16 Comments

Summary:

Yahoo and its destiny has become fodder for headlines and cheap shots. What hasn’t been discussed is the crumbling culture within the company, thanks to layers of management, and resultant state of masterful inactivity masked as consensus. The only organization more dysfunctional than Yahoo? The New York Mets. Yahoo needs a cultural cleanse … quickly! Continue Reading

Dietrich Bonhoeffer, a German writer, once noted that “if you get on the wrong train, running down the aisle in the opposite direction really doesn’t help.” HBO series The Wire co-creator Edward Burns used that quote to describe the drug culture, bankruptcy of the political establishment and eventual fall of some of the great American cities in an interview with Reason magazine. You might as well use the same words to describe Yahoo!

Over past few months, Yahoo’s destiny has become fodder for headlines and cheap shots including some by myself. What hasn’t really been discussed is the systematic rot that has set into the once proud company. What hasn’t been discussed is that the company isn’t really facing up to the fact that its layers of management have resulted in a state of masterful inactivity, masked perhaps as a culture of consensus. This starts at the top - from the company’s board and senior management down to VP level where people are prone to organizing and attending twenty meetings before deciding the fate of a project.

Some senior managers including the ones who are deserting the company are skillful players in this game of hiding ennui behind grandiose plans and a great future that never happens. Others who have been wishing upon a change had realized the hard way about the futility of it all. Look at some of the public statements by those who have left recently and you will realize that the rot is very deep seated in this company. In past few weeks that has emerged as the single issue many Yahoo employees have discussed with me.

Instead of addressing these issues – Yahoo is finding itself releasing memos to the media, writing letters and announcing yet another reorganization. They should have read the writing on the wall when the vice president exodus began two years ago. But instead, the company played executive version of musical chairs. Sort of how Rome’s rulers were busy reading tarot cards when the empire was collapsing.

Earlier today, Kara Swisher broke the news that Zimbra co-founder Scott Dietzen will become the new Senior VP of communications and community properties. Dietzen is a very capable executive, smart, adroit and understated. He is the right man of the job, and can crack some heads if needed be. But can he succeed in an environment that rewards medocrity. Can he bring about change, or will he leave frustrated (but rich) like some of the other founders such as Stewart Butterfield, co-founder of Flickr who sold their companies to Yahoo.

As part of changes announced today:

Yahoo! is making changes to its technology organization, led by Chief Technology Officer Ari Balogh, to better position the company to execute on its strategic priorities. Principal changes are developing a world-class cloud computing and storage infrastructure; rewiring Yahoo! onto common platforms; and creating a stronger partnership between product and engineering teams.
In order to expand its cloud computing capabilities, the Company will form a Cloud Computing & Data Infrastructure Group, charged with developing a computing infrastructure that balances scalability with cost effectiveness. It will move all consumer-facing platform teams to the Audience Technology Group, led by Venkat Panchapakesan. In addition, it is putting new leadership in place behind Yahoo!’s search group, naming Prabhakar Raghavan to direct search strategy and Tuoc Luong as the interim leader of the search product team. Both Prabhakar and Tuoc will also continue in their roles as the leaders of Yahoo! Research and Search Engineering respectively. In addition, David Ku will lead the Advertising Technology Group within Search.

New CTO Ari Balogh is jazzed about cloud computing and storage. He should be – Yahoo is a big champion of Hadoop, an open source effort that can be immensely disruptive in years to come. Despite that, I don’t buy the spin Yahoo’s PR department put out today. At our Structure 08 event yesterday, Yahoo had very little representation.

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  1. First, I agree that Y! completely lost it’s way for a few years in between. One of the key reasons IMO is that the company was trying to position itself as a “media” company – but could not clearly articulate what on earth it meant to anybody – most of all the employess. When you don’t have clarity of purpose (or at least a general sense of “choerent” direction) – it’s a perfect opportunity for “rot” to set in – which sure did in the case of Y!. Add to this, there was absolutely no accountability from the higher ups (all the way to Mr. Semel) – and the organization just stalled.

