trying to stay ahead of some of the trends, which we missed. We missed social networking, we didn’t pick up on Facebook and My Space, and we didn’t compete in search as aggressively as Google did. We innovated well in some places and not others.”
Last week, after much speculation, Yahoo! announced a web-search partnership with Microsoft, designed to take on the increasing power wielded by Google, in a deal many at Yahoo!, including Mr Coppel, had been pushing for.
“It’s very good news. It provides strategic clarity and focus for the business going forward.” He is confident that Microsoft and Yahoo! can now compete with Google in the field of search.
“The combined advertising marketplace creates a much more vibrant and attractive place for advertisers to reach their target audiences compared with two separate marketplaces. “Advertisers want a stronger alternative marketplace, and this clearly addresses that need.”
He adds: “I think everyone is pleased with the focus this provides and it will allow them to focus their energies on building world-class products and delighting their customers.” Mr Coppel spent eight years at Yahoo!, which he describes as the highlight of his professional career. It grew tenfold during his tenure, from 2,000 people and a $700 million revenue to more than 20,000 people and a $7 billion revenue.
We missed social networking, we didn’t pick up on Facebook and My Space, and we didn’t compete in search as aggressively as Google did.
Innovating within such a large company, he says, was a considerable challenge. “It is not something you can force. It’s something that you need to encourage throughout the company and you need to have a way for ideas to surface. It’s very hard as, in big companies, people want to defend their turf. There can be resistance to new ideas.”
He adds: “Things that may not necessarily generate money today but have the potential to generate billions in the future, no longer get funded by the budget as they don’t do much in the short term.”
Despite such difficulties, Mr Coppel was able to secure some of Yahoo!’s most thriving acquisitions. He bought 30 companies over five years, spending $4 to $5 billion in the process.
Among the more successful purchases were photo-sharing site Flik’r, which boasts 40 million users; and the Chinese e-commerce company Alibaba, worth an estimated $8 billion and in which Yahoo! owns a $4 billion stake.
Under his auspices, the number of people using Yahoo! products every month grew from 120 million to more than 500 million. Yet towards the end of last year, Mr Coppel decided it was time to move on. Since his departure, Mr Coppel has been backing digital media and clean-tech companies.
He has invested in London-based company Amee, the Avoiding Mass Extinctions Engine, which develops products to help businesses and individuals calculate their carbon footprint, and plans to make four or five further investments this year. Potential targets include Abe’s Market, an e-commerce marketplace for natural products.
He says: “I think the next generation of e-commerce will involve sites creating more of an emotional connection between the user and vendor, allowing consumers to see the story behind the product. That’s what Abe’s is trying to do.”
Mr Coppel says that out of every ten investments made, “typically two to three will be successful; three to five moderately successful; and the remaining five relatively unsuccessful”.
The better ideas are “those that revolve around disrupting the traditional ways of doing things, changing the cost structure of how business can be done or providing a significantly enhanced product proposition”. That said, he believes the person is more important than the idea. “If the idea is amazing but the person average, there would be no chance of me investing.”
Mr Coppel, a council member of the Palestine Britain Business Council, has teamed up with Lord Stone, the former managing director of Marks and Spencer, to develop an initiative to assist Palestinian farmers.
Called Project Jannat, the aim is to help them export fresh products to leading UK supermarkets, including Marks & Spencer and Sainsbury’s. “We are trying to bring technology to them to help them get into the export market.” He is also helping to develop a brand and build their website, and has been working with the IDF to ensure produce can travel as a priority from the West Bank to the UK. They hope such goods will be on UK shelves by the end of this year.
Before joining Yahoo!, Mr Coppel was founding partner of Windsor Digital. Prior to that, he was vice-president at Allen & Company, and a financial analyst at Goldman Sachs International. He has an MA from Oxford University, and an MBA from Harvard Business School. He is married with three children and lives in London.