1. S trategy for S uc ces s
N ational Bu s ine s s and Te ch nology C onfe re nce
R ap h ae l Wong
Vale ntin S taykov
F rance s P olicarp io
D onny O u yang

2. 2

3. A genda
1 Executive Summary
2 Analysis
3 Implementation Strategy
4 Take-Away
3

4. A genda
E xecutive S ummary
4

5. Yahoo! can branch out to divers ify revenues by
inves ting in C hines e s tart-ups
Yahoo! has not been able to grow due to poor governance and
Complication consistent dominance of competitor market share
How can Yahoo! grow revenues against market giants?
Assign Jerry Yang to lead a large-scale start-up accelerator
for tech companies in China with the Alibaba Group
5

6. Yahoo! needs to find a way to utilize its opportunities
and res ources to compete
Diversify Revenue Competitors Alibaba Group Chinese Talent
Omnipresence in
Chinese talent pool
Miniscule market industry requires Yahoo! interest in
can be tapped into
share forces Yahoo! Yahoo! to enter Alibaba Group gives
by dominating the
to source alternative markets that are access to Chinese
start-up accelerator
revenue restricted to its market
market
competitors
Yahoo! can divers ify revenues by leveraging its competitive advantage
of the C hines e market and es tablis hing a s tart-up accelerator divis ion
6

7. A genda
A nalys is
7

8. Mentors
Jack Ma
Alibaba
Cyril Ebersweiler Lu Yi
Jerry Yang
Joseph Chen
CEO RenRen
3-month workspace, accelerator
$20,000 investment (for 20% protected)
Charles Chao
$200,000 convertible notes CEO Sina.com
Weekly dinners to learn
Perks: hosting, legal, billing
Access to international markets Li Ka-shing
Access to top tech mentors in China Billionaire
‘Demo day’ to raise series A investment
Bill Liao 8
Xing

9. A partners hip with A libaba Group is es s ential to the
s ucces s of the s tart-up accelerator in C hina
Partnership Terms with Alibaba Yahoo!
• $13M in investment capital
• $132M in convertible notes
• Global brand
Alibaba Group
• Expertise via mentorship
• Brand recognition in China
• Infrastructure
J erry Yang will s pearhead the joint venture by rebuilding the
relations hip with A libaba G roup
9

10. Assumptions
Stake in Start-up 20%
Investment per Start-up $20K
Convertible Note
Unrealized Realized
per Start-up $200K
Equity Interest Equity Income
Bad Debt 5%
NPV ROI NPV ROI
Stake in Joint Venture 70% Low
Share in Returns 14% $304.8M 66% $1.6M 17%
(4% Exit; $7.5M Val)
Share of Returns from Medium
$580.9M 133% $9.0M 95%
Interest in Alibaba 1.20% (5% Exit; $10M Val)
Average Valuation of High
$1.6B 482% $46M 486%
Start-up after 5YRS $7.5M - $20M (7.5% Exit; $20M Val)
Start-up Base Growth 50% /yr
Exits 4-7.5%
Discount Rate 20%
Yahoo! has the potential to earn 95% ROI in realized equity
income in the next 5 years
10

11. Yahoo! can realize various benefits from their
contribution to the joint venture
Contribution Benefits
• Expected NPV of $580.9M in
• Take on 70% stake in joint venture
unrealized equity interest
with Alibaba Group
• Expected ROI of 95% in realized
• $13M in investment capital in the
equity income
next five years
• Access to diversified revenues
• $132M in convertible notes for
• First priority to buy out start-ups
start-ups in the next 5yrs
via accelerator
Yahoo! will maximize s hareholder value by es tablis hing the s tart-up
accelerator with A libaba G roup in C hina
11

12. A genda
Implementation
S trategy
12

13. A fter one year, Yahoo! can launch the s tart-up
ac celerator program in C hina
Hire Jerry Yang
High
Create legal parameters with
Establish joint venture Phase 1
Alibaba
Build mentor base
Medium
Attract start-ups
Screen
Applicants
Low
Assessment
0-6 months 6-12 months 12-18 months 18 months +
13

14. “I think that it’s always possible to have a great company
if you have a great idea.” – Jerry Yang 14

