Maybe I'm in the minority here, but I don't think "fixing" Yahoo ought to be as difficult as people make it seem. It's still a well regarded brand, and many millions rely on it for email and as a homepage. It's finance section remains extremely popular. They purchased Sportacular, the app I use to keep track of games.
Theyve just been very poorly managed. They acquired companies like delicious and Flickr, one they let wilted and the other they never really integrated into their platform- Flickr just feels like a freestanding entity.
They should cut out the garbage that doesnt get many users and should focus on their prized assets. They should push ahead in developing unique content for their viewers. It may be too late to get into the mobile OS game, but TV is still pretty wide open and Yahoo can really do something here, using their existing assets and by further developing or partnering with content providers.
I'm hopeful.
Maybe I'm in the minority here, but I don't think "fixing" Yahoo ought to be as difficult as people make it seem.
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.
You hit the nail on the head. Mediocre, petty middle managers are the algae that are sucking the oxygen out of Yahoo.
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.
Yep that sounds about right. The other problem is that these "low to mediocre quality middle managers and employees" do not realize that they are "low to mediocre quality".
"Swat Teams" of vetted talent to handle the most prized assets and initiatives. Let the cruft keep up day to day, apply proven talent to the most important initiatives piece by piece. ie. Apple and the iMac, then iPod, iBook, iWorks, Final Cut etc etc.
I actually work in exactly this type of swat team. We were all hired at well above standard payrates at my large company to build the next generation product. The response from the existing teams was immediate - they saw us as a threat, and started doing everything they could to make our project fail. In the end they succeeded in gimping the product by simply giving us interfaces that just couldn't do what a good product needed. The swat team was dragged into mediocrity. Now many of those rather expensive hires are actively looking to move elsewhere.
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.
This is why such swat teams need to be hidden or actively shielded. Motorola's Droid team was completely separate and able to stand on its own feet. The Google Wave team was based in Australia and had its own incentives and structure. Obviously, swat teams are hit and miss like any startup; they're essentially startups within a corporation.
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, there are several reasons. One is that this is France, and firing people is just more hassle than it is worth. Th second, and more generally applicable reason, is that that would involve changing the status quo. If changing the status quo was that easy, you wouldn't need a SWAT team...
When I left Yahoo in 2008, they had such a "swat team", at least for software development (they called it a "tiger team"). Unfortunately, I don't think Yahoo's main problems at that time were technological. Maybe they needed a similar approach to product management?
I agree with you on this. They have some really good things that they squander with bad management. Delicious should have replaced what ever was being developed internally since it was clearly superior but the company is full of politically minded middle managers who are breading in fighting. Maybe they could start there at fixing the thing, fire the majority of managers.
Google has algorithms, Yahoo! should have editors and journalists. For all these attempts to "fix" Yahoo! never once a new message, advertising campaign, real brand refresh other than a minor logo and homepage refresh. I'm talking the new lifestyle tech feels like the Chrome kids growing up commercials. Like Apple's FaceTime for families type connection with users.
Yahoo is usually talked about as if it's a joke or a failure. According to a cursory check (ahoy - I'm no finance king so I could be reading this wrong) it's worth $19 billion. If I could fail half as well, I'd be pretty happy.
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?
The stock market is an expectations game, it doesn't matter how you do what matters is if you beat expectations. If Groupon manages to lose half as much money as predicted then it will be hailed as a major success despite losing money.
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.
Yahoo, like a lot of shitty corporations in death spiral, is worth less than the sum of its parts. It's not as if the stock price times shares = market cap is really a great figure, at least over short periods of time, but in the long term, reality tends to converge.
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.
Death spiral? Please don't get your financial information from techcrunch. I'd suggest checking public market data which suggests that in the last few years has massively increased its profitability
Net income for YHOO
2010 1,231.66 m
2009 597.99 m
2008 418.92 m
2007 639.15 m
This is the danger of relying on a single financial measure to determine the health of a company. That's like only using a person's weight to determine if they're fat or skinny, when it also depends on how tall they are, their gender, the amount of muscle they have, etc.
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.
Conversely you could argue that they cut unprofitable fat that while bringing in revenue did not bring in profit. Hotjobs and Zimbra don't strike me as particularly profitable.
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.
Yahoo had opportunities to become what Google and/or Facebook are, but didn't. Putting aside the fact that Yahoo's still got more revenue than Facebook, and roughly the same net profit, it's not growing the way Facebook is, and it's only a fraction the size of Google.
Yahoo is way under valued. Yahoo was considering selling its stakes in Yahoo Japan and Alibaba Group for $17 billion. Yahoo's current market cap is $19 billion PLUS $2 billion cash. Does that somehow make the value of its U.S. assets negative?
Those are not divisions, they are shares in entirely separate, publicly traded companies. The valuation is market valuation -- not a number made up by Yahoo.
I'd be interested to learn about his views and opinions on Yahoo during these past 15+ years. From the various things I've read about him, he seems like he was just a nerd at heart who wasn't interested in the entire business side of Yahoo, and when Yahoo started exploding, he had that "Allen/Woz" mentality of missing the "good old days". I heard about the stories (fair or not) of him spending more time on the golf course than the board room. I also have to think back a few years to when he said "No" to Microsoft's offer for acquisition, a very foolish move looking back.
I guess what I'm really saying is I'd like to read his biography when it comes out.
