Yahoo (s YHOO) has finally found a new chief executive to replace Carol Bartz (who left in a huff) and he is Scott Thompson, who till recently was the president of the PayPal division of eBay (s EBAY.) A surprise candidate, it is not very clear what his strategy is going to be for Yahoo, which as I have often said is on the wrong side of the Internet history. More importantly, all the problems of Yahoo are still there. The board of directors? Pretty much the same guys who were asleep at the wheel as Yahoo was going off track!
The talent exodus is a one-way street — out of Yahoo. Good luck changing that, especially with a booming tech economy with well paying companies like Facebook and Zynga(s ZNGA). The loss of web attention to other web services? A befuddling mobile strategy? Check, check! Still the same. In a note to its clients, Goldman Sachs’ Heath Terry while applauding the move, maintained a “sell” rating on Yahoo.
With the deterioration of Yahoo’s core business – user engagement declining, stagnant email product, lack of substantive mobile strategy – turnaround needs to happen at many levels, including product development, infrastructure improvement, talent retention, and brand building, among others, to return the company to a positive growth trajectory. Revenue has declined for the last 12 quarters and with competition continually innovating in these areas, execution of new strategic initiatives and product improvement could be challenging.
Thompson has a track record of proven success with PayPal emerging as a leader in online payments. The company has over 100mm people that have connected PayPal to their credit card and/or bank accounts, a meaningful technology lead, the trust that’s been built around the brand, and over $3.5 bn in mobile transactions already on the platform. It’s worth noting however, that previous CEO Carol Bartz was viewed as a strong restructuring hire who was overwhelmed by this challenge and the conflicting goals of Yahoo’s board and its shareholders. (Goldman Sachs.)
Amen to that!
Given Thompson’s background — payments — I am not sure how he fits into the overall plan for Yahoo which is supposedly focused on media and advertising. Yahoo’s press release has this bio for Thompson:
Scott Thompson has a record of deep industry experience, having most recently served as President of PayPal with overall responsibility for establishing that company as the leading global online payment service. He previously served as PayPal’s Senior Vice President and Chief Technology Officer. Prior to PayPal, Mr. Thompson was Executive Vice President of technology solutions at Inovant, a subsidiary of Visa formed to oversee global technology for the organization. Thompson was also Chief Information Officer of Barclays Global Investors, where he implemented a new strategic technology platform and global infrastructure. In addition, he worked with Coopers and Lybrand, delivering information technology solutions to leading financial services clients.
From those who know him, he is said to have solid leadership skills and tends to focus on technology — both things Yahoo needs badly. I guess I shouldn’t judge him before him even starting the gig.
Anyway, I wish Thompson a lot of luck and would love to see him succeed. For starters, I would love to see a simple strategy and a plan that he can put on a single-sheet slide and tell the world. He needs to zero in on a few things Yahoo will do and do them well. And more importantly he needs to get rid of the toxic bureaucratic muddling influence of the board by going in for a board overhaul. There is nothing more I would like to see Thompson do than a turnaround and in the process, give the media a real and new candidate for the “CEO of the year” slot for 2012.