How Marissa Mayer Failed to Turn Yahoo Around
variety.com
variety.com
Quite simply, Yahoo was culturally never a technology company. They defined themselves as a "media" company in the mid 90s to avoid drawing Microsoft's ire, but they said it for so long they believed it. They underinvested in technology throughout the late 90s and early 2000s, and by that time Google was the behemoth that Yahoo should have been. Yahoo is only around today because they recognized the emergence of China and made a lucky investment in Alibaba. Without that investment, Yahoo would have gone bust years ago.
Many(?) aquisitions were her plan. From the article:
> goodwill impairment charges of $1.2 billion
This means since 2012 Mayer has overseen the aquisition of companies for at least $1.2b more than their book-value worth, and now that value is gone. Paid a premium for brands and then lost the value of those brands.
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> “She believes she can figure it out on her own,” says a former top Yahoo exec. “Her attitude is, ‘I watch TV shows, so I know TV shows.’” Mayer hired Katie Couric — in a deal reportedly worth up to $10 million per year, mostly in stock — because she personally likes the former TV news personality, without a sense of where and how Couric’s brand would appeal to Yahoo’s user base
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> Mayer was gung-ho on expanding Yahoo’s media business, particularly in video entertainment, approving a Netflix-like slate of scripted original series with a seven-year business plan to recoup the investment
> Yahoo formally exited TV-style entertainment in the third quarter of 2015, taking a $42 million write-down on [original series, deals, then axed Yahoo Screen division]
Her plan.
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> Yahoo in February folded seven digital magazines, including titles covering food and travel, which had been a Mayer pet project. She wanted to launch dozens of vertically oriented magazines, dictating that they use Tumblr-based designs, hoping to better monetize Yahoo’s monthly audience.
Her plan.
> Mayer has positioned those closures as a refocusing on Yahoo’s four strongest content segments — news, sports, finance, and lifestyle — as the company aims to cut 15% of its workforce over the course of 2016. But those were the areas on which Yahoo should have stayed laser-focused all along, according to S&P’s Kessler.
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She had ideas that were either unworkable, poorly implemented, or she was unknowledgeable and hired the wrong people.
> I don't think the failure is on Mayer
That's how this works. She had a job and failed. It's okay to say that. They aren't paying her to not take responsibility. They will be paying her more than you and I and many readers of this comment combined may ever make, just to leave.
However, their insane ad revenue keeps the boat afloat, and allows them to fund moonshots and failures. Yahoo doesn't have that insane revenue stream so that strategy didn't work out so well there. Am I missing something?
That quote about "throwing rocks" in the article is misleading - Google has done exactly that and succeeded. Their trick is that they're standing in a quarry and don't have to give a damn how many rocks miss as long as they get the occasional hit. Mayer carried over that philosophy to a company with half a dozen rocks and nowhere to get more.
It's telling that Mayer never really revealed a 'plan' for Yahoo ('content' and 'advertising' don't count). She bought a bunch of things, tried a bunch of deals, and clearly expected value to shake out somewhere like it does for Google. But Yahoo doesn't have the time, revenue, or infrastructure to slot in a stream of experiments and wait for a win - their only attributes were staff and users, and they needed to consciously turn that into money. It's closer to Facebook's monetization task than Google's, and regardless of her talent Mayer's background was an impediment to what needed to happen.
That management style does not fly at a company that has no real product or revenue and is struggling to become profitable.
Most "normal" companies just do not have the luxury of withstanding a huge margin of error on cost vs benefit.
On my mind always is the Yahoo Fantasy Football product. In the past few years, the NFL has grown and other fantasy products have grown in value. Why was Yahoo not able to do the same? Why didn't they leverage the value of their sports products?
People do that because they're lazy and/or inexperienced interviewers.
Yahoo has also gone from a genuinely useful and relevant aggregator to a full-blown click-bait shop.
Perhaps this is how she thought Google makes its billions and she wanted to emulate it.
Sad but she will be richer for it.
There are basically two camps: The founder camps that want to try and prop up the value in order to keep their stake high, and the shark investor camp that are betting on some kind of acquisition (leveraged around the value of Y! Japan and Alibaba) for them to cash in their stake.
