For past year or so, there has been a bit of a lovefest around Yahoo (s YHOO), the rapidly aging former web star that has lost the attention and preeminence it enjoyed in the 1990s and early 2000s. The showers of praise, prompted in part by the appointment of Marissa Mayer as its chief executive officer and her ability to understand the modern web, have resulted in oodles of press for the company.
A year later, that buzz has helped the stock run up almost over 90 percent — something that has warmed the cockles of the cold, mean and brutal Wall Street crowd. It led the “activist” investor Dan Loeb to actively bail out of Yahoo stock and lock in hefty profits.
It has been a year that has kept the Yahoo press office very busy. And it has been a year full of non-critical looks at a company that has made news for giving iPhones to its employees, rapping remote workers on their knuckles and minor upgrades to once iconic products. Or as a cynic (like me) would say — it is like spraying Chanel No. 5 in a pigsty.
My recent appearance on Bloomberg TV in which I focused on the reality of Yahoo has led some — including Business Insider’s Henry Blodget, who benefits directly from the largess of Yahoo as a longtime shareholder and part time employee — to ask me to lighten up.
The problem is that this is precisely the time when one needs to ask the tough questions of the company. Yahoo’s new CEO is a wonderful, intelligent and hard-working executive whose attention to detail and product feedback is a much welcome break for the beleaguered company’s workforce. Her Google-like management moves such as free food and quarterly reviews to weed out low performers are good steps. But these moves, inspiring as they might be, have not resulted in any real products and results.
And this is not about Marissa, who remains someone I admire deeply. It is about the company, its culture and its place on the modern web. It is about Yahoo loyalists and their inability to look beyond the esoteric and frankly worthless metric; the 700 million people who use Yahoo each month. That is a blivet full of 15 year old excrement.
11,700 employees, 1 year, 4 Relaunches
Yahoo apologists point to the face lifts given to Flickr, Yahoo Mail, Yahoo News and Yahoo Weather as achievements for a company that employs about 11,700 people. Of course, none of those people point to that fact that the number of people (in the U.S.) who use Yahoo Messenger has tumbled from over 12.5 million to just over 6 million (based on comScore data). Or that (U.S.) visitors to Yahoo Finance are stagnant at shade over 34 million — the same number they were in July 2012. Flickr had 25 million (U.S.) users in July 2012 according to comScore, a number that had declined to 21.5 million in July 2013.
Dismiss all that as nitpicking, but you can’t ignore the fact that according to research firm EMarketer “Yahoo’s share of global digital ad spending is set to decline from 3.37 percent to 3.1 percent this year.”
When I put that forecast against the somewhat ambiguous number of Yahoo topping the comScore rankings of most widely used websites I see that nothing really has changed. Yahoo’s Weather app uses data from a third party and it doesn’t matter how well it does — it can’t create enough views and thus create a meaningful revenue stream.
I am not the only non-believer. “We continue to believe that a turnaround of Yahoo’s consolidated operations is a long shot, even if Marissa Mayer has improved morale and sharpened Yahoo’s focus on product aesthetic, functionality and mobile apps,” wrote Jordan Rohan, who follows the company for brokerage, Stifel & Co., in a recent research note to his clients. Jordan is being generous.
Like I told Bloomberg’s Emily Chang, Yahoo’s product lineup sort of blows. There isn’t a single product they make that I want to use.
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.
Mobile first? Actually no, mobile last
Looking forward, it is pretty clear the world isn’t about the web as we know it and instead it is all about the mobile. The good news is that Yahoo’s CEO knows that.
“I hope that at some point we are looking at a world where mobile is a majority of our revenue,” Mayer told BusinessWeek writer Brad Stone. The bad news is that Yahoo has done nothing to capitalize on that opportunity. It has launched some new apps but boy, are they struggling in the rankings.
Take for example the top free 50 iOS apps in the US iTunes App store — there is one Yahoo property in there, Tumblr, which cost the company a whopping $1 billion. Flickr, whose much ballyhooed rebirth inspired headlines across the globe, ranks a mere 39th in the “photos and videos” apps. BusinessWeek celebrated Yahoo’s focus on new products and design, but someone should look at Yahoo Mail — the font it uses is from the 1990s. (Yahoo Mail is ranked at 114 spot on the US iOS App Store.) On the US Google Play store, Yahoo Mail is ranked at #19, Tumblr at #81 and Yahoo Fantasy Sports League at #109.
Here is a tiny bit from Bloomberg’s piece about Yahoo.
Cahan’s division, called Mobile and Emerging Products, now exceeds 330 people and has its primary offices in New York, San Francisco, and Sunnyvale, Calif. Underscoring mobile’s importance, Mayer ordered the team’s work space in Sunnyvale renovated. Unlike the soporific purple and beige cubiclevilles that fill the rest of Yahoo’s dot-com-era headquarters, the mobile group has adjustable workstations that let employees sit or stand. There’s an exposed ceiling, whiteboards on every other wall, and big colorful posters that display giant iPhone screens.
330 people — you gotta be kidding me! There is one question that needs to be asked: what the hell are these people on Yahoo’s mobile team doing? What is the daily active user base for Yahoo, and its individual products. “We also launched our redesigned Yahoo! app for iOS and Android, complete with Summly integration. As a result of this launch, we saw 55% increase in daily active users and a 60% increase in time spent using the application.” Mayer said during the conference call, but how about some actual numbers?
And while Yahoo management talks about mobile from one side of its mouth, they are unable to resist the lurid lucre of web-based advertising. Perhaps that is why they are out celebrating the comScore top spot and looking at signing up Katie Couric to their web platform, just as she signed up Saturday Night Live (SNL) to the Yahoo platform. As I see it, for about the 13th year, Yahoo continues to be schizophrenic, torn between its desire to be either a media entity or a technology company.
