Yahoo Announces Resignation of Jerry Yang (businesswire.com) |
Yahoo Announces Resignation of Jerry Yang (businesswire.com) |
I worked for a semi-dysfunctional semiconductor company and so I think I have some perspective on what it takes to "fix" a company like Yahoo.
I think the biggest reason a company becomes like Yahoo has less to do with senior management and more to do with the fact that the company is filled with low to mediocre quality middle managers and employees. Mediocre managers aren't very good at their job, so it seems like they make up by playing politics. Once politics is rampant, what gets done is not what works the best, but what helps you or your team get ahead in the political game. At this point you start bleeding talent because good people prefer not to work in an irrational workplace. You also lose the focus and initiative you need to keep a successful product successful.
The worst part is that there's nothing you can really do to fix this. You can try to fire the bottom 10%, but if you only have a problem with the bottom 10%, you're not yahoo. You probably need to fire the bottom 50%, but then you wouldn't have enough personnel to keep all your assets going AND some of that 50% would also be good employees who lost out in the last edition the political olympic games.
Any well-intentioned change in process or product focus by top-management will also inevitable morph into something completely different thanks to your low-quality middle managers who won't understand what you're trying to do, but will understand that they need to step up the politics to keep their jobs.
I guess the point of my rant is that a big company is like an emergent system and you can't really fix a dysfunctional emergent system by changing a small number of things that are part of that system.
I may get jeered for saying this, but a non-trivial amount of it was a result of Jerry. He kept his buddies around in high places for too long, and the rot set in. There were VPs in Yahoo who contributed absolutely nothing (and probably are still around, but I left). But they were always blocking progress just to stroke their own egos. Once you have nepotism and incompetence at the top, it just flows down naturally and the next thing you know there is widespread politics and infighting between teams. It becomes a feedback loop; the good people leave, and are replaced with buddies of the current incompetents.
The way to fix this is to actually make the problem worse for a while, by segregating the groups into independent units. Then you fix each of these units, one at a time. Then you bring them back into the fold.
Can anyone there do it? I doubt it. Most of the decision makers are too busy playing politics.
Honest question: Am I missing something really obvious? Is Yahoo really falling apart (slowly I guess as the same has been said for the past decade)? Or is it a case of not fulfilling potential?
I guess what I'm really saying is I'd like to read his biography when it comes out.
name companies acquired by Microsoft when microsoft already had competing products, which ended up well for both parties.
honest question. I have to believe there are a couple. and i'd like to know about.
if no one can mention how a deal with MS does not KILL the company, how can they defend that a deal was the best?
CEO et al job is to maximize value for the company. not to serve shareholders that want to make a quick buck turning around shares.
The Rise and Fall of Jerry Yang
How he built a great company and then orchestrated one of the greatest destruction of value in the history of business
Yahoo! already up 3.24% in after hours trading... so the market liked the decision.
Its a choice between shareholder value and wanting to hold onto the core culture of the company. An interesting discussion on the Microsoft offer: http://www.quora.com/Yahoo/Why-did-Jerry-Yang-pass-on-the-Mi...
My children don't know what Yahoo is.
It is one of the million insipid content destinations on the web.
I'd suggest educating your children as to how to make money instead of brand recognition.
That said, Yahoo! does have some strong brands. Yahoo Finance, omg! and Yahoo Mail come to mind. (Yahoo Mail is second only to Hotmail in web-mail market share; Gmail comes in third.)
The nice thing about no one knowing who you
are is that 22 year old college geeks don't
get the idea to 'disrupt' your industry and
instead focus on 'disrupting' a more well
known brand like Facebook.Unless you plan to simultaneously disrupt web email, search, financial portals, sports, news, generalized all purpose portals, and on and on.
Yahoo grabbed a lot of users back when the web was young, and this is a cash cow for them, but it has have never figured out how to compete and grow their audience since.
Still rumor at this point, but the Wall Street Journal has a pretty good track record overall.
:-)
this is a /. comment about the case, mentioning jobs "resigned after 9 years. Sold all his stock. Apple III had failed. Mac was fine, but the board wanted an "adult" in charge. Steve returned in 12 years"
If a company consistently outperform expectations then people will also get upset at them. (AAPL) The company can get in big trouble with the market if they make people who usually make money lose money like how the Porsche family short squeezed a number of prominent hedge funds. Note that when hedge funds short the fuck out of a stock with borrowed money on borrowed stock it's not market manipulation, but if a family were not to trade their stock because they have no need to create liquidity for market participants then it's market manipulation.