The first is the one pushing for all the moonshots (and were the ones moving to hire her in the first place) and the second group would love for her to fail so they can move on with selling the company and get their stake back.
All of the "moonshots" you've mentioned are basically just late game hail mary's that were likely not going to work. IMO, the only way for any CEO to get the business turned around would be to pay off all the shark tank shareholders, strip out as much of the non-core business as they can, and then rebuild the brand from the ground up. However, the founder shareholder camp is firmly against that for a number of reasons, including the fact that many of them would be the ones losing their place at the company.
If you look at the stories of successful turnarounds, they all had unified investors. In the case of Apple, everyone rallied around Jobs because they knew their stake was worthless if they didn't give up on their pet projects. But because of the other investments, there's a solid floor on the value of the company, so all of the key investors know there's a fairly solid floor price on the shares, and everything else is just house money. Why not bet on moonshots in that case?
Who knows that they might be still better off? That is probably the premium needed in order to limit one's losses.
Let's compare mission statements. Google's mission is to "organize the world's information and make it universally accessible and useful". Absolutely. Makes sense. Tesla's mission is to "accelerate the world's transition to sustainable transport". Yes, I can get behind that. Every move Tesla makes reflects their mission.
But what's Yahoo's Mission? (and now that I Google it, it has changed again, for the 25th time) "Yahoo is a guide focused on informing, connecting, and entertaining our users".
I'm Really not sure how to connect that with the sick parade of misfit properties circling the drain we call 'Yahoo'. Though we can all make our best guess, I'm not sure anyone clearly understands what Yahoo is, or what it's trying to be. Not even Marissa Mayer. That's job #1 for a CEO.
I'm struggling to find a way to distinguish this definition from the Internet writ large. Yes, everyone agrees that Yahoo is on the internet, but nobody can really say why.
But they brought her on and paid her amply to specifically fix this problem. As a result she shares part of the blame for Yahoo's failure to right the ship.
Yeah, especially if the "oncologist" told the patient to change their t-shirt to purple to cure the cancer. Eg:
http://www.nytimes.com/2014/12/21/magazine/what-happened-whe...
" For months, the team had settled on blue and gray. If users were going to read emails on their phones all day long, the thinking went, it was best to choose the most subtly contrasting hues. But now, Mayer explained, she wanted to change the colors to various shades of purple, which she believed better suited Yahoo’s brand.
ccording to one senior executive, Sharma’s body language changed the moment Mayer issued her request. He looked deflated. Altering the color of such an intricate product would require that members of his team spend all night adjusting colors in thousands of places. He slumped off and prepared to tell his staff the bad news. "
How is "it" possible given the fact that the engineers all made the last minute changes Mayer demanded and the outcome was unsuccessful?
A better metaphor might be: Yahoo! was like an old rusted out car. You hire someone who tells you how they can fix this car, you pay them a lot of money, and then they leave the car in worse shape than when you hired them. How much blame do they deserve?
Which is to say: A new CEO absolutely can turn a failing business around -- that's what she was being paid tons and tons of money to do. If Meyer did feel like Yahoo! was a completely lost cause or that she would be incapable of fixing its problems, then she should not have taken their money. As an extremely wealthy person to begin with, she had that luxury.
In short: She absolutely has culpability in the failure of Yahoo!.
Also: Yahoo! had a ton of resources in a rapidly-growing industry. I highly doubt turning Yahoo! around would be impossible. Hard, maybe. And maybe many people had already sort of given up the game and moved on to better things. But, again: If you're CEO, it's your responsibility to turn the company around. That's why you get the big bucks.
What I was commenting on was the implication that any company can be turned around. I don't think that's true.
Do I fault the oncologist? Depends. Is there any reasonable expectation of success? Was the failure mode that ended up panning out one that could have been avoided with known courses of action? Was there any "user error"? Similar questions could be asked of Yahoo, and while I realize that I + most people not in a yahoo boardroom probably don't have sufficient visibility or background to answer decisively, never felt the external signals (her management decisions) I've seen demonstrated a course of action I would have been confident in.