    However, I would like to think the organization is actually much better focused now and has actually been taking various measures delibrately from the time Jerry took over. If you look back – he/they laid out the “big bets” first and from that time each re-org / change has actually been something that moved the organization towards that direction. Granted, the Microsoft episode did shake up the organization (as admitted by Mr. CEO himself) – but I believe the organization started course correcting even before that.

    In general there is enough blame to go around and as you rightly pointed out a good chunk of that clearly rests on some of the executives who recently deparated. I mean these guys have been at the helm and delivered NOTHING (apart from consistently losing market share in search, let key properties like Groups rot, kept talking about “social search” and did nothing…). I mean, one can go on and on.

    I actually think the new org *MIGHT* greatly benefit the company by pulling in all audience products under the same umbrealla. I have heard of horror stories of how these various groups never spoke with each other and each of them were outcompeting the other groups instead of the “real competition” (Remember reading somehwere recently that this is very much prevalant in Google but thanks to the Adwords cash cow, nobody cares – at least not yet).

    Anyway – I truly hope that Y! has it’s purpose clear and more importantly that they don’t keep finding “new purpose” but instead execute towards the one they laid out. With some of the moves they have been making in the last few months – I think they are on the right track.

    Would definitely like your thoughts on this, Om.

  2. Thanks for writing this. I’ve been waiting for someone to start examining some of the deeper questions about what’s happened to Yahoo over the years. Mark’s made a great point about clarity of purpose. This is something that’s plagued Yahoo for a long time now. As a former employee and now watcher from the sidelines, I’ve got a bunch of other thoughts and am trying to put them together in a few blog posts to turn some attention to things beyond the more widespread Yahoo bashing over MSFT and recent exec departures.

  3. Really nice post, Om.

    I agree that the culture is the problem. For years they have turned out client software so bad that you had to wonder if anyone there had any pride at all. The site was better, at least until the new MyYahoo!, but drifting nonetheless. So the departure of so many senior people must be a generally good thing for the company’s prospects.

    Mark seems to have a clearer picture of the place than I do, but it is hard to be believe that Yahoo! will recover before Decker is gone, no matter how smart she may be.

  4. This reminds me of an axiom that a friend once shared. When companies get to this sick state, they keep removing little cancers (or the tumors leave the body of their own will), thinking that one more cut and the body is clean only to realize that the body is creating new tumors every day.

    You can’t save the body until you fix the culture, and you can’t fix the culture until you coalesce around one message and one mission of what Yahoo is. In plain simple, English-speak.

    For all of their assets, for all of their users, for the great many services that they offer, I have no sense what Yahoo IS anymore.

    By contrast, Google organizes the worlds information, largely through automated systems that are simple and user-friendly. Everything they do, even when they fail, seems to fit within this gestalt.

    Apple builds the best, most integrated device, media and service experience by delivering the full enchilada. They think different than everyone else in the industry and wear it as a badge of honor.

    Can anyone tell me what Yahoo IS?

    Cheers,

    Mark

  5. Perhaps just a small sign of what they think / don’t think about their loyal customers.

    I have hosted some domains at Yahoo for several years starting from the days when their email and other services were great.

    I just received a domain notice renewal with the associated bill. I could not believe it. They have increased my current domain (dot com) price from $9.95 to $34.95!

    All attempts to communicate with Yahoo about this huge in your face increase have failed and they have not responded to any of my emails.

    Business starts and ends with the consumer. So Yahoo you have not only lost me as a customer but I am beginning to hate you.

  6. Decidedly: It’s the profits, stupid. Friday, June 27, 2008

    [...] the profits, stupid.  Show me the money Yesterday, Om Malik wrote “What’s wrong with Yahoo?” Malik tries to explain “the systematic rot that has set into the once proud company.” Personally, [...]

