Yahoo! Learns Software Scales Best

NEW YORK (TheStreet) -- Shares in Yahoo (YHOO) tanked last when it came out that new CEO Marisa Mayer had convinced her board to give her that $4.2 billion from the sale of its foreign assets, and not just hand it to shareholders, as Reuters reported.

Me, I bought 100 shares. I'm speculating Mayer has convinced her board of a very basic truth to which I have been witness my entire career.

Software scales in ways content does not.

Why? Time.

Think about it. It may take you two minutes to read the wisdom on this page, two minutes you'll never get back. Sure, if one million people read this piece, that's two million minutes my column has grabbed, attention every content company knows how to spin into money.

But software scales better. Software can do its work while requiring no time at all. Software can do its work in the background, making money while content makers sleep. You make more money having a computer do your mental labors than doing anything yourself.

Software is why Google (GOOG) is what Yahoo was. While Yahoo was listening to Wall Street and turning itself into a "portal" in the 1990s, trying to grab more and more users' time, Google was focused on software, on doing search better. It takes less time to do a Google search than to floss your teeth, but you can scale that in ways content can't, because content requires user time to make money.

I have known this for decades. I learned it from the other side of the value telescope.

My dear wife writes software. Her software does transaction processing. It's very complicated software. It has taken an enormous team a lot of time to design, build and manage this software. It only makes a few pennies each time it runs but the pennies add up.

One result is she outranks me. She makes a lot more money than I do, and has ever since the dot-com bubble became the dot-bomb. If I weren't able to cook, I'd be useless.

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