Yahoo’s Marissa Mayer Stumbled After Secret Truce with Activist Investor | Hacker News Reader

Yahoo’s Marissa Mayer Stumbled After Secret Truce with Activist Investor

wsj.com

79 pointsjackgavigan121 comments

I enjoyed the first couple of Yahoo/Meyer post-mortems, but at this point, it just seems like people are flogging a dead horse and taking potshots at Meyer while she's down.

She took on a hard job at a struggling company with minimal core competencies and a downward trajectory. Yes, she spent big and made a number of risky bets, which ultimately didn't pay off. Few people took a stand against her when she made those bets, but now that we know the outcome, everyone's suddenly an expert who knew better all along.

Yes, she wasn't able to save a sinking ship, and yes, we now know that she's no Steve Jobs. But that just makes her an average executive, in the same league as most SVPs/CEOs out there. It doesn't make her a failure or incompetent. Let's bury this dead horse already.

I don't think that most CEOs/VPs would take such a job in the first place though.

I think they would. If you can turn Yahoo around, you become legendary. CEOs are already risk takers, it makes sense.

Also it wasn't all that risky. Even though she failed she'll walk away with enough money for a lifetime (to add on top of the lifetime supply she already had).

>I don't think that most CEOs/VPs would take such a job in the first place though

You don't? A job with a huge potential payoff while making oodles of money in the meantime? Yeah, sounds awful. You fail that job and, worst case, your family is set up for 3+ generations.

>Few people took a stand against her when she made those bets

I'd like to know why you think that nobody wanted to call her out publicly. I'm not disagreeing with you, I just want to know your opinion in regards to why people kept quiet.

People kept quiet? I'm not a Mayer apologist (or even a "fan"), but she has been criticized for everything. From her looks (people said she is a dumb blonde who is going to wreck everything) to her decisions (everyone knew tumblr was a bad idea). I have even read about people saying that Google offloaded her to Yahoo in order to sink them. All of this right here on HN.

So no, they did not keep quiet. They've treated her worse than Jobs. Who by the way, conspired with others to pay tech workers less...

I think people kept quiet because most of what she did seemed reasonable at the time. When you're suddenly put in charge of a sinking ship, you need to make big risky bets in order to turn things around. When you're managing a company worth tens of billions of dollars, obsessing over a few ten million dollars seems penny wise and pound foolish. She didn't make any obvious mistakes, which is why there was no consensus that she was doing a bad job. But now that everyone knows the outcome, people seem to have known better all along.

If I'm reading the subtext of your post correctly, you're insinuating that people didn't want to call her out publicly because they didn't want to seem sexist? If so, that certainly hasn't stopped people from taking potshots at her now.

> Few people took a stand against her when she made those bets

Plenty did, but it was not politically correct to attack her publicly, so these people's concerns were quickly dismissed as you know what (it begins with a s... ).

Yahoo has zillions of product. How about integration between these products ? there is none. That's how you start building a valuable ecosystem, that's what Google, Apple and Microsoft do ! You can't buy your way into success if there is no real global strategy to interconnect all the apps you bought.

There's a big difference between critiquing a business strategy and "attacking her".

When people do the latter to a prominent woman, I think it's reasonable to ask whether sexism is involved. We know from a variety of studies that people are more critical of women, and more personally critical. [1]

It's often unintentional; many people who are consciously not sexist demonstrate significant bias. So I don't think anybody needs to feel accused or defensive. But it's certainly something we as a society need to work on.

[1] E.g.: http://fortune.com/2014/08/26/performance-review-gender-bias... and http://www.wsj.com/articles/gender-bias-at-work-turns-up-in-...

I'm afraid you can't have it both ways. In part of your comment, you say that attacking someone in a sexist way is quite easy to do because it's unintentional, it's done by people who are not sexist, and broadly applicable statistical heuristics should be used to determine the likelihood that a remark is sexist.

Elsewhere, you say there is a big difference between non-sexist and sexist criticism. A big difference should be observable and definable, thus easy to avoid committing.

My opinion is that there actually is a big difference and your heuristics are wrong. I would not accuse someone of a serious faux pas, which a reasonable thing to feel accused and defensive about, unless I could clearly explain the difference between it and a reasonable remark in a way that others could repeatedly point to when constructing their own remarks. In a statute or regulation, this kind of definition is referred to as a safe harbor.

I said there's a big difference between commenting on a strategy and attacking a person.

This is all in reference to spriggan3 changing the ground from her bets, which is what heimatau was talking about, to "attack[ing] her publicly".