Rotten to the core
I can sit and talk about in this abstract terms, but the fact is that Yahoo’s core is getting completely hollowed out. According to one Wall Street analyst, search-based advertising accounts for about 75 percent of company’s operating profits, and yet no one seems to notice that Yahoo’s share of US search queries has declined from 20.3 percent in 2009 to 11.3 percent at the end of July 2013. In fact, every month is a new low.
By selling its search crown jewels — search — to Microsoft, the company is more reliant on Microsoft for profits than most realize. And all that search-market share loss didn’t go to Google, but it has been sucked up by Microsoft’s Bing which now accounts for about 18 percent of the total US search queries, according to comScore.
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Things are worse on mobile — the company doesn’t even have a double digit share of the mobile search market. Mobile (unlike Yahoo on the web) search is driven almost entirely by ability to search inside the URL/search bar and most people end up using Google as a default option. Google owns Android and has done a good job of becoming an important part of iOS users’ habits as well. Google’s search is slowly and surely moving towards offering intelligent serendipity that can drive a new revenue stream from action-oriented advertising, the kind which makes sense on mobile platforms.
In comparison, Yahoo is still dependent on the old school page-view driven advertising business model. And even here, Yahoo is facing a nightmare situation — thanks to technology in the form of programmatic buying. This type of buying is limiting the demand of premium advertising that Yahoo has been hawking.
Yahoo no longer enjoys the monopoly on the massive scale web advertising. That mantle has been taken over by Facebook, which, quite frankly, has figured out a way to create inventory of billions of page views at costs much lower than Yahoo. As a result it offers advertisers cheap display advertising but with ability to more effectively pick and choose attractive demographics. In other words, with better targeting and cheaper prices, why would a display advertiser look at Yahoo over Facebook?
Let’s just face it — there isn’t anything premium about Yahoo anymore. By the way, this isn’t just my theory — Yahoo blamed programmatic buying for the revenue shortfall in its most recent quarter (Q2 2013.) And this is a problem that isn’t going away, especially since Facebook, which throws up tens of billions of page views daily, has made making money its sole mission.
So why is Yahoo stock up?
“All of the stock bump is because of increase in the valuation of Alibaba,” Ben Schachter, analyst with Macquarie Securities pointed out. The positive press and improved image of the company because of Marissa has helped the stock. But as far as products are concerned, “we haven’t seen much.” He isn’t the only one who is in wait-and-see mode. Other analysts too say that there remain substantial challenges.
While it is easy to say that these things take time, one thing is clear: Yahoo doesn’t have time. It doesn’t have time to move at the speed of General Motors in the age of Tesla. It has to learn that when it comes to the only thing that matters in the world of consumer technology — attention — they are losing it to sexier, shinier and prettier things.
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.
And in the interim, I am going to focus all my writing on companies actually inventing the future. And if anyone from Yahoo management wants to come talk to me, I am all ears and they know where to find me — as long as they come with data that shows not only is its audience and daily engagement growing, but also its revenues, profits and appeal to a new generation of users.
hm, I love how Om only tells you where Yahoo’s apps are located in the iOS store, even though that OS accounts for less than a quarter of the worldwide OS usage.. where are the Android stats?
I love how you use the word usage. Android out-manufacturers Apple. Apple still out-uses Android (apps, revenue, ad impressions, web browsing). Details, details.
HEre you amigo — things aren’t that different on Google Play store: Yahoo Mail is ranked at #19, Tumblr at #81 and Yahoo Fantasy Sports League at #109 And it is added to the story, though I am going to get global data from Google, for this seems to be US only Play store.
Aw, did Om offend your loyalty to a software platform? How dare he?
Too bad you’re wrong about OS ‘usage’ Whatever makes you sleep better at night.
Bam! Another insightful, educated post, unlike the ones on businessinsider that reek of desperation for clicks (especially all the apple trash talk prior to Henry’s investment when the stock bottomed at 395 and suddenly his minion Jay was forced to change his tone to drive up the stock)
Great piece, Om.
I’m always so confused by the contrast between Marissa Mayer’s philosophy/aesthetic — clean, helpful, classy, non-evil — and the Yahoo! frontpage — Kardassians permanently in the top stories, junk stories almost indistinguishable from fake sponsored stories. . . .
It seems like they are too afraid of losing traffic to tinker with improving quality, leaving them, like you say, stuck with their existing, dwindling market segment.
While it should still be a platform with a lot of upside, especially with the right M&A, I agree that the potential is still more unproven than shown.
Chris
Many thanks for the comment and yes, you are right about the dichotomy of the situation. Yahoo front page has lost all meaning and remember I grew up with that page/design and loved using it as a service.
That said, MM has great aesthetic and good taste. I have seen it up close at various events, during interviews and during casual chats.
Reminds me of Ron Johnson’s dilemma at JC Penney.
now that is a well written criqitue of Y!.
Thank goodness for Om Malik. Mayer is a remarkable executive but there’s so little there there for the business of Yahoo! Where the CEO should get good marks is in turning around perceptions of the company so they can retain and maybe even attract good talent.
word.
One of the “core” products they are applauded for is Yahoo Fantasy Football. If Yahoo were investing in its core successes, its fantasy app would not have auto-drafted Aaron Hernandez as my TE in the 6th round last night, more than a month after he was locked up on murder charges and released from his team. There are dozens of other players not on any roster for months who still appear in the Yahoo Fantasy league. This is not that hard for a company with Yahoo’s resources who wants to show that they care about investing in their “successful” products.
Disclosure: I sold Yahoo short this morning after discovering they had auto-drafted Aaron Hernandez onto my team last night.