The rule in the finance industry is that if the banks aren't able to profit from your stock price movements then your company is probably doing something illegal according to the securities industry.
Unless you are exercising a trading strategy (expectations game) you should generally not give a crap about stock price movements, instead you should look to things like moats, book values, and other things and then check whether the stock price is a reasonably accurate reflection of the value of the company. In this case Yahoo is probably a decent investment which is why many companies are looking to buy the asset.
Sun was sitting on a cash hoard of billions when Oracle bought it -- plus MySQL, plus some actually valuable technology, plus a lot of great engineers, plus patent portfolio. The assets were probably worth 2-3x the acquisition price!
When HP split into HP and Agilent, the printer business alone was valued at more than the entire market cap of the company; the rest of HP was perceived as having negative value.
A lot of Yahoo's value is in investments in Asia, investments which are rapidly trying to divorce themselves from Yahoo.
Yahoo arguably has a sustainable display ad business, and some destination sites, (although I personally am not into advertising), but to make the turnaround, you'd want to axe the top several tiers of management. The new CEO is a good start; this is a great second step.
A rational world with honest and effective boards of directors, coupled with greedy and self interested PE firms of large size probably would have already broken up Yahoo, HP, and RIM. The biggest crime with these companies is the thousands of great engineers stuck there, not accomplishing what they could at more effective organizations.
Net income for YHOO 2010 1,231.66 m 2009 597.99 m 2008 418.92 m 2007 639.15 m
And that was when Yahoo's brand meant something!
If you build yourself a business that puts you into the 1% with out making a huge name for yourself you're less likely to have your revenue stream threatened because most people aren't even thinking of competing with you.
Their net income may have increased, but they did it by selling businesses (Hotjobs and Zimbra) and cutting costs (sales and marketing and product development) dramatically. Their revenues have dropped considerably, and they have had a humungous brain drain. The 2011 estimates for annual revenues are $4.4 billion, down from $6.3 billion in 2010 and from $7.2B in 2008. That's a plunge of 30% YoY.
This is what a death spiral is. They achieved profitability by hacking and slashing. At some point, which was likely already passed, you cut to the bone, and you no longer can sustain a viable company, and the pace of decline gets quicker.
Also, often times the best outcome for shareholders is to wind down the business and allow them to reinvest the profits, which so far is not an action that YHOO has taken.
Moral of the story - building a star team in an existing company is a good way of building resentment about that team and is unlikely to breed success.
Or you need to be actively shielded. I was part of such a swat team for internal tools in my first job out of university. The IT department did everything possible to kill us, get us fired, etc. We needed support from the CEO down to stay alive. In the days before I came on board, our managers and directors would disguise the team, telling other people, "Ah, they're just business analysts working on miscellaneous stuff. Not important. Ignore them."
Well it's not always that simple. Hindsight is of course 20/20, but at that time he may have thought that Yahoo was worth more than $33 and/or had a plan to get them there. Oddly enough, the MS offer could be used to help prove his point. Here is an outside company offering to buy Yahoo for much more than the current price so there is definitely value here that they were not leveraging.
With Yahoo up 3% on the news it'll be interesting to see what the future holds.
Says who?
I agree with you that yahoo should have sold to microsoft, by the way. But the legal duty to maximize value bit is just not accurate.
Legally, in his role, his responsibility was to the shareholders first.
This gets mucky on boards of publicly traded boards because large shareholders can be directors and may have divided loyalties. There are strong conflict of interest policies, requirements of care and so on that are intended to help manage this, but it can be a tough balancing act.
Wikipedia has a good outline on director's duties. If you plan on leading a successful startup, learn this cold. http://en.wikipedia.org/wiki/Board_of_directors#Duties
I've served on corporate boards and it can be a tricky place to serve in the interest of the organization, balance all of these requirements and stay true to your own personal sense of purpose. Its also very rewarding work and I recommend it highly to anyone that has the opportunity to participate, even for smaller organizations, non-profits, etc.
I doubt Yahoo would have ever been worth that price to Microsoft, but even if it was, the offer doesn't necessarily mean Microsoft expected Yahoo could flourish or even survive as an independent company. I doubt too many people can cogently sum up what Yahoo does, and I'm not sure any of them work for Yahoo.