15. A genda
A ppendix
15

16. Potential ris ks can be mitigated with careful
execution.
1 Alibaba does not accept the partnership
Increase incentives available to Alibaba to partner with Yahoo! but in
the scenario of a lost partnership, Yahoo! can partner with other start-
up accelerators already present in China (Chinaccelerator, etc.)
2 Jerry Yang is unable to lead the joint venture
Yahoo! has a vast network of experienced executives that can lead the
venture in Jerry Yang’s absence.
3 Low supply of mentors in China
Leverage Yahoo’s international brand to reach out to successful
entrepreneurs across the globe to serve as mentors in China
16

17. Low
New Companies Total Companies Investment per Average
Year Invested Invested Year Total Investment Valuation Total Valuation Yahoo's Share
1 50 50 $ 1,000,000.00 $ 1,000,000.00 $ 7,500,000.00 $ 375,000,000.00 $ 52,500,000.00
2 75 125 $ 1,500,000.00 $ 2,500,000.00 $ 7,500,000.00 $ 937,500,000.00 $ 131,250,000.00
3 113 238 $ 2,250,000.00 $ 4,750,000.00 $ 7,500,000.00 $ 1,781,250,000.00 $ 249,375,000.00
4 169 406 $ 3,375,000.00 $ 8,125,000.00 $ 7,500,000.00 $ 3,046,875,000.00 $ 426,562,500.00
5 253 659 $ 5,062,500.00 $ 13,187,500.00 $ 7,500,000.00 $ 4,945,312,500.00 $ 692,343,750.00
Investment per Unrealized Disc Unrealized
Year Disc. Inv Per Year Opp Cost Disc Opp Cost
Year Return Return
1 $ 1,000,000.00 $ 833,333.33 $ 155,500,000.00 $129,583,333.33 $ 52,500,000.00 $ 43,750,000.00
2 $ 1,500,000.00 $ 1,041,666.67 $ 153,750,000.00 $106,770,833.33 $ 131,250,000.00 $ 91,145,833.33
3 $ 2,250,000.00 $ 1,302,083.33 $ 151,125,000.00 $ 87,456,597.22 $ 249,375,000.00 $ 144,314,236.11
4 $ 3,375,000.00 $ 1,627,604.17 $ 147,187,500.00 $ 70,981,626.16 $ 426,562,500.00 $ 205,711,082.18
5 $ 5,062,500.00 $ 2,034,505.21 $ 141,281,250.00 $ 56,777,765.72 $ 692,343,750.00 $ 278,237,425.25
NPV ROI
Total $ 6,839,192.71 $ 451,570,155.77 $ 763,158,576.87 $ 304,749,228.40 66%
Investment per Expected Return Disc Expected Expected bad
Year Disc. Inv Per Year Disc Bad Debt
Year Realized Return Realized Debt
1 $ 1,000,000.00 $ 833,333.33
2 $ 1,500,000.00 $ 1,041,666.67
3 $ 2,250,000.00 $ 1,302,083.33
4 $ 3,375,000.00 $ 1,627,604.17
5 $ 5,062,500.00 $ 2,034,505.21 $ 27,693,750.00 $ 11,129,497.01 $ 6,593,750.00 $ 2,649,880.24
NPV ROI
Total $ 6,839,192.71 $ 1,640,424.06 17%
17

