Co-founders of Yahoo are Jerry Yang and David Filo who were Electrical Engineering graduate students at Stanford University. The Yahoo! domain was created on January 18, 1995. Yang and Filo realized their website had massive business potential, and on March 1, 1995, Yahoo! was incorporated. In April 1994, directory of web sites originally called “Jerry and David’s Guide to the World Wide Web” was renamed “Yahoo!”, for which the official backronym is “Yet Another Hierarchical Officious Oracle”.
From their blog,
After many late nights and a lot of pizza, we decided to take the big leap, turn our hobby into a business, raise money and devote ourselves totally to building a company. This was no sure thing. For example, 15 years ago, we wanted a free service that was ad-supported. But the conventional wisdom was that our business needed to be subscription-based. Few people thought that advertising could be the key revenue generator for the Internet. Of course, the conventional wisdom was wrong and so today we know that August, 1995, the month our first ad went live, was a critical milestone in the history of Yahoo!, as well as the history of the internet.
This timeline from their flickr tells the brief story of Yahoo