From Yahoo to Yafoo?
In addition to Microsoft and Newscorp, there are rumors of a third bidder for Yahoo: Yahoo Japan.
Yahoo! is Japanese
Many Japanese believe that Yahoo! (pronounced as “Ya-foo”) is a Japanese brand and they get confused (and sometimes even angry) when faced with the facts. The reason why is a result of a smart brand strategy on the part of the favorite online brand of the Japanese. In order to be successful in Japan’s market, you have to be Japanese—or, at the very least, seem like you’re Japanese.
A company that isn’t owned by a Japanese male is regarded with suspicion. How can a foreigner (or a woman) achieve what very few Japanese people can? In a society of salary men, founding a company is considered an act of madness, or—when successful—as an act of heroism.
This mentality goes far in explaining why most foreigners who own a company in Japan don’t print “CEO” on their business cards. It tends to work out for the best when the Japanese assume your company is owned by a native and not a foreigner. And as a matter of fact, the implications of the very complicated Japanese business culture almost require staffing a Japanese person to deal with Japanese companies. Foreigners usually don’t have the nerve, patience, or cultural understanding to easily seal contracts with Nihonjin.
Yahoo! has followed this strategy with great success. With its Japanese management and corporate culture, it has become the biggest online property in Japan. In The Land of the Rising Sun, Yahoo! has the power of Google, Yahoo!, Monster, and eBay combined.
For example, eBay’s naïve attempt to enter the Japanese market was one gigantic failure. They put a old woman with a frozen food background born and grown up in Hawaii in charge of the Japanese operations. No, that’s not a joke. Officially, eBay still claims that they failed because they were six months too late.
From Trick to Treat?
Now, what used to be a trick to win the trust of the public might suddenly become reality:
Yahoo Japan could unlock its shares held by Yahoo by swapping them for a large equity stake. Complicated, but not inconceivable, especially if private equity injects some cash—and money managers might be keener on a direct stake in Yahoo Japan than in the U.S. operation.
The key to such a deal would be Softbank, which owns 41 percent of Yahoo Japan. Softbank CEO Masayoshi Son has close ties to both Microsoft chairman Bill Gates and Yahoo CEO Jerry Yang, who sits on the board of Yahoo Japan.
Softbank also owns 3.9 percent of Yahoo, but it also owns, as does Yahoo, a large stake in Alibaba, the operator of Yahoo China. Alibaba’s management is reportedly restive about the prospect of Microsoft getting a say in their affairs. Softbank might throw its Alibaba stake into the combination, which would give Alibaba an exit in the public markets without the risk of an IPO, and the new Yahoo majority control of its Chinese websites.
So far this is just another valleywag suggestion turned rumor, so let’s examine it from a Japanese perspective.
Why It Won’t Happen
As I understand it, the Japanese won’t be able to close such a deal, because:
- The required pace for closing such a deal is way too high. It would require months before every member agrees.
- The Japanese don’t prefer deals with high risk. Yahoo! Japan is doing very well keeping its distance from Yahoo! Inc.
- Not even Microsoft would dare impose on the most successful Yahoo! branch. Thus, Yafoo has nothing to lose if Microsoft or Newscorp get their claws on it.
- Managing a global brand from within Japan seems as impossible as the inverse.
Why It Still Might Happen
The main reason it might happen is SoftBank. SoftBank is an incredibly bold, fast and—in that sense—un-japanese company. It has managed to turn the mess that Vodafone created with the JPhone brand into a respectable success. SoftBank also understands the difference between Japanese and Western branding; they’re smart enough to put new Western management in charge of its Western operations outside of Japan.
A second reason is that with the Berseker in charge of Microsoft, you can never really know for sure. If Ballmer operates Yahoo! Japan with the dinosaurical level of precision we’ve learned to expect from him, then maybe the Japanese operation should be fearful of being smashed into pieces in the event of a takeover.Ð