Again, CEO Isn’t Yahoo’s Real Problem

Hedge-fund investor slash trying-to-be-an-activist shareholder slash media darling Eric Jackson of SpringOwl told the Wall Street Journal today that it is time for Yahoo CEO Marissa Mayer to go. He outlined a strategy to save the company, which basically says to cut 9,000 jobs and make a few other changes.

“For all the bluster, the solution outlined in the long presentation reads more like an accountant’s grumblings than a strategic vision,” more accurately  writes The Register.

All that nitpicking shows that there is very little understanding of the hiring reality of Silicon Valley. I also wonder if he has any insight into the reality of Yahoo and how it fits into the larger context of the modern consumer web.

First, let’s look back at what he’s said about Mayer over the years:

  • 2015: “I disagree with this notion that Yahoo can’t be fixed.” #
  • 2014: “Two years after her hiring, however, I think it’s fair to point out that she has made a number of costly and largely self-inflicted errors since taking over.” #
  • 2013: “The company is worlds ahead of where it was a year ago.#
  • 2012: “There are very few people in Silicon Valley who are genuine tech rockstars and can go out and hire as CEO — she is one of them. Something must be happening at this company for her to leave Google.” #

In these so-called investor experts’ analysis, there is a tactical admission that Yahoo as a technology product is on a declining curve, becoming irrelevant by the day. A CEO change won’t magically make people leave Facebook, Google, Snapchat and Instagram (plus more) to come back to Yahoo.

I’m not hating on either the CEO or the company, just pointing out the obvious. Of course, others have disagreed with me in the past. But I have been consistent in my view on the growing irrelevance of Yahoo. Here is what I wrote in 2013; things haven’t changed much over the past two years:

It is about the company, its culture and its place in the modern web. It is about Yahoo loyalists and their inability to look beyond the esoteric and frankly a worthless metric; the 700 million people who use Yahoo each month. That is a blivet full of 15 year old excrement.

Yahoo, like most large web companies from the 1990s, gained mass scale because it arrived to the party first and moved fast enough to keep signing up more and more people. Of course, it helped that there wasn’t much competition, especially after the big bubble burst in 2001. Yahoo met the needs of a lot of newcomers to the internet by offering simple and easy-to-use products. Fast forward to today and we have a whole new generation of internet users who have grown up using a plethora of services. They understand what is good, what is average and what is simply terrible. Yahoo’s offerings for this new class of users aren’t that compelling enough to shift their attention to the company.

It is often easy to look at the web services from the perspective of the current/past generation of users and get blinded by the big numbers, but technology companies have to look forward and make sure they capture new classes of users. It is the challenge faced by every single consumer products company — brands and products age with their early adopters and eventually become worthless. As a knowledgeable man recently told me, “Yahoo is like the Fat Elvis” when all of us “want a new king of rock-n-roll.” Buying Tumblr is a good move, but again, it’s too soon to declare victory.

And forget the products — so far Yahoo has been unable to attract top quality talent to the company. Not one 20-something I have talked to in the past six months has wistfully talked about working for Yahoo. And even those who have joined Yahoo from Google are joining the company thanks to mega-million dollar contracts, not because they want to work there. When Yahoo becomes the desired job-spot for a fresh, new tech tinkerer — that will be the time I will lighten up on Yahoo.

Making it about Mayer, both as the savior and the villain, is what I find distasteful about the so-called “investors.” If they don’t want the chief executive to fail, then they need to satisfy these criteria with the board before they’re hired:

  1. Shift the focus from personality and charisma to experience and track record.  

  2. Focus on the task at hand by fixing cultural or structural problems and then hiring executives based on the specific skills that are needed. In Yahoo’s case, the company needs a financial manager to sell assets. No one is taking that into consideration, because somehow people think Yahoo is relevant and fixable.

Pip Coburn, who runs a small (and unconventional) investment advisory group, recently noted in an email to some of his friends:

So, has Marissa Mayer the CEO of Yahoo seemingly done a poor job from our analytical observations? Yes. Terrible. Could we do THAT job? No way. We aren’t sure anyone could really do that job well at this point.

Maybe the so-called activists will get a clue and move on to some other company, where they can practice their activism and management capabilities. To rephrase: If you were any good at being a CEO, you would be a CEO. The pay is way better — just ask the Yahoo CEO.


A letter from Om

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