Yahoo CEO Carol Bartz was in fine form this week, telling the crowd assembled for the company’s analyst day that after only 14 years, Yahoo had “somehow got boring,” declaring its 6 percent operating margin as “pathetic” and announcing the start of “good times” that will leave those bad old times (hello, Jerry Yang) in the past. Then came the juicy little sound bite, which echoed for days. “We have fallen and we really want to get back up.”
It’s become the Bartz shtick: Blast Yahoo’s current malaise as unacceptable, tweak the old management and then vow to fix things — fast. It never fails to entertain the press, and sometimes it even gives the stock a small bump.
But if you want to convince your users and investors that you’re truly focused on the future, you may not want to quote a 20-year-old TV commercial. And does Yahoo really want poor Mrs. Fletcher as its new mascot? Better not to remind everyone that purple is also the color of bruises.
Granted, turning around a $7 billion-a-year company takes time. Bartz has been making hard decisions, cutting deadwood and reassembling a Byzantine management structure into something that works. But her song and dance is starting to wear thin. Many of the people she’s relying on to turn things around were at Yahoo in the bad old days, and don’t enjoy being thrown under a bus to please analysts. Yahoo still has a lot of creative, skilled people responsible for properties to which many users remain loyal. It’s not their fault that top management couldn’t make more money from them.
But the bigger, more immediate issue for Yahoo is that it’s running out of time. Overseas markets are growing fast, and Yahoo needs to grab a piece of them early. Tech startups are seeing a wave of M&A activity, and the cream of the crop will be acquired first. Above all, the web is shifting, from static pages to social media, from search to discovery, and the long-term leadership of that new web is still up for grabs.
Yahoo is a dark horse in the race for the social web, even though it has a lot going for it. It has hundreds of millions of users, and partnerships with many heavily trafficked sites. It has long, deep relationships with the biggest advertisers online, as well as the community of developers writing the Internet’s next act. What it doesn’t have, despite Flickr’s initial success, is any momentum in social media. The harder it races to catch up, the further it seems to fall back.
If Yahoo is really focused on the future, it needs to anticipate where its competitors will be in six months, not just catch up to where they are today. Luckily for Yahoo, Facebook tipped its hand to developers this week, hinting at major changes that it’s planning for the next six months. Its Open Graph API, for example, is an attempt to move Facebook features beyond its walled garden and onto other sites. To attract developers, Facebook must draw a nice little road map, one that Yahoo would be smart to study.
Yahoo needs to stop talking about being amazing again, and simply amaze. And who knows? Maybe Bartz’s comments are intended as a distraction from something big Yahoo has planned. After all, it’s building its new 3-million-square-foot headquarters in Santa Clara – enough to house 11,000 workers. That’s a big gesture showing Yahoo is confident of future success. Or maybe it just means that, if Yahoo can’t find new ways to monetize the web, it can instead rent out office space to someone who can.