The moment the Yahoo website banner went up and the news of the financing spread, Silicon Valley and the broader venture capital world reacted as though someone had dropped a depth charge into still water.
A four hundred million dollar valuation on a first round.
At a time when venture capital firms deliberated carefully over investments of one or several million dollars, the number was genuinely shocking.
If the first round valued the company at four hundred million, what would the second look like?
The third?
The comment section beneath the Yahoo banner filled almost immediately.
“Oh my God!!
Oh my God!!
Oh my God!!!” That one needed no interpretation.
“Is today April Fool’s Day?” The classic Western response to something that defied belief.
“Incredible Yahoo.
Congratulations Yahoo.
Where is Yahoo located?
I want to work there.” Presumably a job seeker.
“The internet still has enormous potential.
I’ve decided.
My next investment is going into internet companies.” That one had the tone of someone with money to deploy.
…
In Silicon Valley itself the reaction was the fastest.
By the end of the day, Yahoo was the only conversation happening.
Internet practitioners across the valley were already saying that the date ought to be marked as Yahoo Day going forward.
“A valuation like that actually went through?
Have those venture capital firms completely lost their minds?” The kind of comment that came from someone who had passed on the opportunity and was finding reasons to feel better about it.
“That’s exactly why you’re an employee and they’re the ones writing the checks.” The kind of response such a comment reliably produced.
“It seems internet companies genuinely have a future.
We should be allocating more attention there.” That one had the ring of a venture capital associate preparing a memo for their partners.
Across town, in an office at a company called Netscape, a man named Marc Andreessen was shouting with genuine excitement.
“The spring of the internet has arrived.
Next, it’s Netscape’s turn!”
He had no idea that someone had already quietly set their sights on his company.
Perhaps that explained why, in the middle of his celebration, he felt a sudden inexplicable tightening in his gut and a chill he couldn’t quite account for.
…
Before the investors departed, Andy Grove held Jerry Yang’s hand at the garage entrance and spoke with unusual directness.
“Starting today, Yahoo is no longer a small company.
It is a member of the great companies.
The whole country will be watching.
Make sure everyone here is ready for what comes next, because the challenges ahead will be significant.”
He meant it as encouragement.
It landed as both.
Back inside the now quieter garage, John Leighton looked around at the space that had contained Yahoo’s entire world for the past several months.
A hundred square meters of rented garage with pizza boxes in the bin and server cables on the floor.
“Time to say goodbye to this place.” He said it quietly.
“It really is.” Jerry Yang and the others said it almost at the same time, with the same tone of something ending and something larger beginning.
…
“Alright.
We have a great deal to do.
First, the workspace.
We need a building that can accommodate hundreds of people, eventually thousands.
Recruiting begins immediately.
Second, we consolidate the English-speaking regions and move on the European expansion.
Country-specific stations, localised language versions, offices in Australia and Canada.
That is the priority for this year.
Taking the first step globally is what separates a good internet company from one that shapes the internet.
Let’s make sure we take it properly.”
Jerry Yang said it with a calm certainty that had not quite been there two months ago.
The room responded.
“Yes, boss.”
John Leighton stayed to chat for a while, then excused himself and left for the hotel.
The day had been more draining than it looked from the outside.
He needed quiet.
Jerry Yang and the others watched him go with the expression of people who had long since accepted that this was simply how John Leighton operated, and laughed among themselves as the garage door closed behind him.
…
“Zach, how does it feel to be a millionaire?”
“John.
I actually am a millionaire.
I genuinely am.
This is like a dream.
The internet is incredible.
Incredible!!”
John Leighton burst out laughing at Zach’s barely coherent enthusiasm.
“Alright, Zach.
Keep it together.”
“Why are you always so calm about everything?”
“It’s innate.
The burden of being a genius.”
“Absolute nonsense.
Be honest.
Was this just luck?”
“How could it be luck?
I saw where the internet was going before anyone else did and I led you straight to Yahoo.
That is talent.
That is not something you can teach.” John Leighton replied with complete shamelessness.
He thought to himself, Zach, if you had also been reborn with knowledge of the future, you too could have pulled this off.
“Your self-promotion is getting genuinely out of hand, you know that.”
“Not at all.
I am the man who is going to become the wealthiest person in the world.
We are still very early in that story.”
Their voices faded as the car moved away from the Yahoo building.
…
Three days later, John Leighton was sitting on the hotel balcony in his usual state of unhurried quiet when Zach came in carrying a stack of newspapers.
“The whole country is going a little crazy, and you’re sitting out here like nothing happened.
Here, look at these.
This is what the past three days have looked like.”
“Is that right.” John Leighton replied without particular urgency, though he reached for the top paper.
The financing funds had cleared and were in the account.
Board representatives from each investment firm had arrived and begun settling in.
A wave of business talent from the investor networks had started joining the company, confirming what John Leighton had always known about the real value of bringing serious institutional backers on board.
It was never just about the money.
John Leighton had quietly transferred his voting rights to Jerry Yang and David for the time being.
It cost him nothing practically and secured their control of the company at a critical moment.
Both of them had thanked him in a way that suggested they understood exactly what the gesture meant.
…
He looked at the newspaper in his hand.
“The Wall Street Journal.
Not bad.” Zach rolled his eyes.
He had known exactly which paper was on top of the stack.
The headline read: **The Craziest Company in the World — Yahoo!**
For a financial newspaper, a front page lead on a two month old startup was not a routine decision.
The piece laid out the numbers plainly.
An initial angel investment of five hundred thousand dollars and a starting valuation of five million had, in just over two months, become a four hundred million dollar company.
An eighty-fold increase in value.
The article asked, with genuine curiosity rather than mockery, whether any investment in recent memory had moved faster.
It then turned to the broader question of the internet, calling the Yahoo financing the most aggressive bet Silicon Valley’s venture capital community had ever placed, and noting that the result, whatever it turned out to be, would define how the industry thought about internet investment for years to come.
It closed by predicting that the internet gold rush era was no longer approaching.
It had arrived.
…
USA Today, the Los Angeles Times, and the New York Times all ran Yahoo prominently in their financial sections within the same three day window.
The coverage was thorough enough to make Yahoo a household name across the country in under a week.
Of course, not all of it was praise.
Some commentators argued that the venture capital firms had collectively taken leave of their senses, that no two month old garage startup was worth four hundred million dollars, and that the people involved would eventually be seen as cautionary examples.
Alongside the debate, Jerry Yang and David Filo had become genuinely famous.
The coverage consistently described them as the people who had become billionaires faster than anyone in the history of American business.
John Leighton’s name did not appear.
He had specifically asked them to keep him out of the coverage for as long as possible.
He was fifteen years old, and drawing that kind of attention at fifteen was not something he needed.
The arrangement would not hold forever.
But for now, it held.
Jerry Yang called regularly to complain that the media attention had made it impossible to work or sleep properly.
Every time, John Leighton told him the same thing.
You say that, but I can hear the pride in your voice.
…
Some of the tabloid coverage went further still, declaring that Yahoo effectively was the internet, that with Yahoo fully operational no other internet company was really necessary, and that Yahoo and the internet had become synonymous.
John Leighton read those pieces with the quiet amusement of someone who knew exactly what was coming.
Amazon.
Google.
What the internet would eventually become was so much larger than what anyone looking at it in early 1995 could imagine.
That was, perhaps, the single greatest advantage of knowing how the story ended.
Yahoo was the beginning.
Not the conclusion.