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In January 1994, Stanford graduate students Jerry Yang and David Filo created a website named "Jerry's Guide to the World Wide Web." Jerry's Guide to the World Wide Web was a directory of other websites, organized in a hierarchy, as opposed to a searchable index of pages.
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In April 1994, "Jerry's Guide to the World Wide Web" was renamed "Yahoo!". Filo and Yang said they selected the name because they liked the word's general definition, as in Gulliver's Travels by Jonathan Swift: "rude, unsophisticated, uncouth." The name can also be a backronym for "Yet Another Hierarchical Officious Oracle".[6] Its URL was akebono.stanford.edu/yahoo.[7]
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By the end of 1994, Yahoo had already received one million hits. Yang and Filo realized their website had massive business potential, and on 1 March 1995, Yahoo was incorporated.[8] On April 5, 1995, Sequoia Capital provided Yahoo! with two rounds of venture capital.[9] On 12 April 1996, Yahoo had its initial public offering, raising $33.8 million dollars, by selling 2.6 million shares at $13 each.
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Like many search engines and web directories, Yahoo diversified into a Web portal. In the late 1990s, Yahoo, MSN, Lycos, Excite and other Web portals were growing rapidly. Web portal providers rushed to acquire companies to expand their range of services, in the hope of increasing the time a user stays at the portal.
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On 8 March 1997, Yahoo acquired online communications company Four11. Four11's webmail service, Rocketmail, became Yahoo! Mail. Yahoo also acquired ClassicGames.com and turned it into Yahoo! Games. Yahoo then acquired direct marketing company Yoyodyne Entertainment, Inc.
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on 12 October 1998.[11] On 28 January 1999, Yahoo acquired web hosting provider GeoCities. Another company Yahoo acquired was eGroups, which became Yahoo! Groups after the acquisition on 28 June 2000. Yahoo also launched Yahoo! Messenger on 21 July 1999.
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When acquiring companies, Yahoo often changed the relevant terms of service. For example, they claimed intellectual property rights for content on their servers, unlike the companies they acquired. As a result, many of the acquisitions were controversial and unpopular with users of the existing
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On 3 January 2000, at the height of the Dot-com boom, Yahoo stocks closed at an all-time high of $475.00 a share. 16 days later, shares in Yahoo Japan became the first stocks in Japanese history to trade at over ?100,000,000, reaching a price of 101.4 million yen ($962,140 at that time).[12]
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On 7 February 2000, Yahoo.com was brought to a halt for a few hours as it was the victim of a distributed denial of service attack (DDoS).[13][14] On the next day, its shares rose about $16, or 4.5 percent as the failure was blamed on hackers rather than on an internal glitch, unlike a fault with
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In late 2002, Yahoo began to bolster its search services by acquiring other search engines. In December 2002, Yahoo acquired Inktomi. In February 2003, Yahoo acquired Konfabulator and rebranded it Yahoo! Widgets, a desktop application and in July 2003, it acquired Overture Services, Inc. and its subsidiaries AltaVista and AlltheWeb. On February 18, 2004, Yahoo dropped Google-powered results and returned to using its own technology to provide search results.
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Google then released Gmail, its webmail service offering 1 GB of storage, on 1 April 2004. Yahoo responded by upgrading the storage of all free Yahoo Mail accounts from 4 MB to 1 GB, and all Yahoo Mail Plus accounts to 2 GB. In 2007, Yahoo took out the storage meters and made the storage limit unlimited. On 9 July 2004, Yahoo acquired e-mail provider Oddpost to add an Ajax interface to Yahoo! Mail Beta. Google also released Google Talk, a Voice over IP and instant messaging service, on 24 August 2005. On 13 October 2005, Yahoo and Microsoft announced that Yahoo! Messenger and MSN Messenger would become interoperable.