Ryan
That is harsh. Sorry man! Good luck with the football season
You refer to the millions of Yahoo users as EXCREMENT? Maybe you are getting to old to write for the public. S’ok. It happens to the best of them.
sell
Reblogged this on Seeking Digital Freedom Online and commented:
Strong analysis always beats fawning. Love this article on GigaOm
This article was extremely frustrating to read:
“(Yahoo Mail is ranked at 114 spot on the US iOS App Store.) On the US Google Play store, Yahoo Mail is ranked at #19, Tumblr at #81 and Yahoo Fantasy Sports League at #109.”
ARE YOU SERIOUS? These numbers are freakishly misleading because it reports them in overall app rankings, but instead we should be looking at them by each category in which they are published. For example:
Yahoo! Mail (Productivity category): #5
Yahoo! Weather (Weather category): #2
Yahoo! Sports (Sports category): #13
Yahoo! Fantasy Football (Sports category): #2
(these ranks are as of of Aug 22, 2013 on iOS App Store, U.S.)
..the list goes on, but you see what I’m trying to say here? This article is written by a total nonsense skeptic.
Enjoy,
-Yahoo! employee who monitors rank and app marketing everyday and truly believes in the company’s vision
Free App category (overall) is the right way to look at the reality of your company
1.Google Gmail at #22 overall not in some special productivity category.
2. Instagram #7 overall, not some special photos category.
3. Weather Channel #92 overall.
Tell you what you have
Tumblr and Yahoo Fantasy Sports app — 52 and 67 overall — of which one cost $1 billion.
I am glad the company has a lot of believers like you — it needs that blind support. I am not a believer and I am a skeptic — why don’t you guys prove me wrong. Simple
Yahoo is doomed with their current direction in mobile. Their “feedback” link is overwhelmingly filled with boisterous complaints about their “new” approach in mobile where they lock in floating yahoo toolbars taking up a significant portion of your phone and tablet screen with no ability to remove it in settings. Users are screaming at them online, even begging them to remove it, yet all are ignored. Moronic lack of attention to customer satisfction and user experience.
Then when one reads the user comments posted to their own yahoo new articles you realize their market share appears to be populated in large part by the very bottom of the market.
To Rushabh – so if you work at Yahoo, see my comment above. If you want to see your company succeed, do something to turn this “new” mobile direction around in terms of the horrible user experience! Just go to your own feedback section and you will see what I am talking about.
No hay peor ciego que el que no quiere ver.
When Steve Jobs would make product announcements he would often say, “Boom.” I think this post qualifies as a “KABOOM.” And agreed. Everyone in the tech industry lionizes Marissa Mayer, but I have yet to see evidence that she’s some monster genius. I’ll just have to take your word for it, Om.
Meanwhile, we’ll just have to wait for the new Yahoo! logo. That’ll fix EVERYTHING.
You nailed it piece by piece Om. Thanks for a great article
Can you elaborate on the impact Alibaba’s assets have on Yahoo’s US stock price / overall traffic numbers? Two additional follow-up questions:
1. What is a reasonable time horizon to measure the success of Yahoo’s M&A activities over the past 2 quarters?
2. Do you see Yahoo giving up the US market and focusing on China? Basically, the Yahoo identity decreasing and Alibaba identity increasing.
Naveen
If you click on the Dan Loeb link, you will get all the details.
On the M&A activities — just see how soon the people who joined via M&A leave. If they leave sooner, then they are in trouble
On US vs China, they are going to be non-player in China from the looks of it.
Thanks Om. I did read the Loeb article. I guess I didn’t frame my question correctly.
I wanted to ask if you have direct visibility or opinions on specific Alibaba products that will have an impact on Yahoo’s worldwide traffic numbers. Right now, most literature I’ve come across presents Alibaba as a black box and projects a future based as a function of Yahoo’s % ownership of Alibaba, not from actual user, traffic or revenue numbers. Asset sales contributed the majority of Yahoo’s cash flow in the previous year, so I’m wondering how they plan to keep momentum going with a shrunken asset base and with assets outside the US.
Interesting thought on the M&A, don’t most companies have a mandatory lock-in period for acquired staff? I’d assume folks would be loathe to break these golden handcuffs and walk away.
I suggest some proofreading:
“By selling its search crown jewels — search — to Microsoft, the company is more reliant on Microsoft for profits than most realize.”
Or maybe the author thought the word ‘search’ belonged twice in that sentence.
And on the article content? Based on what I know about Yahoo (not much), the arguments and data backing them are compelling.
Dan
Thanks for catching that..
over my head! =) lol, i just like the “Yaaahoooo!” and their mail is simple and easy to use.
“It is about Yahoo loyalists and their inability to look beyond the esoteric and frankly worthless metric; the 700 million people who use Yahoo each month. That is a blivet full of 15 year old excrement.”
Directly from the GigaOm About Us page….
“Since 2006, GigaOM has grown into the leading independent voice on emerging technologies and the disruption of media. The GigaOM news network’s online audience of 5.5 million monthly unique readers relies on its definitive coverage of cloud, mobile, cleantech, consumer web and media.”
If 700 million is worthless, how does 5.5 million make a leading independent voice?
You talk oodles about the CEO…when the CEO spends billions to buy crappy sites run by rich teenagers in UK and some stupid site called tumblr used to distribute porn , and in this day and age calls WFH a crime…. What else can you expect. Lets be honest , Meyer is no genius CEO.in fact I liked the college dropout CEO better and I thnk he had some real balls and could turn around yahoo if given a chance.
Maybe, just maybe, Yahoo!’s stock has also been helped by the rather large increase in efficiency. Yahoo hasn’t really gained anything in terms of revenue, but profit is up at a good margin.
