What a Microsoft Yahoo deal would mean for startups (continued)

What a great move by Microsoft! This has been floating around for awhile and the last time I wrote about it was in May of 2007. Anyway, I thought I bought at the bottom for Yahoo months ago in which case it fell another 25% from there. When I saw the news this morning I was quite happy to sell my shares and make a slight profit. As we all know when it comes to the Internet and advertising, scale matters. What this potential deal could mean for startups are two things. One, when Microsoft finally integrates its 3 or more advertising platforms with Aquantive, adcenter, and Panama, they may just be able to offer startups a decent or even better alternative to using Google Adsense to monetize their inventory. Secondly, that huge collective sigh you are hearing is one that is based on the fact that there will be one less independent multi-billion dollar acquirer for the thousands of startups out there. In fact, this integration could take awhile and take Microsoft out of the running in the near term as well. So if you are a startup depending on a quick flip, I would do what you were always supposed to do – focus on your fundamentals and figure out how to build a real business. In addition, given the uncertain economy, I would be very careful on ramping up your business too quickly unless you have the results to justify your growth in fixed costs. Moving on, it will truly be interesting to see how Microsoft integrates Yahoo and what parts of Yahoo it decides to sell like Kelkoo or kill like possibly Zimbra. All I know is that there have been lots of senior Yahoo resumes on the street so it will be interesting to see where they all end up.

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