Now, that could in and of itself be debated, but I think it's only a peripheral argument to the core point: Is compensation commensurate to the work done? (Which frankly I often think is the subtext in these CEO discussions) This is where a large amount of my personal issue lies, since regardless of which direction I think Yahoo could move, the course of action taken was "iffy" and the compensation extreme. Winding down a lost cause? Could have been done without nearly as much expenditure, and likely with greater shareholder value. Reviving a faltering company? Clearly has not happened. Nevertheless, she is pocketing hundreds of millions for what is by all standards a failed job.
So again, do I fault the oncologist (CEO) for failing to treat the terminal cancer (business failure), if all other options are undesirable? Probably not more than as the parent said, they "share a hand" in it, but to me that does not necessarily entail a declaration of aggressive "fault". Do I pay them exponential multiples of a typical salary to do so? Probably not. I realize that from this 10000 foot view it's a very subjective argument, but to go into line items requires a good deal more time than this post before work allows, and I hope this conveys the idea sufficiently even so.
* She took the helm of a failing company; is it reasonable to think that she was going to be able to turn it around, from any rational perspective?
* She was paid a lot of money to turn it around; is a CEO essentially paid to "take the blame" when a company fails /for whatever reason?/
The former is a question of business physics, if you will, and my personal belief is that she is not at fault in any real sense. Yahoo was a company on life support for several years before she got there. Nothing was going to turn that around. If anything, the point of bringing her in was to prop up the company long enough to cash in on Alibaba, and in that she certainly succeeded.
The latter question goes to a debate we should definitely be having regarding executive compensation, and one in which I probably agree with both you and other (somewhat self-righteous) respondents to my comment. She was paid far too much. However, in that she cannot be faulted any more than any other well-compensated CEO in the world, regardless of success. To say that she was paid far too much /to fail/ implies that had she succeeded the pay would have been appropriate. The notion that there's some outcome that warrants executive compensation on that level is not one I subscribe to.
If said oncologist has the hubris to claim they can...while accepting $100M+ to do it then, yes...yes I do.
https://www.themuse.com/advice/negotiating-success-what-to-l...
In hindsight this is tough to accept. Her only job experience was with Google, while that is impressive Google was it's own rocketship that was skyward from the get-go, she had no experience taking over a project on a downward slide and turn it around, she was also demoted while at Google. But hindsight is always 20/20, and maybe no one else more qualified wanted the job at Yahoo...?
So you're saying that no one can save Yahoo, not in the past three years, not now, and not in the future? The company is simply doomed? Sorry, I don't buy it... Mayer had a leadership position and she failed.
But to blame that on classification I think is misleading. Can we call Google a technology company (or Ad company)? Was Netscape not a technology company? Was inktomy not a technology company? It does not matter, what mattered is that they didn't confront change and adapt. In some cases your niche is too unique to be able to adapt and you'd essentially have to pivot (but that's hard for big cos --though there are good examples IBM and office equipment or any number of companies which went from manufacturing to basically sales orgs selling things produced elsewhere.
Yahoo also never really sold anything. They were a publisher before there was a good marketplace for online ads. IBM was able to pivot because they had an established sales channel they could mine for dollars; but Yahoo's sales channels never got built out to the same extent before Google came in with a new model and obliterated them.
She largely got to write her own ticket at Yahoo and had two healthy children while moving from a mid-upper management role at google into a real CEO position.
Most women that have two children back to back like that in the professional world end up in a "mommy track" career path.
That's a load of crap. If anything, 'this business' showed us what you need to do is grow to a level where you can throw not 10, but 100 rocks against the wall, and once one of them hits, get another 4 dozens and hurl them at the same spot immediately.
Isn't this pretty much what Google does? Outside their core areas of search and advertisement, they try numerous projects until something gains friction. When something does, they work on variations on the theme (to their detriment perhaps, see their numerous chat offerings now). If it doesn't, or it isn't profitable, they scrap it.
Even if it does gain traction, they'll do it for a little while, then kill it anyway. And make another messaging platform/app.
It's still not healthy, but their bets are spread quite a bit better than Google's.
(I think there is quite a bit of monetization potential for Google in Google Apps and Chromebooks. They could move to a position/market that Microsoft was in. But it takes time to grow that business.)