That’s business 101. Before you worry too much about growing revenue, make sure you capitalize on the revenues you have. If you can do that, it opens the door to higher quality products. It’s a process. Why acquire all this small companies? Because many of them are efficient, and those gains in efficiency directly translate to real dollars.
This isn’t the only reason, but it’s definitely on the mind of many after the last earnings call.
Another big reason that you touch on is the movement. At this point in the game it doesn’t matter where the movement is happening, the fact that a company like Yahoo! is making these changes is a rather big deal. If you pay closer attention you will realize the primary objective of all these moves: being nimble. Marissa Mayer is dead-set on making Yahoo! one of the most agile large web properties out. Putting them in position to capitalize not on current opportunities, but ones that one turn up for 5 or 10 years. Sprucing up what you have no isn’t a bad idea, but if you really want to grow and you’re Yahoo, you need to set yourself up for what is coming not what’s already here.
That’s what they’re doing. And that’s why their stock will keep going up over the next 6 quarters. As long as they remain on this path I see good things for them. They will be competitive again.
And this is coming from someone who doesn’t use Yahoo! (Google). Game recognize game as some would say.
Honestly Yahoo! just needs to look at USA today or Quartz and turn their old fashion home into something sexy.
Honestly also have you seen how horrible the purple yahoo menu bar looks over the black flick menubar (and why 2 menubars also??).
Yahoo is not sexy neither appealing!
Right on, brother. Yahoo sucks.
Thanks for this informative piece. I’m sure she is talented but she essentially condemned the internet when she killed work-from-home. She (and her head of HR) said that communication, speed, quality, collaboration, organizing, trust, teamwork, and monitoring all suffer and that misunderstandings and costs increase when employees work from home.
Then, cutting even deeper, Meyer said, “It is difficult for humans to trust people that they don’t frequently see face to face.”
Your CEO is damning the internet?!
Where is the article that says Yahoo is cutting new ground to make working from home even more effective?
There’s also a fairly transparent, tell-don’t-show nature to the way they are trying to project a sense of “renewal”. Average consumers don’t care and amateur observers can see through it (i.e., a rise in stock price and an influx of talent being supported by Alibaba’s valuation).
There’s no PR effort more transparent than their off-the-mark “30 Days of Change” campaign: http://whoo.ps/2013/08/13/why-the-f-should-we-care-about-yahoo-s-new-logo
Good points Jonathan. I read your piece yesterday. Good one.
I always use Yahoo! as a primary site I visit for news and interesting happenings. As someone mentioned, it has become more of an Enquirer front page. Stories are lame as can be. It’s bad!
brilliant article, Hi5 OM!
You are only as good as your last innovation. Yahoo basically has none of it’s own, and hasn’t done much with the ones it bought, and overpaid for.
I have very fond memories of Yahoo, but now my interest is almost entirely in watching if MM can do something spectacular to save the company. In other words, my interest is in her, not really Yahoo, at least until they release something that creates or moves a new market.
I have followed your posts and opinions on Yahoo, and also on the same page when it comes to Mayer being an awesome leader.
How much time do you think is right for a turnaround of a company which is “Yahoo with all the over hang you have mentioned” lead by some one like Mayer? How about a post on how Yahoo should do what with each product or business for a turn around?
I have a feeling (but I am not an expert on big-ass companies) that Yahoo lacks vision.As an example – they had a huge opportunity with Flickr, they just gave it a facelift and a bigger room, but it’s doesn’t have any more value over what was there 5 – 7 years ago. Other web sites stepped in and took over some of it, but some of the value is still on the table – yet Yahoo can’t even grab that.
Thank you. I was searching for some sanity on Yahoo! I am not sure I have found it here, but I have gotten close.
Thanks, Om, for another brilliant article that goes beyond the mainstream media’s fascination with Vogue-worthy Marissa Mayer. I appreciate your faith in her abilities, but Yahoo! has very little to show after her first year at the helm. “Improving employee morale” with free meals and iPhones has not resulted in any meaningful products for today’s digital audience.
In my view as a stockholder and six-year, bleed-purple veteran of Yahoo! Media (now happily elsewhere), Mayer has squandered the jewel of Yahoo’s once-excellent content and fallen into its old “technology company” trap. She has abdicated her responsibility for Yahoo’s content to self-entitled, unqualified lower managers — with the results already apparent on Yahoo’s dumbed-down Front Page and celebrity-obsessed Entertainment properties. I worry about the future of News, Finance and Sports.
Meanwhile, by adopting the timeworn conundrum that “Yahoo! is a technology company,” Mayer fell into the trap that made Yahoo such a technological also-ran. Yahoo has never learned that technology has to be in service to the end user, not an end in itself. Consumers don’t go to Web sites for technology; they visit for the content and “stuff” that the technology delivers. Ross Levinsohn knew that — and Mayer should know it from Google. But all we get are a cool Weather app and redesigns of obsolete properties.
I was interviewed for Yahoo mobile division (I’m a former employee). I brought them a new product idea that was perfect for them, scalable to Billions, and a new source of advertising that jumped wayyy past Facebook. New, new, new, but just about ready to pop.
They didn’t even listen. Just asking BS little technical quiz questions (this was after I specifically asked them not to waste my time with quiz questions).
Whether I got the job or not, didn’t matter. What mattered was their utter lack of curiosity about a new mobile segment. They are busy playing catch-up with 3 years ago.
Om. I have a question for you. Lets say a certain CEO grew revenue 3 times in 10 years and profits grew 2X, but the stock was stuck in a rut. Would you say yay! profits and revenue grew? Or would you say they missed the boat on mobile, tablets, etc.
On the other hand, you grew the stock price 100% but you are still stuck on revenue and middling on profits in a year. Would you say Boo! this sucks, go back and make good products?