It is possible to address both in sexist ways. But when somebody is attacking a prominent woman in ways that prominent men in similar situations get a lot less of, I'm much more inclined to read the personal attacks as sexist in motivation.

I definitely didn't say "there is a big difference between non-sexist and sexist criticism", and I don't believe that to be generally true. That's why hidden biases like sexism and racism are so pernicious. Is any individual Mayer comment sexist? Who knows. But when we look at statistical patterns in how women are treated, it's obvious that bias is in play, be that conscious but hidden or entirely unnoticed by the commenter.

Your focus on assuring safe harbor for dudes is telling. You don't talk at all about safety for the people actually being harmed by the sexism; they appear irrelevant to you as long as guys don't have to endure examination and possible criticism.

Your last paragraph is way off. I don't have to list my anti-sexism accomplishments to justify making a point about something else.

Trying to create a safe harbor for apparently sexist men is not "something else".

Sure, you don't have to list anti-sexist accomplishments. But if you want to be read as somebody who has a balanced approach to the topic, you have to demonstrate that balance.

> Yes, she wasn't able to save a sinking ship

Why do you think this? Based on the WSJ article [1] she created a mobile ad revenue (non-existent before Mayer) of 1.5 billion. Mavens is a huge success. She does need a little more time. I honestly thought Mavens was a wash until this article but she's followed through on what she said and it's working. A 4 billion dollar company that created a 1.5 billion market...I'd call that pretty awesome. She needs to do better though. Double that and the public should see the turnaround as well, which she's on track to do with 1-2 more years of aggressiveness.

[1] https://si.wsj.net/public/resources/images/P1-BX746_YAHOO__9...

Mavens isn't a new product, it's advertising sales in the only growing parts of the company (mobile/video). Meanwhile other revenues are collapsing and total revenue is sagging. Profits are in the shitter and they're trying to sell off all the pieces before it's too late. It's absolutely a sinking ship.

So yes, she cherry picked the hot areas and highlights how they are growing and ignores the fact that costs are also growing and profits are disappearing. Yay MaVeNS!

I'm not a fan of the public just repeating talking points. Namely, you are doing this as well because Mavens wasn't in existence pre-Mayer [1]. Maven IS a new product, you're very misinformed to think anything else.

Yahoo isn't a sinking ship, it's previous 'core' is. Hence why Mayer is shifting emphasis, focus, and ahem revenue. Banner ads wasn't going to keep Yahoo alive, Mavens can and will. Mayer was insightful enough to see this and pounced on it even though she believes in some areas she should've acted sooner (I think she's referring to her Maven's focus).

[1] http://marketrealist.com/2015/03/yahoo-coins-term-mavens-key... tl;dr; "Yahoo coined the name MaVeNS, a broad acronym for mobile, video, native, and social. Prior to 2012, Yahoo had no native or social ads, and mobile and video were in the nascent stage. The four MaVeNS businesses didn’t contribute any revenue. And now, within less than two years, MaVeNS has contributed more than $1 billion of annual revenue."

> with minimal core competencies

Sorry - do you mean Mayer or Yahoo?

Yahoo.

Mayer is a very competent woman, as anyone at Google would tell you.

I think people knew the logo redesign was a joke immediately. It was obvious she was the wrong person to run such a large company and no-one liked the company to begin with. It's hard to blame people for having the advantage of hindsight when they were criticizing her at the time. Being an average executive at that level just doesn't cut it.

> She has defended her strategy by stressing that growth is the lifeblood of internet businesses.

Or, you know, utility.

It's funny how she defends all these acquisitions underneath some imaginary fable that growth == success. Google didn't reach where it is today because it grew fast -- it was able to grow because it has basic utility and was known as the best amongst the competitors.

The key question for Yahoo has always been, what is the core part of our business that users love us for? As she probably knew, fantasy sports is a big one, but unfortunately that's not going to be enough for a company as large as Yahoo. As a result, they bought up a bunch of startups to try and find more core-utility.

It's been fun to watch, but I'm with the crowd that says Yahoo can't really change and should just sell its core off. When the average consumer thinks internet, they're not thinking "oh thank god Yahoo is there", but without Google or Amazon -- two companies that can justify aggressive growth -- we'd be left with a shoddier internet and that's just the basic truth of it all.

Yahoo was sustainable and profitable. They weren't as big as Google or Amazon but they made a lot of money. But that wasn't good enough for the investors or the public, who want infinite growth.

I never understood the mania for growth. If a company is reliably returning, say, 20% profit, I wouldn't mess with success.