18. Medium
New Companies Total Companies Investment per Average
Year Total Investment Total Valuation Yahoo's Share
Invested Invested Year Valuation
1 50 50 $ 1,000,000.00 $ 1,000,000.00 $ 10,000,000.00 $ 500,000,000.00 $ 70,000,000.00
2 75 125 $ 1,500,000.00 $ 2,500,000.00 $ 10,000,000.00 $ 1,250,000,000.00 $ 175,000,000.00
3 113 238 $ 2,250,000.00 $ 4,750,000.00 $ 10,000,000.00 $ 2,375,000,000.00 $ 332,500,000.00
4 169 406 $ 3,375,000.00 $ 8,125,000.00 $ 10,000,000.00 $ 4,062,500,000.00 $ 568,750,000.00
5 253 659 $ 5,062,500.00 $ 13,187,500.00 $ 10,000,000.00 $ 6,593,750,000.00 $ 923,125,000.00
Investment per Unrealized Disc Unrealized
Year Disc. Inv Per Year Opp Cost Disc Opp Cost
Year Return Return
1 $ 1,000,000.00 $ 833,333.33 $ 154,000,000.00 $128,333,333.33 $ 70,000,000.00 $ 58,333,333.33
2 $ 1,500,000.00 $ 1,041,666.67 $ 150,000,000.00 $104,166,666.67 $ 175,000,000.00 $ 121,527,777.78
3 $ 2,250,000.00 $ 1,302,083.33 $ 144,000,000.00 $ 83,333,333.33 $ 332,500,000.00 $ 192,418,981.48
4 $ 3,375,000.00 $ 1,627,604.17 $ 135,000,000.00 $ 65,104,166.67 $ 568,750,000.00 $ 274,281,442.90
5 $ 5,062,500.00 $ 2,034,505.21 $ 121,500,000.00 $ 48,828,125.00 $ 923,125,000.00 $ 370,983,233.67
NPV ROI
Total $ 6,839,192.71 $ 429,765,625.00 $ 1,017,544,769.16 $ 580,939,951.45 133%
Investment per Expected Return Disc Expected Expected bad
Year Disc. Inv Per Year Disc Bad Debt
Year Realized Return Realized Debt
1 $ 1,000,000.00 $ 833,333.33
2 $ 1,500,000.00 $ 1,041,666.67
3 $ 2,250,000.00 $ 1,302,083.33
4 $ 3,375,000.00 $ 1,627,604.17
5 $ 5,062,500.00 $ 2,034,505.21 $ 46,156,250.00 $ 18,549,161.68 $ 6,593,750.00 $ 2,649,880.24
NPV ROI
Total $ 6,839,192.71 $ 9,060,088.73 95%
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19. High
New Companies Total Companies Investment per
Year Total Investment Average Valuation Total Valuation Yahoo's Share
Invested Invested Year
1 50 50 $ 1,000,000.00 $ 1,000,000.00 $ 20,000,000.00 $ 1,000,000,000.00 $ 140,000,000.00
2 75 125 $ 1,500,000.00 $ 2,500,000.00 $ 20,000,000.00 $ 2,500,000,000.00 $ 350,000,000.00
3 113 238 $ 2,250,000.00 $ 4,750,000.00 $ 20,000,000.00 $ 4,750,000,000.00 $ 665,000,000.00
4 169 406 $ 3,375,000.00 $ 8,125,000.00 $ 20,000,000.00 $ 8,125,000,000.00 $ 1,137,500,000.00
5 253 659 $ 5,062,500.00 $ 13,187,500.00 $ 20,000,000.00 $ 13,187,500,000.00 $ 1,846,250,000.00
Investment per Disc Unrealized
Year Disc. Inv Per Year Opp Cost Disc Opp Cost Unrealized Return
Year Return
1 $ 1,000,000.00 $ 833,333.33 $ 148,000,000.00 $123,333,333.33 $ 140,000,000.00 $ 116,666,666.67
2 $ 1,500,000.00 $ 1,041,666.67 $ 135,000,000.00 $ 93,750,000.00 $ 350,000,000.00 $ 243,055,555.56
3 $ 2,250,000.00 $ 1,302,083.33 $ 115,500,000.00 $ 66,840,277.78 $ 665,000,000.00 $ 384,837,962.96
4 $ 3,375,000.00 $ 1,627,604.17 $ 86,250,000.00 $ 41,594,328.70 $ 1,137,500,000.00 $ 548,562,885.80
5 $ 5,062,500.00 $ 2,034,505.21 $ 42,375,000.00 $ 17,029,562.11 $ 1,846,250,000.00 $ 741,966,467.34
NPV ROI
Total $ 6,839,192.71 $342,547,501.93 $ 2,035,089,538.32 $ 1,685,702,843.69 482%
Investment per Expected Return Disc Expected
Year Disc. Inv Per Year Expected bad Debt Disc Bad Debt
Year Realized Return Realized
1 $ 1,000,000.00 $ 833,333.33
2 $ 1,500,000.00 $ 1,041,666.67
3 $ 2,250,000.00 $ 1,302,083.33
4 $ 3,375,000.00 $ 1,627,604.17
5 $ 5,062,500.00 $ 2,034,505.21 $ 138,468,750.00 $ 55,647,485.05 $ 6,593,750.00 $ 2,649,880.24
NPV ROI
Total $ 6,839,192.71 $ 46,158,412.10 486%
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