Building great products takes time, as you know. The first problem she has addressed is stemming the rot. That’s an amazing feat for someone on the job for a year.
I imagine at least 70% of folks at large companies who are struggling who will gladly take that.
I’m actually pretty impressed with the Flickr overhaul and that innovation is (finally) going on there.
MUCH more work still needs to be done with Flickr, but it could be something even more powerful than anyone imagines — especially with synergies between Tumblr and Flickr, some really interesting leverage could be achieved here for photos on the web.
Did you even read the article?
Om incisive analysis like a hot knife through throught the Yahoo butterball
Don’t pull your punches, Om. Let us know what you really think.
Very well analyzed and written article!
Om…the best you have is criticizing their font choice for Yahoo Mail? “BusinessWeek celebrated Yahoo’s focus on new products and design, but someone should look at Yahoo Mail — the font it uses is from the 1990s.”
I’m looking at the CSS for Yahoo Mail and its using Helvetica Neue all over the place? You’re joking about the font right? Helvetica itself is from 1957. Neue is from 1983. It’s also the font of choice for iOS 7. So your point was….what exactly?
This is an outstanding analysis. Far better than Blodget’s that’s for sure. I have three observations:
1. Om is dead on regarding demographically targeted advertising on Facebook. And LinkedIn I would add. In fact, Google should also be concerned about this because its user profiles are not as demographically rich.
2. When Jeff Macke of Breakout called for Tim Cook’s resignation, I gave up on Yahoo Finance. Granted, Bloomberg and CNBC are just as bad. Why is honest and thoughtful business journalism so difficult? Are Americans really so dumb that Yahoo Finance is giving them what they want?
3. Why is the mobile team split among three geographic areas? Tell the people outside of California to move there or they’re out. Also, get rid of the open office space. Give all the best people their own windowed offices. That’s our company policy. It costs more but you can truly think and be creative when you have no distractions.
After reading that MM epic on BI and then this piece and my self-diagnosed proclivity towards hyperbole and conspiracy, I wouldn’t be surprised if MM paid off both Henry and OM to wage the proverbial media good cop / bad cop so that the “renewal” at Yahoo would take on a “stuff of legend” twang. I just spent 2 hours reading about a Technology executive whose products do not inspire me to switch from my current Internet Apps. I do not know why I just did that – such are the habits of today’s Internet user and Internet hindsight isnt as great as well. OM – Im noticing an uptick in your profile, you appearances on CNBC, your new book etc. Good Luck to you – you seem to have Perez Hilton vibes to Internet Journalism 🙂
Where was YHOO 12 months ago? Rome wasn’t built in a day. This is the exact reason your a journalists and not an investor
I am a 21 year old and new user of Yahoo! products. I invested in the company when I heard Marissa’s vision, happy I did so, but am more happy of the products being released. I use Sports, Finance, Mail, Flickr, and Tumblr. You’re post is so riddled with inaccuracies, generalization and sillinesses it’s hard to read. At first this post pissed me off, but then I remembered Steve Jobs’s keynote from Macworld 1998. http://www.youtube.com/watch?v=LWuR88AIKLg
This is what Marissa Mayer has done in one year at the company. Unlike your piece, these are facts, not generalizations or conjecture.
-An entirely new board of directors has come in, which has given her flexibility to make the bold moves necessary to turnaround the company. Max Levchin came onto the board and said he was persuaded by Mayer’s vision. I think he might understand this business a little better than you do.
-Fired and replaced the entire executive team hiring big c suite players from google and amazon. Henrique De Castro at COO, who understands ad technology, Ken Goldman at CFO keeping operating costs under control just to name 2. Also interested Jackie Reeces, a former Goldman exec is head of HR. She was also placed on the board of directors at Aliababa. Interesting Goldman’s loan to Aliababa. http://www.bloomberg.com/news/2013-06-05/goldman-said-to-pledge-500-million-to-alibaba-loan-as-ipo-looms.html
I’m sure that’s just complete coincidence though.
-Introduced new mobile apps-Flickr, Yahoo Sports, Yahoo Weather, Yahoo Mail, Fantasy football. All fantasy sports will soon be combined into one app.
-She’s cut the product set from over 60, down to 12. She gets that focus is important and you can only do so many things well. She’s clearly taken a few cues from Jobs’s turnaround strategy.
-She’s made over 20 acquisitions, primarily in mobile, expanding the mobile team from a few dozen to several hundred. I’m sure she’s had a conversation or two with her friend Sheryl Sandberg, who is the first executive at any company to prove you can monetize mobile. Nearly all their mobile apps are stream apps, making them perfect for mobile monetization.
-Built a closer relationship with Apple, Facebook, Google and Twitter.
http://appleinsider.com/articles/13/06/22/inside-ios-7-apples-partnership-with-yahoo-deepens
http://www.businessinsider.com/so-jony-ive-tipped-off-his-pal-marissa-mayer-on-the-changes-coming-to-ios-7-right-2013-6
http://techcrunch.com/2013/05/16/yahoo-partners-with-twitter-to-further-personalize-homepage-newsfeed/
-Reversed traffic decline, making them the most trafficked web property in the United States. These numbers did not included Tumblr.
Okay, now to conjecture. See how I’m separating facts from opinion? Your piece could use a dose of that.
Mayer’s background in artificial intelligence (masters from Stanford) makes her the ideal product oriented CEO for the times as that’s where the future in mobile is. Just look at google with google now or iOS 7 with their today view in notification center. Mayer put it well in her interview at davos economic forum (http://www.youtube.com/watch?v=TLbUqKr1Zuk) right now you go to google and enter your query-in the next five years instead of you entering your query, you are the query. The “computer” now has so much context about you (location, search, consumer habits) we are on the road to it knowing what you want before you even ask.