  7. Check the culture of Yahoo, from the perspective of employees and ex-employees at OfficeBook, an app on Facebook.

    http://apps.facebook.com/office-book

    I hope the changes in management will result in a culture that maximizes fun and productivity in that company.

  8. Yousef Ourabi Friday, June 27, 2008

    Great Article, two minor typo corrections:

    He is the right man of the job, and can crack some heads if needed be.

    Should probably be…

    He is the right man for the job, and can crack some heads if need be.

  9. Great post Om!
    Yahoo has definitely lost it’s way. They saw themselves as the starting point on the web with their portal strategy, but consumers moved away from portals as the starting point on the web and moved to Search as their starting point. And Yahoo is definitely losing ground to Google at Search.

    I think Yahoo should open up their crawl & index and become a platform where developers and startups can build new search based applications. Sort of like how Facebook became a platform to build social applications. Yahoo could turn around very quickly and build an ecosystem around it’s search platform. New search based applications could be built for a fraction of the cost, and all on Y! search.

    http://ihobbes.wordpress.com/2008/06/23/yahoo-open-up-your-search-index-to-gain-market-share/

  10. “I’ve been waiting for someone to start examining some of the deeper questions about what’s happened to Yahoo over the years.”

    Sorry Albert, but this is far from being explained.

  11. After Yang, What Should Yahoo Do? – GigaOM Monday, November 17, 2008

    [...] one, and a total and absolute failure on the part of Yahoo’s board of directors. In June 2008, I wrote about the systematic rot inside the company. What hasn’t been discussed is that the company isn’t really [...]

  12. what s wrong with yahoo Wednesday, December 3, 2008

    [...] [1] What’s Wrong With Yahoo? – GigaOM (gigaom.com/2008/06/26/whats-wrong-with-yahoo) [2] Tech Trader Daily – Barron’s Online : What’s Wrong With Yahoo Finance? [...]

  13. i probably wont get this email anyway because yahoo.com have crapped out and I am unable to access my mail. I have enjoyed your comments but cannot really comment on the symantics of yahoo and its organisation because I am a ‘newie’. I will from time to time visit this site because there are some knowledgeable people on site. Thank you for your entertainment! Siri.

  14. james rhines Sunday, April 19, 2009

    the yahoo server on my pc and lap top dose’t work very well. Is there a problem in your system or what?

  15. I’ve solved the problem using Yahoo pretty easily on my computer: I simply deleted THEM! I don’t have time in my daily life to wonder what the hell is going on with Yahoo anymore and have been pushed by Yahoo itself into simply not caring anymore.

    Who cares?

    There’s too many other avenues available to me now to sit and wait on these “Yahoo’s” to get their act together!
    And that statement they released? Corporate psychobabble. It meant absolutely NOTHING to me as a user of online services. UGH…..

    It’s sad, because I’ve had a Yahoo account for years now but like I said, in my daily living, I don’t have time to figure this company out FOR THEM when they should be helping me figure out how to do what I want to do FOR ME!

    R.I.P. Yahoo…..

  16. Om Malik’s prose unwittingly replicates the Yahoo problem. He tells us Yahoo has problems (wow!) that reflect on the organization (no kidding) and he tells us some names (who cares?) of people he suggests will issue more worthless words to cover in b.s. specifics he doesn’t detail. Based on my own present and recent experience, let me help: When you sit down to your screen and keyboard Yahoo! don’t work right. You want to send an e-mail and get some cockamamie gray screen with all sorts of nonsense instead of what you’re used to, then you know what? It ain’t working right. Up pops an overline that says you may be having problems with something you never heard of, but click here. Nothing happens. You know what? The damn thing isn’t working! I wish I knew why (I’ve had gurus in), but it doesn’t matter how many meetings you have or bells and whistles you tack on if your basic product don’t work. I wish someone would offer some suggestions. The one useful thing in all that I’ve reading in this string is, go to Google. #

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