His job was to do what was best for shareholders, not his employees and definitely not himself. Tough to argue that turning down $33 for the current $15.50 was best for shareholders.
Tough to argue that turning down $33 for the current $15.50 was best for shareholders.
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.
Pretty much any offer to acquire a significant public company is going to be made at a significant premium to the share price at the time of the offer. Saying MS offered to acquire at a significant premium reduces to saying merely that MS made an offer to acquire.
The fact that MS made an offer to acquire at all helps make Yangs argument regardless of price. There is so much talk of fiduciary duty while ignoring that MS has the same duty to its shareholders. MS must have seen value in Yahoo at that time and offered a significant premium rather than wait for Yahoo to continue to fall and possibly get picked up by someone else. Or perhaps before Yahoo turned the corner and became too expensive for MS to buy.
Just because the company might fit into Microsoft's road map at $33/share doesn't mean it fits into anyone else's. Microsoft needed portals it could use to draw eyes to perennially flagging MSN, and Yahoo has some really popular pages (Yahoo sports, weather, and finance - really the most valuable part of the company) that would have fit nicely.
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.
The law mostly. Otherwise ownership of companies would be mostly pointless, similar to that of gambling (in that your fate would be mostly random, more so then it currently is).
Your statement about the law is for the most part not true. There's a much more in-depth discussion of this at this older HN posting: http://news.ycombinator.com/item?id=3227980
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.
Says the fact that he was on the board of directors of the corporation (emphasis on the fact that it's a public corporation consisting of shareholders).
Legally, in his role, his responsibility was to the shareholders first.
Directors solely have a responsibility to the corporation. The corporation has a responsibility to the shareholders.
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.
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 think that was said from a shareholder/owner perspective. Microsoft's offer was for more than double Yahoo's current price per share, and that was 4 years ago.
A CEO has fiduciary responsibility for the property of the shareholders. A CEO can have other perspectives if he or she wishes, but the shareholder perspective better be high on the list.
Technically, a CEO doesn't have fiduciary duties. The board of directors does, and the CEO runs the company/reports to the board. I know what you mean, of course.
You know what, beatle is right, I'm wrong. Not sure when or how I developed the misconception, but I'm sorry for speaking outside my area of expertise and blowing it.
Sorry, I don't know. I think that's the case for all public companies in the US, at least (I don't know if it applies to limited parterships, private corporations, s-corporations, etc). I searched to confirm CEOs were not necessarily fiduciaries before I posted, and I did see that officers could be fiduciaries (eg, for internally managed pension funds - though it didn't have to be the CEO).
17 years is a really long time at any company. Jerry has done an amazing job building Yahoo! from a startup to dominate player in the tech industry and has created 13,600 jobs.
Yahoo! already up 3.24% in after hours trading... so the market liked the decision.
standard disclaimer: afterhours trading is very thin liquidity, so a small amount of trading can move the stock price significantly without meaning much. tomorrow's opening price is the first real indicator of what "the market" thinks.
Your children also probably don't know what Petrochina is but like Yahoo that doesn't make them an unprofitable company. 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.
I'd suggest educating your children as to how to make money instead of brand recognition.
Yahoo! is a media company, and media is a business where brand recognition matters. Petrochina is not.
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.)
Does anybody else get what fleitz was trying to say here?
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.
What I'm saying is that you can easily get yourself into the 1% with out having to make a huge name for yourself and if you want to get REALLY rich it's also possible to do without huge branding. Although YHOO and MSFT in the tech press are 'dying' businesses in the 'real world' they are hugely profitable.
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.
I understand the point you are bringing up. However, there's one thing about tech companies is that their cashflow can only be sustained if their position were defensible. RIM and Nokia demonstrate how quickly a stellar business can fall into the precipice. In terms of business lifecycle, Yahoo is effectively a cash cow. http://www.valuebasedmanagement.net/methods_bcgmatrix.html It may generate a lot of profit, but it is in a business that isn't growing its market share, and risks not replacing its lost audience.
Yeah but in this case the diversity is a weakness. You can't replace Yahoo! because they don't do one thing really well, they do a bunch of things mediocrely well. What is the Yahoo! brand? What do they do anymore? No one really knows, even though they do a ton, so how could you even aim to replace them at all? At best you could aim to replace Yahoo mail, and that seems like a very reasonable (though still ambitious) startup goal.
It's still the #3 largest in the US and #4 largest web property in the world according to comScore for monthly unique visitors. It may not be cool as it was in 1997, but it's still a massive force on the web with a huge number of users and advertising inventory.
While I agree with the premise that seniors are a valuable demographic, the problem with Yahoo here is that there is nothing compelling about Yahoo that would make it the default choice for the next generation of seniors.
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.
Are seniors actually a valuable demographic? I agree large numbers of users are great, but I thought the general thinking was seniors, even if relatively rich, have established and difficult to change purchasing patterns; thus, 18-35, teens, etc. are worth a lot more to advertisers.
Yahoo!'s new spinoff, HortonWorks, can become a billion dollar Hadoop company down the line if they carefully navigate around Cloudera and MapR. Not sure how/if that affects Yahoo shareholders.
Wonder if Yahoo! will get real shitty. Then, 10 years from now, Yang will come back, save the company and make it the most tech profitable company ever. Better buy some stock.
not that far fetched. think you being mostly downvoted for language and emoticon.
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"