I see Yahoo building the “interest graph”-I use 4 of their properties- Sports, Finance, Flickr and Tumblr. All of those products are gathering information on what I like, from teams to tv shows. This makes delivering the proper ads that much easier and more lucrative.
As to the Mobile App rankings, you seem really misinformed as to how those get ranked on iOS. Write this piece when Tumblr updates their app and you’ll see what I mean. By the way- http://9to5mac.com/2013/08/23/apple-reportedly-testing-changes-to-app-store-ranking-algorithms-now-including-user-ratings/.
Yes because businesses are only successful if they have “20-something fresh new tinkerers”… Is the flip side “stale old farts”? Yet another example of age stereotypes in the tech industry being propagated.
What arrogance, to think and actually even say “we are on the road to knowing what you want before you even ask.” To have the author even think and write “Mayer put it well”…ridiculousness to even feel as if they as a company, and her as a person can know what someone is thinking, and to know what they “want”, just by where they live, and what they buy…what nonsense! If people are actually stupid enough to either notify “the world” every time they go somewhere, “checking-in” at all of these places, “liking” products, sharing some expensive thing they bought, or want to buy, all to show all of their “friends” or “connections” how important, or wealthy, or successful, or trendy, or savvy they are…if people would actually stop and see what they are doing, none of the real important, real wealthy, real successful etc etc people even do any of that stuff!!!
Hi Mr. Malik,
I disagree with your analysis and have a much more positive outlook for YHOO. Here’s all I’ll say: if you genuinely think what you have written here, then short the stock. I’d like to see you back your opinion up with your own money.
Best,
Stewart
Stock prices go up and down for many different reasons. Short-term investment prices are not great indicators of long-term success or growth. Look at the housing crash, for instance.
I am a big user of Yahoo products for over the years. I remember choosing Yahoo for mail back in 1999 because it offered 6MB of free storage as compared to 1MB by hotmail. Have also actively used Yahoo groups, clubs, Q&A, business mail/web hosting, etc. Before I proceed I should mention that I also use gmail, blogger, facebook, twitter, quora, etc.
I still see a lot of value in Yahoo products but I agree that lots of the web products are still stuck in the past and sometimes bringing them to latest generation does not provide good results. For example, I resisted moving to the latest new Yahoo email as long as I can (by disabling Javascript so it forced me to an older version) because the new email annoyed me. Now I am forced to use the new one but some features dont work well so I have to keep moving between the basic and the advanced version. Yahoo Groups seem to have little or no innovation since the early days. They do work well for what they are intended but It would have been good if it was made web 2.0
Yahoo Q&A have been amazing and so good that even Google Q&A (or whatever they were called) gave up but again not much innovation has happened in that area. Now Quora is taking away some of their crowd. Maybe I am old ‘excrement’ (but I am younger than Om ;0) but I still think there is a value in the Yahoo products. How long will this value last remains to be seen. In the meantime, I am still giving them a chance and hoping they will sort the problems out.
Why is Yahoo Mail in the top 20 of Android apps, and not even in the top 100 of iOS apps? Is it auto-installed on some android phones? Is the stock Android mail app that terrible? Do Yahoo subscribers buy Android phones in much higher numbers than the users of other email services?
If I were to guess I’d conclude the following:
Mail on iOS directly supports Yahoo mail as IMAP and supports push email. It was offered with the iPhone day one and was touted as a free plush alternative to Apple’s Mail.
I do not know (do not own an Android) but can’t imagine Google treats Yahoo Mail as a 1st class citizen in Android, therefore the need for a dedicated Yahoo email app is much more prevalent.
push, not plush…
What about the fact newer phones will be less dependent on the app store and more dependent on the browser. Similar to the 90s when desktop power and usage was focused in to the browser away from archaic applications.
Apps were never the future. Web traffic will always be king, and yahoo will always be Queen.
Typed on my BlackBerry q10 with a browser and functioning keyboard. Stay pleb Om.
Please let me have missed the /sarcasm tag somewhere in your post. No? Alright then…
I’m sorry, where exactly is your source for the “fact” that “newer phones” (whatever that means) will turn from high-quality apps to mediocre-at-best browser-based interaction? Patently false – every recent stat I’ve read (and personal experience) points to just the opposite. The Web – especially the mobile Web – is vastly inferior to any well-written app on any major platform. Possible wishful thinking on your part as you are saddled with the smallest and least-compete app store of any of the 4 major platforms? (Not a judgment, but an actual fact.)
Your take that the shift-to-mobile situation of today is in any way like the rise of the Web in the late ’90s is similarly unfounded, and undermines any credibility of any of the rest of your post. The Web allowed for collaboration and interaction that was not possible on the unconnected desktop; the trend towards mobile – like it or not and it certainly has its drawbacks – has those same qualities, but with much more immediacy/ubiquity because we’re never without our damn phones/pads.
Now there’s a few things I take issue with in Om’s article, but the idea that Yahoo is some Internet royalty that cannot be dethroned because THE WEB is utter nonsense, and honestly, your petulant Blackberry sig just makes you come across as some kind of sad windmill-tilter.
I think my favorite part about this article is the use of the word blivet.
This is a good reality check on Yahoo’s progress in the last year. It’s clearly still early in the turnaround. But let’s be honest, turnarounds in consumer-facing tech companies are hard. So I agree that much of the heavy lifting remains to be done, but Yahoo has done a better than expected job of bringing in fresh talent, making headway on revitalizing the culture and company morale, and putting out fresh products in areas where they’ve been weak in the past. The really hard part, and hopefully something they’ve been working on in the background, will be turning around search volume.
