23. David Shen – inside Yahoo!’s ad revolution

Paleo Ad Tech

David Shen was employee #17 at Yahoo!, hired by founders and Stanford classmates Jerry Yang and David Filo to shepherd the user experience — and eventually the ad experience — for the pioneering and absurdly successful directory and portal to the nascent internet.

David is also the author of the best behind-the-scenes look at Yahoo!’s ad evolution, a book called “Takeover: The Inside Story of the Yahoo Ad Revolution” (available here).

A digital ad historian after our own heart, David has also collected and archived a range of important Yahoo! creative executions from the 1990’s and early 2000’s that can be enjoyed on YouTube:

David designed the Yahoo! logo and was there when the first grainy banner-ad image was pushed live in 1995 to the chorus of lead engineer Donald Lobo sighing, “We sold out.”

“I think there was a pervading notion or hatred … of advertising,” David tells Marty and Jill in this reflective episode. “In fact, there were a lot of people who had this dream: Could we build a Yahoo! without any advertising?”

Intriguingly, after a troubled experiment with the ad server NetGravity (later acquired by DoubleClick), Yahoo! chose to develop and use its own in-house technology for ad serving, insertion, scheduling, accounting and measurement. (For a reason David reveals in the interview, these tools were all named after Camelot-Era notables.)

Yahoo! was a bellwether of the dot-com boom, going public on very little revenue in 1996 — only two years after it was founded in a famously messy trailer on the Stanford campus, — and rising up and up to a peak valuation of $128 billion in 2000, more than Ford and Chrysler combined.

That same year, Yahoo! was the most popular website in the world. Soon, things changed.

“You think that something like that’s always doing to last, right?” says David. “Well, you know what? The music stops.”

At its nadir, Yahoo!’s stock was priced at $8 for a valuation of $5 billion, 96% below its peak. It entered a period of rotating CEOs and halting M&A that continues to this day.

After the dot-com bust, Yahoo!’s management became more amenable to ad formats that would have been deemed too intrusive pre-2001. Thus the notorious Yahoo! home-page takeover ad so beloved of upper-funnel advertisers was born, inaugurating an era of D-HTML and Flash-driven creativity that tested (and often broke) the outer limits of home browser connectivity.

Iconic early examples of HPTO’s (as the media agencies invariably acronymized them) were the birdseed-themed Ford Explorer launch, Britney Spears’ beloved Diet Coke spot, and creatives for films such as The Incredible Hulk and Pearl Harbor that were perhaps more exciting than the source material.

David left Yahoo! in 2003 while his friends Jerry and David were still very much in evidence. He’d witnessed the glorious rise and thudding fall of the exclamation mark, and he was ready to turn the (web) page.

Today, David runs David Shen Ventures and enjoys biohacking, coaching and living his best life in Northern California.

And if you’d like to see early footage of the Yahoo! founders looking like the kids they actually were, this Stanford-produced video is 30 minutes of fun: