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Summary:

Yahoo CEO Marissa Mayer yesterday briefed the troops on what comes next for the beleaguered Internet giant. She shared some ideas, but frankly those aren’t enough for I think the rot is too deep and cultural for the company to make a comeback.

Marissa Mayer

New Yahoo CEO Marissa Mayer laid out her plans for the turnaround on Tuesday — vague plans at best — and the company is hiring a new chief financial officer, Ken Goldman, who is apparently acquisition minded. Yahoo certainly needs to graft outside talent but the question is if the graft will actually take.

“At Facebook and Google, they know your underwear size before you walk in the door. At Yahoo, it was clear they hadn’t even Googled me,” an entrepreneur who was in acquisition talks with Yahoo tells the New York Times.

I have heard variations of similar interactions from other people as well. That statement if anything reflects the fact that the rot inside Yahoo is so deep, so extensive and so cultural that it would take a divine intervention for the company to overcome its woes. Major and painful cuts won’t be enough and neither will be the acquisitions. As I said before, it is one stinky blivet! Wall Street, as usual, having no grasp on reality is expecting miracles.

  1. Om, I think you’ve got it dead right. There are two fundamental problems at Yahoo.. 1) they’ve lost the engineering / product culture they once had, and 2) the org structure is effed up bigtime. I think Marissa is a great fit for problem #1, but the foundation is too shaky. This is a 10 year old problem there.

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    1. Thanks for sharing your thoughts Salim. I think the company is too far down the road to mediocrity. I am just surprised that people (read Wall Street) doesn’t see it or rather doesn’t want to see it.

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      1. Yahoo looks good to Wall Street because of margins, revenue, and eye balls. Mediocrity on product is a-ok. for wall street Just look at Wal-mart and every other big box retail store that sells to the “center 40 states.” They sell the lower end of companies’ product lines and they are making some on wall street happy. Look at 1 yr and 5 yr numbers there. I think this is a bit of upper class tech snobbery that comes through and not enough thought of the majority of people.

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      2. jason paul richmond Wednesday, October 3, 2012

        I’m surprised that your surprised. Wall Street excels at valuing mediocrity — it’s a product of their reliance on the Gaussian bell curve.

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  2. Yahoo answers is the only thing they got going for them.

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  3. That’s it, one anecdote? I’ve heard some ideas being thrown around by junior writers at tech blogs that provide more insight than this, I was expecting more. I actually felt exactly the same way before thought the same before Marissa showed up, but I now believe she has a chance to make something out of this– and has no obligation to explain to the tech media or “community” what her plans are at this time.

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    1. I think the problem is much more deep seated and Marissa can’t fix them all. It is crazy to expect her to pull a miracle. You should read my previous posts about Yahoo. I think they are fighting the battle of attention – where they have a lot of competition. We shall see soon how this plays out.

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      1. I agree. I believe they are little more than a glorified AOL. And they have an ex-Googler leading that effort too.

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  4. Here is the best plan I have seen for fixing Yahoo! Need to grow revenue first! http://bytesfrombits.wordpress.com/2011/11/30/yahoo-restoring-the-growth/

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  5. I don’t get all of the criticism. Yeah, Yahoo never grew out of its roots as a portal. They didn’t branch into social networking, but the world doesn’t need a whole lot of those. However, with less page views than Facebook, they still generate more revenue than them. Which means Yahoo is a more desirable place to run ads than Facebook. Or twitter.

    People still use Yahoo for mail (despite complaints from the under-30 crowd, email is not going away). They use it for news and stock quotes and financial information (where I just got the revenue #’s for the two companies). They use it for web hosting. Is it rotten because it couldn’t sustain its meteoric growth of its first few years of existence? They even proved to be a good investor, with their return on Alibaba, which the geniuses at Facebook will not match with their much larger investment in Instagram.

    I don’t understand why people expect a stream of hits from companies that have a successful product – there is no formula for creating great web companies, so why hold Yahoo to those expectations?

    As far as being rotten to the core, there is no doubt waste at yahoo, but show me any publicly traded company with $5 Billion in revenue that doesn’t have unneeded employees, or makes bad choices. They don’t exist. There is no formula for great companies.

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    1. Yeah, I agree. I use yahoo every day, it looks and works great for me. I don’t see the point here.

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  6. Where’s the beef?

    This article seems a little slim on substance Om. A reflection on one anonymous person’s quote.

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    1. You have to be completely out of touch with the tech world to say that.

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      1. Ankush, I think you missed the point. I take issue with using one anonymous person’s quote second handed. What value is this? I can’t reflect on the persons disposition, circumstances, whether he was jaded, or what. Did the anonymous person come from a mediocre company of questionable value to yahoo and was venting at the slight, or should I take some anonymous persons view seriously and write a column on him, implying that this anonymous persons views are worth considering because Mr anonymous is supposedly a very reliable source? Not clear on what value is of assigning a label of “rot” to the many people that work there, and attempting to backup the assertion with one anonymous second hand source’s one time experience of what some yahoo representative did or did not do.

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  7. The issue with Yahoo is that it is a public company and has to live by a 90 day mandate everyday. The right thing to do is to make it clear to the markets that the next 3 to 4 quarters would stink, and get their act together.

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  8. Om – You MAY be right, however; I think you are jumping the gun quite a bit to claim that a turnaround is impossible. Many, many companies in far worse shape have been turned around by a leader determined to make the tough business decisions and reinvigorate the culture. Yahoo is still profitable, touches many millions of users everyday and still has an incredibly recognized brand in the internet space.

    Is it tarnished? Yes. Do they need to make major organizational and product-oriented moves? Yes. That being said, there is nothing impossible about it. Mayer needs to make bold and calculated moves, and the board needs to support her every step of the way.

    I am not making a prediction for or against here, but Yahoo is clearly not a lost cause or someone of Mayers caliber would not have taken on the challenge. A lot can change quickly in the technology space. Hot startups (see Viber, Whatsapp and many more) quickly can generate huge numbers of users. Likewise, many of the heavyweights are spreading themselves quite broadly and may lack focus in key areas (see Google and MSFT). By rebuilding a strong culture, acquisitions (both talent and products) and the right focus on organic products, Yahoo can certainly turn things around. Unlike a startup, the DO have mechanisms to monetize users and traffic.

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  9. I don’t fully understand what business Yahoo is in. Google offers search; Facebook connects people; Amazon is a retailer; Apple provides integrated computer hardware. What is it exactly that Yahoo does?

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    1. Well Robert,
      Yahoo is a media portal offering news, dating, ckassifieds, stock quotes, email and various other web services to its end users. I.stead of being highly conce.trated in one category it has spread itself thin, and even partnered with others instead of developing its own products.

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  10. Warren Buffet Quote: When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

    With that said I’m rooting for Marissa.

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