Thanks for the concise explanation of your position. Seriously, well done. Like many folks, I rode the ramp up and then took the profits. That’s something I don’t do with companies I believe in. I stay for the long term. Your statement, ‘There isn’t a single product they make that I want to use’ is how I feel. Marissa is a courageous and intellectually endowed leader. Had she been on the leadership team when Yahoo allowed MSFT to gut their crown jewel (and Qi Lu’s team), she would have been the one to fight it. That was the day, in my humble opinion, that Yahoo gave up.
Thank you for saying how it actually how it is. I read an article last evening that was “suggested” for me on LinkedIn (which I thought google owned, who cares though)…I endured through the second or so page. (But now I have realized what I wrote here is even longer, and to many, I am sure will be considered uneducated nonsense!) I apologize in advance for any misspellings, improper use of words, wrong grammar and punctuation, and anything people may find offensive, or judgemental,as well as the length itself!) The article I sadly read was of course going on and on about Marissa Mayer (noted did not take her husband/father of her childs name of course, a sign of what? knowing she doesn’t really have to? She is a liberated woman? An empowered woman?). What I found so down-right despicable is that is what most of society looks at as “success”. A set of parents that tried so hard to give their daughter everything they could in as far as making sure she had every opportunity to be the best she could be, encouraging her to do good in school, encouraging her in every way they could, teachers and coaches that encouraged her every step of the way…and to see her now so “successful”…I can’t see where there is any success in: living in a grossly expensive place you do not own, being head of a company that you do not own, that has no tangible product, that pays how many totally unnecessary employees? Using the profits from trash advertisements for products and services that no one even needs? To be actually giving the unnecessary employees food and products the company has had to buy for them so they want to stay working there?? Not allowing working parents be able to work from home so they are able to raise their own children?She is paying how much for her dresses? As for me, a successful person is someone who knows they do not need expensive clothing, nor tons and tons of money, or the “most expensive name-brand anything”, none of that stuff makes a person who they are, you are no car, no vacation, no phone, no clothes are ever going to make you one ounce better as a person!!! All those things can and have done is make people feel bad when someone else has something even better, and you just never will have enough money no matter how much you have! As well as making people look down on others that appear to have a cheap, old car, cheap old clothes, etc…but to many they are the smart ones! They usually have a huge smile on their face tooI I have found by learning that whatever money you do have is to not spend it on anything you do not even need!!! I consider it true successful parenting when the parent knows and understands that successful child-rearing can and only ever has worked when you know for sure what is being fed into the childrens minds is only the most moral, most truthful, most quality information to bring them up knowing how to “be”. The absolute best possible way is making sure your children are watching what you do, showing them how to “be”, and also making sure they are around others that are morally upright, so the children can see the way they live, and learn from what they see and hear. Children need to be taught to treat others how they want to be treated, honoring those older than themselves, treating their parents, grandparents, neighbors, teachers, coaches with respect, how to take care of themselves through: hard work, eating right, being kind to others, doing things for others, etc etc…and all of these qualities are more and more difficult for parents today as they must be in the workforce, with their children in daycare or at other peoples’ houses, around people they really do not even know, or alone, all the while possibly listening to horrendous music and tv shows either online or on a tv about sex, drugs, killing, abuse, hatred, racism, outright putrid filth pouring into the childrens minds every single day. As the parents are trying to make more and more money so their kids can have the best clothes, and technology products like cell phones, ipads, laptops, etc etc and more and more stuff stuff stuff! Today, the pressure that many many women feel is that if they are not working, or want to be home to take care of the children and their house to make it a home for their husband and/or children, they have believed and made to feel that they must be and are are “lazy” or they “just don’t want to work”…when in their hearts they want to be caring for their own children, they have been fed that going to “work” and making money is what makes a successful woman and mother. I just cannot see how people think that all of that “success” is really even “success” at all. I am not saying that it is a bad thing to work when you become a mother, but a key point is to figure out if the money you are bringing in is really more important than being home (and I am not writing here about a single parent, that is an entirely a different novel for me in itself! These woman are working, as they really do need to, as they have gotten to that stage by many many other factors, some self-created, others who had no other choice), such as:clothes/shoes/coats/etc for work, transportation (car payments, gas, insurance, repairs, etc), the cost of lunches and meals for when you are at work, the cost of daycare, the cost of laundrying the clothes, or drycleaning the clothes you use for work, and “fake” nails so you fit in with all the other women there with the “fake” ones so you look “professional” and “glamorous” or to show “you take care of yourself first” or that “I make the money so I can use it however I want” etc etc… as well as the expense of needing to possibly hire someone to clean your house for you since you are exhausted or not able to even clean where you live for your family due to not even being there any longer than for sleeping, and getting ready to go back to work!! As well as needing to buy the more expensive food that is “easy” to cook and fast, or just going out to eat since you did not even have time to make the “easy” food. (how “easy” is this food really? If you had to do go through and make everyone else go through along with the expense and time spent that you were not home to make it yourself while being home and available for your children?) You wouldn’t even need a cell phone for any reason at all! Your kids wouldn’t need one either! You know where they are, if they are in a sport or a club or anything you put them in, you know when it is over, you know where they practice, you know when and where the games/events/meeting/club are held, they don’t need to call you, as you are already there, either there watching them, or waiting for them! You get to be with them the whole way home, finding out everything they did, how they felt, sometimes determining if what it is is actually helping, or if it is not helping at all, or even hurting them, you have that time home encouraging them every mile you drive! Some parents that have been away working or shuffling their kids all over the place say they do not understand why they can’t even talk to their kids…or they just must be rebellious, or don’t want to talk…but may be it’s because the child by that point (possibly pre-teen, tween, teenager) don’t even know how to talk to their parents, since they never really spent much time with them at all : ( Back to Marissa, as for a woman that “smart” I would be mad as “hell” I fell for all of the horseshit (as my grandfather would say) To me, a successful woman (especially with that much money, she would never need to work for money for anyone, anywhere ever again a day in her life) who is in this first “stage” of marriage, with a child, would to be: in a home that you own, with a garden, to know how and actually does cook, bake, clean, and possibly know how and actually do sewing, to be at home with her dear, sweet, innocent child who needs her in every way, not giving a care to what is “supposedly” going on in the world. She would have everything she ever needed to bring that child up to be the best they could ever be!! I am sorry I wrote so much, I was just appalled as always, wha
t people these days even consider success in the first place. By the way, I had fallen into all that nonsense too, for many many years…but I have stopped putting myself down and feeling bad about it, learned from the many many mistakes I’ve made, and remember the things I did do right!!.All I want to do now is cherish life with my loving, hard-working, incredible husband, and keep pouring my love and encouragement into my 3 excellent, hard-working, loving, caring, thoughtful young adult children and the ones they love and to everyone I know as well as ones I will meet!!! None of that costs a dime. Blessings, peace, and joy to all who read this!! : )
Yahoo is doomed with their current direction in mobile. Their “feedback” link is overwhelmingly filled with boisterous complaints about their “new” approach in mobile where they lock in floating yahoo toolbars taking up a significant portion of your phone and tablet screen with no ability to remove it in settings. Users are screaming at them online, even begging them to remove it, yet all are ignored. Moronic lack of attention to customer satisfction and user experience.
