Silicon Valley Has-Beens Strike Back

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Today’s Silicon Valley is dominated by seemingly unstoppable Internet giants like Google and Facebook. But it wasn’t always so.

In the late 1990s, Yahoo ruled Silicon Valley. StumbleUpon was tech pundits’ industry darling in the early 2000s. And MySpace was the social networking superpower until the late 2000s.

These iconic companies rose and they fell, out-smarted, out-maneuvered and out-gunned by Google, Facebook and others. In recent years they’ve all been written off as yesterday’s news.

They’ve always tried to succeed, of course, trying new CEOs, new acquisitions and new ideas without success. But now, all three companies are aggressively re-inventing themselves with creative and credible strategies for re-claiming their dominance.

Each of them is staging a comeback. And I think they could all succeed. Here’s why.

Yahoo

Yahoo wrote the book on the dorm-to-riches Silicon Valley story we’re all now so familiar with. Started by a couple of Stanford grad students in 1994, Yahoo was a rocket from 1995 to the crash of 2000, a disaster from which it never fully recovered. (In January of 2000, Yahoo’s share price peaked at over $118; by September it dropped to around $4.)

Yahoo started out as a hierarchical listing of web sites, quickly adding a search engine and web portal. Drunk on cash, Yahoo acquired company after company, adding a dizzying variety of new services. They made a lot of really good acquisitions, but didn’t seem to know what to do with them.

Yahoo became famous for shutting down one service after another. Each closure would send a ripple through the Internet of people saying “Wow, that site Yahoo is killing sounds awesome!”

Since the crash, Yahoo has suffered a chronic identity crisis. “What is Yahoo?” is a question nobody has been able to answer for 12 years. It hasn’t helped that the company changes CEOs like socks.

But Yahoo’s newest CEO has breathed new life into Yahoo. I have to admit strong skepticism about Marissa Mayer when she was hired as Yahoo’s president and CEO a couple of months ago. She’s very young, and has never run a company before. In fact, she’s only worked for one company in her life — Google.

But since arriving at Yahoo, Mayer has been kicking ass. She held an all-hands meeting at Yahoo this week to announce the turn-around strategy. In a nutshell, Yahoo’s goal is to become the leading mobile personalization company, claiming the sweetest of sweet spots for revenue growth over the next ten years.

The idea is to use some of Yahoo’s existing stuff, and combine it with new stuff to provide a totally personalized way to experience everything you want to do (and buy) online, especially but not exclusively on mobile devices.

We can expect aggressive acqui-hires, stunning redesigns and above all some pushing of the envelope in terms of abusing user privacy. (Don’t worry, we’ll all happily sacrifice our privacy for radical personalization.)

And we can expect the spending of cash to boost morale. Mayer is already handing out free food and smartphones.

The bottom line is that Yahoo finally has a winning strategy, and also someone visionary clearly in charge.

StumbleUpon

The content discovery engine StumbleUpon was one of the many post-crash startups that stole eyeballs from Yahoo in the new millennium. Launched in 2001, StumbleUpon was a decade ahead of its time.

Its fuzzy combination of Amazon.com-like computerized intelligence for recommending things with its ad-hoc peer recommendation system provides a level of mystery magic that even today many social sites are struggling to develop.

The biggest barriers to acceptance over the past decade have been a combination of overcomplexity, compared to simpler alternatives like Reddit, and also competition from better personalization in Google Search. StumbleUpon has also suffered from a cultural shift to more explicit social discovery of content. Most people discover content these days on their Facebook, Twitter and, increasingly, Google+ streams.

But in the past two weeks, StumbleUpon has been rolling out features designed to bring the company back into superstardom.

First, they launched some really sweet mobile apps. The iPad app, for example, is fantastic — as cool to use as Flipboard on the iPad, but with much more intelligent discovery. Non-mobile apps have also been redesigned smartly.

They’ve added Pinterest-like “lists,” and made the service far more image-focused.

In short, StumbleUpon feels suddenly like a hot new startup that’s re-defining the social web.

MySpace

Launched in 2003, MySpace (as all dominant social networks do) took years to rise to dominance. But rise it did, and by 2008 was the undisputed leader in social networking.

Unfortunately for MySpace, however, Facebook happened.

MySpace always had several major problems, including too many ads too soon, and a lack of opportunities for third party companies to build applications.

But the biggest flaw in my opinion was that MySpace was butt-ugly. The anything-goes customization prompted millions of people to transform their profiles into some of the ugliest, most annoying and unreadable pages on the Internet. Which would have been fine in 1998. But in 2008, beautiful minimalism was sweeping the net. The new iOS Apple approach to visual design was suddenly dominant. And the key to that sensibility is locking things down so users (and, in Apple’s case, developers) couldn’t screw things up, visually speaking.

Year after year, MySpace remained an island of ugly in a rising sea of simplicity.

This week, a new video demo of the upcoming MySpace redesign appears to show something surprising: MySpace has apparently leap-frogged over several generations of user interface design, and is now being called — wait for it! — beautiful!

The new MySpace incorporates visual elements of Pinterest, streaming-nugget elements reminiscent of Twitter, and a “sideways timeline” that combines in spirit Facebook’s newish Timeline feature with Google’s iOS app for Google+.

The site appears to be targeting “artists,” both musical and otherwise, allowing content creators to track and interact with fans.

The new MySpace offers exactly the kinds of new features and functions that can bring the company back to life.

It’s unlikely that MySpace will ever become the number-one all-purpose social network. But they could succeed very nicely as the social network of choice for certain types of artists and their fans, and especially as a much needed discovery engine for music.

Startups are exciting. But so are re-starts.

I’m really excited about the prospects for resurgent Yahoo, StumbleUpon and MySpace.

All three of these companies are suddenly taking their loyal users and combining that asset with new thinking, new designs and new technology to stage bold comebacks.

And I think they might just succeed this time.