Yahoo seeks to trump rivals with high-profile hires


Yahoo’s hiring of two experts in the fields of sociology and microeconomics underscores the value the global Internet services behemoth is placing on specialized research as tool for gaining competitive advantage.

Yesterday, Yahoo announced that two well-known academics – economist R. Preston McAfee, and sociologist Duncan Watts – would be joining the Yahoo! Research Team.

Both are highly esteemed in their respective fields.

McAfee, who is J. Stanley Johnson professor of business, economics and management at the California Institute of Technology, will be a vice-president leading Yahoo’s microeconomics research group.

Watts, a professor of sociology at Columbia University and author of Six Degrees: The Science of a Connected Age, will spearhead Yahoo’s research into human social dynamics, with a especial focus on social networks and collaborative problem solving.

The latest hires augment the already powerful research team Yahoo has been assembling for the past couple of years.

Over this period, the Santa Clara, Calif.–based company has hired a wide assortment of talents in fields ranging from Web search to micro-economics, from artificial intelligence to online advertising, and from data mining to social networking.

These leading lights have been snagged from facilities worldwide – such as universities (Cornell, Carnegie Mellon, Wisconsin) and industrial labs, including those of Microsoft Corp. and IBM Corp.

Yahoo has also opened lab facilities in Berkeley, Calif., New York, Barcelona, Santiago, Chile and Bangalore, India.

This induction of the best talent into Yahoo Research will have a significant payoff, according to Prabhakar Raghavan, head of Yahoo! Research.

It “enables us to gain powerful insights and answer complex questions in [a variety of] areas, including search and information navigation, social media, community, personalization and mobility,” Raghavan said.

How significantly will these “insights” affect new product development at Yahoo? That’s not easy to predict.

When it comes to monetizing research, tech companies have a mixed track record. There are instances where some companies have very profitably piggy backed on the work done by others.

For instance, while Xerox Corp.’s Palo Alto Research Center is widely credited with inventing several key features of modern computing in the 1970s, it was Apple Computer Inc. and others that took advantage of those inventions.

To protect against this, Yahoo’s key competitor, Google, places most of its researchers within product groups, in addition to maintaining a small standalone research cell.

But it seems much of the specialized research being undertaken at Yahoo is not aimed at designing or developing new product offerings.

McAfee himself has suggested that immediate product development is not the focus – but rather understanding and responding to longer-term market trends.

Yahoo is certainly well positioned to closely study and influence these trends.

The company’s wide-ranging “social media” portfolio includes:

Yahoo Answers – a community-driven Web site that allows users to ask and answer questions posed by other users. The site gives members the chance to earn points as a way to encourage participation. As of November 2006, it contained 65 million answers and more than seven million questions.

Flickr – the popular photo sharing Web site and Web services suite that is also widely used by bloggers as a photo repository.

Yahoo! HotJobs – that provides tools and advice for job seekers, employers, and staffing firms.

Right Media – The online advertising company that Yahoo! recently announced it would acquire. Right Media operates the Right Media Exchange (RMX), a marketplace that enables advertisers, publishers, and ad networks to efficiently trade digital media.

Each day – through its various properties – Yahoo generates a gargantuan amount of information for researchers to study.

According to one report around 482.1 million unique visitors visit these sites, viewing 116 billion pages (an average of around 241 page views per visitor).

And each day more than 12 terabytes of data recorded daily by Yahoo (to put that in context – within four days Yahoo would have recorded as much data as the US Library of Congress collected in all the days of its existence until December 31, 2005).

Transforming this data resevoir into insights and then into actionable information will be a quite a daunting challenge – even with the combined strengths of top notch research and product development teams.

According to Raghavan the methodology will be based on articulating specific questions and then finding responses to those using insights from a “confluence of multiple technical disciplines.”


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