My question is: do they do a small number of internal R&D projects, or do they do a large number that gets continuously filtered?
Apple likely has a half-dozen products sketched out that they can't release until some technology / market hurdle is overcome. So they focus their R&D on the technology hurdles, and their lobbying/PR efforts on the market ones.
[1] http://www.androidauthority.com/how-does-google-make-money-f...
And I do mean "yes and no". There are ways in which they are different, but there's also significant ways in which the performance is significantly correlated in a way that would concern me as a CEO.
You tube does not make much money according this article. If youtube was making money wouldn't google make a not of it in their 10k or 10q instead of not breaking it out.
https://www.sec.gov/Archives/edgar/data/1652044/000165204416...
Looking at the services that have been killed over the years or stagnated, they don't allow enough data collection or ad delivery to justify spending money by Google. Either because they simply weren't well geared towards it, or because they didn't get enough uptake in the market.
Mayer spent a lot of money on acquihires and self-aggrandizement but all that was externally visible was entropy. The changes that I've seen all involve the pollution of their various news aggregators with the lowest grade clickbait.
I think she should be applauded for those things personally, even if Yahoo was a sinking ship she couldn't save.
How much money does youtube really make compared to search. The profit margin is not anywhere close to their search ad business.
// source: wasted many years of my life at Yahoo, left after Marissa came and I realized that she was being hoodwinked by the manager-types.
By relying on attrition, you can pretty much guarantee that the people with the best offers waiting on the outside are going to leave, and that's pretty highly correlated with the people that you actually want to keep.
If layoffs are required, there is no other way than to take the bull by the horns and make hard decisions about who has to go and who has to stay. Sometimes that involves making decisions about what programs are going to go/stay, which consequently leads to letting good people go when you shut down some of those programs.
I'd also guess that shareholders have learned the lesson many years ago, which is why active layoffs often increase share price. Layoffs tend to increase near-term profitiability; whether long-term profitability is increased depends on whether you get the layoffs & refocusing done right.
Not quite. The worst would be to do that, then have a office suite converted into a nursery for just your own kids.
The only reason it might have looked good enough to take is that axing remote at a stroke gets pretty much everyone, good and bad. I suppose a few young/single/unemployable people might move to the office, but my memory was that Yahoo lost most everyone who was remote.
That's marginally better than the usual "make the workplace intolerable" option, where you lose exclusively the good. Of course, it's still much less good than actual dismissals, where you (hopefully) keep the good engineers in particular.
Not just engineers. sales and ops folks who are close to clients/vendor offices are also prime for remote work.
seems like a sad knee-jerk response by y!
Twitter's False Prophet: How Jack Dorsey Failed to Turn the Company Around (wsj.com)
HN top comment: I don't think the failure is on Jack; Twitter was a walking zombie before he arrived. All the engineers left after writing their own version of popular well designed Scala libraries like Akka and Spark and Play because huge ego. They stuffed these rewrites into monorepo which came crashing down. The engineers ran away and Jack turned off the lights.
A) That she was paid so much money. A lot of people could have "not succeeded" for a lot less than what they paid her.
B) Her attitude. I have never dealt with her, and am only basing this on what I've read: She seemed to push a lot of bad policies, that made employees upset, with the attitude of "All of this pain is for the Great Reward of turning Yahoo around." Yet at the end of the day, it seems that their sacrifices were for nothing.
She talked big, but never delivered, and is making out quite successfully, for failing. Meanwhile the real brunt and struggle was pushed onto the employees.
EDIT: I also think this resonates with a lot of people, as most of us have had similar execs. "No, we can't afford another server, you'll just have to work harder. Guess you'll just have to work through the night! Oops, it's 5 p.m., time for me to head out to my company-paid steak dinner, in my company-paid car, then time to head home to my company-paid apartment!"
Yes, they built something. Still.
Uh that part is pretty substantial.
Driving it into the ground at mach 3 makes every leader in SV, every leader in tech, look bad. "Why just like yahoo, I'm sure twitter is worthless and about to go out of business" We either know better, or for various social reasons we can't say stuff like that, so we don't say stuff like that. But she's representing "us" to the world, very poorly indeed, which hurts many people's pride. "Why all those SV CEOs can't lead starving dogs to raw meat, right?" That's gonna bruise some pride. On the very big picture, its no different than a sexual harassment scandal or an arrest for securities fraud. It makes an entire industry look very bad. So the distancing starts. "I'm no Marissa" "She's awful nothing like me or us" "she was never one of us"
I love this new career path. Beats working years just to advance to manage your old team.