Then when one reads the user comments posted to their own yahoo new articles you realize their market share appears to be populated in large part by the very bottom of the market.
yahoo is up over facebook because of the amazing hatred most users of Facebook have for Facebook. Its insidious snooping, constant changes in its private kingdom ruin users opinion of Facebook. People *believe* Yahoo is going somewhere good. They believe Facebook is going the way of MySpace + NSA style snooping for profit.
If Mayer can convince people that Yahoo offers better privacy and respect than the overall Facebook ad-solution, Yahoo will be buying the remnants of Facebook in 3-4 years.
Yahoo has a seasoned leader, with integrity. Facebook has a Hot-or-Not clone maker that loves giving his users the finger. ‘that sandwich isn’t going to make itself’ ‘you are my bitch’ etc. etc. etc. Investors look for character and integrity in leaders.
Having said that, Mayer has the brains, depth, control, and *experience* to pull off the radical up turn of Yahoo.
Good point about selling to Bing – that was a silly move, and its unlikely similar silliness will take place under Mayer’s guidance.
The question that is the knife edge for investors in my opinion is will Mayer be able to re-vitalize integration of broadband mobility *applications* with Yahoo’s huge infrastructure and abilities. Sure, short term Ads are important, but what will rock Google’s world, is Yahoo’s ability to launch new backends for Mobile Apps.
And that’s impossible for Facebook and wildly invasive for Google’s ‘freedom of speech’ issues.
OM, I wholeheartedly agree that Yahoo culture is effectively bankrupt, which is sad considering their history.
I feel sorry for any company no matter the size judged by app store rankings. Mobile is not mobile, mobile is playing by other peoples rules and subjecting expensive development resources towards pop culture products which arent even discoverable.
I cant stand up for Yahoo’s content I think no matter how good their apps are the content is generally deplorable.
But mobile first will bankrupt many a company, and app stores lack of discoverability will do the same.
I think app stores need to go away. In fact as unrealistic as it sounds, I think the iPhone itself needs to go away before mobile will become a rational perspective on what’s possible, beneficial and valuable.
great article….if you think watching Carly Fiorina blow up at HP was fun, that will be just a warm up act compared to watching this bitch fall.
You need a comma in the vocative “No, Henry” (cf. “Come On Eileen”).
Om,
You can safely ignore ANYTHING that Henry Blodget has to say (and all of Business Insider). You see, he’s a convicted fellon for securities fraud, and he’s rotten tomato from the glory days of Wall Street, so basically he has ZERO credibility. Being that he’s also a shareholder, makes him that much more biased and corrupted. He’s a fool.
I am neither a skeptic nor a believer just tracking this closely as a student of tech. You have extremely valid points but aren’t these the early days of a turnaround.
The comparison always seems to be with jobs – but jobs himself spent the first three years fixing the current line up (I.e. his equivalent of refreshing mail/Flickr etc). It wasn’t until 3 years later was the first new product (iPod) launched.
Other people maybe cheering too early but you being skeptical too early are falling into the same trap as the optimists?
In other words- doesn’t overnight success take a long time?
http://cgviews.wordpress.com/2013/07/16/turnaround-take-a-long-time/
Om,
Very useful article and a helpful counterpoint to the prevailing commentary elsewhere. While I might not be as pessimistic as you are at this point, I love the facts-driven view and I think it serves the overall discussion on Yahoo’s prospects very well.
So, well done you! 🙂
Cheers, Sean
Thanks Sean.
Yahoo did a great favor though – to those who were acquired at incredible valuation!
Don’t you love to have more “Yahoos” if you were a “start-up” in that space?
I remember someone in the 80’s once said: “You only get a Allen Bond once”!
This could be another one! Lol!
Give me a company that was been draining for 5+ years, then snapped back to growth in 1 year. This is why people like you do NOT invest. Metrics are improving. The easiest slogan is “Rome wasn’t built in a day.” So annoying listening to these old numbers.Next year at this time, things will be GROWING. If you can’t see it, you should probably open your eyes and do some meaningful analysis.
Yahoo?
1. They held us ransom at one point by requiring us to pay to download the hi-res version of our own photos on Yahoo Photos; and
2. Is it just me or has Yahoo News (Singapore and Malaysia) disabled Readers’ Comments? (But I still may comment and read comments for this article… hmmm?)
Rykel
Can you tell us what happened with you on Yahoo News.