Microsoft is buying Yahoo, and the question of the day is what does this mean for both Microsoft and Yahoo, along with the many users of their products.

Ultimately, the success or failure of the venture will depend on just one thing- Culture.

How does Culture Form? 

The first day of school, every year, is an exciting and terrifying experience. There’s excitement about seeing old friends, and who will be in your class; there’s fear about what the new teacher will be like, and whether you’ll get along; it’s like entering a new micro-society. Fortunately, all the other kids in your class, and the teachers feel the same way. You will be forming a community we call the Classroom in fairly short order. People will self sort into roles including class clown, the smart one, and all the other iconic classroom roles within the first few weeks, if it takes that long. The class may even develop its own set of rules, and as people get to know one another, the class will hopefully function well as a unit. If it doesn’t, and kids don’t find a flow, the atmosphere will be disruptive for everyone in the room.

This same sort of situation takes place in almost any group or community setting.  Whether it’s online or not, business or pleasure, each group has some cultural DNA- it’s what makes the group or community stick together, and often it’s what brought them together in the first place- a set of common interests or goals.  Sometimes the rules are very clear from the outset, but more frequently, they are largely unspoken rules of behavior and conduct that develop over time.  We can call this “family values”- the rules you have in your household, or “community values” for larger groups ranging from the PTA to message boards and blog posts, but at the heart of it, the story is the same- everyone coming together to form new rules.

When Cultures Have to Merge 

Two things tend to happen when cultures come together.  Some people assimilate, and others continue to remain separate and distinct, tied to the larger group for reasons other than just common purpose.  Let me explain.

Immigrants to the US tended to form small pockets and communities- think Jews in the lower East Side of Manhattan, Little Italy, Harlem, and Chinatown;  the wonderful neighborhoods in San Francisco, and for that matter, most of the interesting neighborhoods in large US cities have an ethnic focus.  People tend to congregate there because other people like them are there, and they feel comfortable with others with whom they share a culture, even if they live in a strange new place.  Over time, many people try to assimilate into the larger world and community that includes more than just the “neighborhood”.

Often, the roots or cultural DNA remains established in the physical area people initially settled, even if many of the original residents no longer live there.  Think about the french flair that remains in New Orleans despite the fact that the Louisiana Purchase occurred in the 1800’s.  French and Creole cultural elements remain, and even the laws of the State remain based on Napoleonic Code rather than English Common Law, causing headaches to law students everywhere who learn general legal principals rules and have to add the addendum “Everywhere BUT Louisiana.”

How Does Any Of This Apply Online? 

Well, businesses are organizations just like the local PTO, Church Group, or school.  Each has its own set of operating principals and rules, making it easy for stereotypes of “An IBM Guy” or for that matter, “A Mac User” to become cultural shorthand to tell us a lot about someone before you even know them.  Just like you know it’s a safe bet to guess that your new jewish friend likes bagels, it’s a safe bet to guess that anyone over the age of 50 who has worked for IBM has a closet full of suits he wore to work for years, looking as much in uniform as if it were standard issued apparel.

When companies merge, there’s always fear about what the purchase will “change”.  Recently, when Sears bought Land’s End, people worried about the future for Land’s End.  Land’s End has a reputation for good clothes at a good price, great customer service and reliability.  Sears has a good reputation for Craftsman tools and decent, affordable appliances, but a lousy reputation for clothing quality.  (My favorite joke was always the “seer sucker suit” interpreted as “any sucker who walks into Sears will buy that suit”)   People were worried the cultural DNA of Land’s End would be forced to become that of Sears.  Surprisingly, Land’s End has been able to keep on doing their thing, and the merger’s main change has been to allow Land’s End customers to get their hands on product at a local Sears or do returns there rather than through the mail.

Microsoft and Yahoo

This merger will be interesting.  Microsoft has been seen as a big giant who works on innovation, but the end user is not always in mind when they design products.  The engineers are in control, and feature creep seems to predominate over intuitive usability.  Yahoo is an online community and search engine along with some interesting web -based tools like Flickr, that I use all the time.    I can see what Microsoft gains by purchasing Yahoo.  I’m not sure it’s as clear to me what Microsoft can do to leverage Yahoo, and what the merging of these cultures will mean.

For me, I rarely use Yahoo except for flickr.  Why?  It’s interface is clunky and visually distracting.  Google by way of comparison, has important usability features I just don’t find on Yahoo, like threaded email conversations, google docs, google groups- Google is my grocery store or mall, where all of my online needs are satisfied in one interface.  In Yahoo, the process of getting in and out are burdensome enough, and the integration with all the other things I use isn’t as smooth.  It’s not as simple as new and old.   It has to do with ease of use, intuitive interface, and being able to solve most of my problems myself, quickly and easily.


Seth Godin talks about remarkability all the time. What makes something special and noticeable, and worth talking about.  Unfortunately, I don’t really find most of Microsoft or Yahoo remarkable now, and I doubt the merger will change any of that.  I worry that Flickr will change, but they will probably be smart enough to leave the good stuff alone (hopefully).

Microsoft may want to change its ingrained perception in the marketplace, but that will involve a cultural change and shift that aren’t easy to accomplish.

Think about the purchase of Cingular by AT & T.  First, they spent millions rebranding every AT & T store into Cingular stores, because Cingular had a decent reputation, then almost as quickly, they decided to change them all back again to the “new” AT & T.  I think this branding and rebranding was remarkably stupid.  Tide doesn’t change when you put a new label on the outside- it’s still laundry soap.  AT & T had developed a lot of brand disloyalty over the years, and this follows them around.  Branding changes don’t change the animosity built up over years of bad experience with land line phone services- they lost consumer trust, and just because the phone is cellular doesn’t change things.   Experience tells us not to expect stellar service, and that’s why lots of people are still waiting to buy an iphone- years of built up brand disloyalty with AT & T, having nothing to do with their cell service.

Microsoft and Yahoo may do things differently, but the cultural DNA, as seen from the outside, leads me to suspect everything will be more of the same, middle of the road, “good enough” products, but nothing that will surprise and delight.  And that’s really too bad for both companies in the end.