Now I can see the logic behind all the attention on emojis at the Google I/O event. They will be our new leaders.
Some kind of severance guarantee for the new CEO in case they get fired, OK, I get it. You need to keep your kids in private school and continue to pay your mortgage for the period of time while you find something else to do, fine, no problem. I'd even be fine with a healthy multiple of what that kind of expensive lifestyle costs for 6 months. In Mayer's case I'd even say that a million bucks might be justified, given that it will probably take her a while to find something else to do.
But an agreement that will likely soon result in a $55mm payment to an outgoing CEO who has spent nearly 4 years pissing money away in bad acquisitions and destroying value across multiple verticals is absurd.
Yahoo then failed to fix its shitty directory (it eventually licensed results from third parties) and built a successful ad platform that was never bleeding edge. Meanwhile Yahoo passed on Google and Facebook…
They have dynamic lists based on sales and downloads (which has its own issues, admittedly) for every category that may be algorithm-based but has no human making arbitrary decisions for each individual app.
They also choose certain apps and feature them on the front page of the app store, which changes every week.
They also let developers choose their categories (instead of employees choosing the categories), and developers can choose more than one category.
They also let developers pick keywords (with some limitations) for users to find the apps via search terms.
Each app page has its own url, so it can be landed on via other methods throughout the web.
So all in all, it's very different from early Yahoo, and significantly better, and all of that would be plenty if they had like 1% of the total number of apps that they do, but they don't, so way too many apps get buried and unnoticed.
The only chance for yahoo was promoting someone from within not bringing a "professional" CEO that will jump ship in a few years.
Jack Dorsey was (apparently) in the market for a job change around 2011, was a two-time winner already, and has since shown that he's willing to take on turnarounds. Sounds great, but I can't imagine what offer would have gotten him to take over a bloated, directionless horror like Yahoo.
The entire job offer was an ugly one only suited to people without the independence and focus needed to succeed at it. Someone market-savvy enough to claw out a profitable place for Yahoo was bound to have options that didn't require mass layoffs and managing a dozen nearly-worthless side products.
IMO her Google career itself was vastly exaggerated portrayal of her actual talent
And in any case, there is no reason to believe that Yahoo’s or any tech company’s continued existence is normal. Yahoo was of a time, as was Digg, MySpace, etc.
It’s easy to say they “screwed up”, but success for any amount of time is the exceptional part. Regressing to the mean of “non-existent” or “not valuable” is…normal.
What exactly Yahoo is, can someone explain LIM5. and who their target customers are consumer or corporate???
I am not talking their subsidiaries, just Yahoo. Alibaba is cool, but that's not enough.
They are not even trying at anything. They are not even exploring anything.
All I can say, they can do better than this.
We create value for advertisers with a streamlined, simple advertising technology stack that leverages Yahoo’s data, content, and technology to connect advertisers with their target audiences. Advertisers can build their businesses through advertisements targeted to audiences on our online properties and services (“Yahoo Properties”) and a distribution network of third-party entities (“Affiliates”) who integrate our advertising offerings into their websites or other offerings (“Affiliate sites”). Our revenue is generated principally from display and search advertising.
We are proud of our rich history that has evolved with the Internet, beginning in 1994 when our founders, Jerry Yang and David Filo, then graduate students at Stanford University, created Jerry and Dave’s Guide to the World Wide Web, a simple directory of websites to help people navigate the Internet. Yahoo was incorporated in 1995 and is a Delaware corporation. We completed our initial public offering on April 12, 1996, and our stock is listed on the NASDAQ Global Select Market under the symbol “YHOO.” Yahoo is a global company headquartered in Sunnyvale, California.
Seek and ye shall find: http://files.shareholder.com/downloads/YHOO/2121517153x0x893...
Not commenting on the general sentiment of what you wrote but I think that's a tough question even in the context of a successful business like google.