The world isn't static, a "reliable" profit is worth less and less each year if a company isn't growing. Companies are valued based on their future earnings potential, growing companies will thus be valued much more highly. In Yahoo's case not only was there no growth, but their business was shrinking without a clear path to stopping that.

OK, but unless that company is paying out a dividend, why would you invest in it?

Theoretically, a stock price reflects future earnings. If future earnings are constant, then the stock price doesn't move.

Why buy $1M in stock if you know 5 years from now it'll be worth $1M?

But in turn, if a company is getting 20% profit, why do they need people to invest?

Because they're currently a public company, and without people interested in buying the stock, it's going to attract activist investors which often ends up as a big distraction without making any real changes.

So it sounds like the problem is systemic - this is why I'm never eager about companies going IPO...for every Google that ensures shareholders can't kill the company, there are hundreds that guarantee mid-term failure for short-term gain.

Equity cash out

Because you know 5 years from now it will be worth $1m, and not a lot less after a series of growth-oriented misadventures that didn't pay off.

Also, you'll be getting steady income from dividends.

Also, in the bigger picture you're less likely to be dealing with a manic depressive cyclical market that gyrates wildly between extreme growth mania and extended depressive episodes.

What you don't get is a monkey-brain dopamine kick from telling yourself that you're an awesome person who beat the market.

It makes investing predictable and drama-free, and where's the entertainment in that?

People have thousands of stocks to choose from. If they want consistent low growth, they'll go with something far more predictable like a bond. Low demand for this stock makes it worth even less, which hurts investors even more and gets CEOs fired. This is why growth or consistent high profits that can pay for dividends is a goal of every company. Mediocre profits alone won't really do you much good if you're working for your investors at a major corp.

> OK, but unless that company is paying out a dividend, why would you invest in it?

I feel that's the core problem with the stock market. It was supposed to be about investing in a company in exchange for the share of the profits (dividents). Instead, people got greedy and now it's gambling; nobody cares about the company they invest in, everyone plays meta-games.

The stock market has always had a high gambling component.

A lack of dividends is hardly the stock market's problem, though. Assuming that is actually a problem (I'm not sure it is), it would be a problem of company managers and investors not understanding fundamentals.

Dividends are taxed at a higher rate than capital gains.

Once you look at the incentive structures that creates, the mania becomes disappointingly rational on the part of investors.

It also converts investing into a negative-sum game.

That leads back to the dividend question. As a shareholder, you only make money one of two ways: your stock goes up, or you get dividends. To be attractive, a company needs to be doing one or the other.

If you think the company will keep returning that profit, no more, no less, and it happens to be true, then you will most likely find market participants who are convinced that the company will return more than that in the future. Since their projection of future returns is much higher than yours, they will offer you enough to sell. The new owners won't be content with with the stable return because that's not what they paid big money for.

A company usually needs to be growing YOY in order to reliably return a 20% profit. Unless it's a protected monopolist, or a comfortably ensconced player in a stagnant market. (In which case it's ripe for competition.)

It is entirely possible to overprioritize growth. Doing so can lead to overreach, spiraling costs, bloat, and loss of focus. But at least some growth is often required just to maintain a stable return.

It also bears mentioning that ther are many possible factors driving growth, some of them endogenous and some of them exogenous, some of them cyclical and some of them secular. It's very hard to speak of the blanket term "growth" as being particularly meaningful, in and of itself. We need to be specific.

It's not too complicated: if you don't pay a reliable dividend you need to have growth to keep investors happy. Yahoo's profitable businesses have been shrinking and they have been unable to find new ones to replace them.

Sure, but looking at their historic revenue, you're going from ~1.8B between 2007 - 2009 down to ~1.1B 2011-present[1]. In fact, their latest quarter for Mar 2016 only netted them 1.08B.

This is a ton of money and I reckon they could last a long time on it, but I believe the investor-mindset is something like "if you're not growing, you're dying" and if you're dying, you should probably sell at your peak. Looking at Yahoo revenue, it's clear they're dying and as a result, I wouldn't paint this as just greedy investors being greedy.

[1] - https://ycharts.com/companies/YHOO/revenues

As an occasional investor if a company isn't growing then I'd say we want it to make profits in the old fashioned manner of sales exceeding expenses. Yahoo was struggling a bit there. If you look at the earnings of the previous years there was quite a lot of funny stuff relating to Yahoo Japan rather than straightforward profits from happy customers.

It's an inherent risk of being publicly traded. Imagine a company with perfectly stable profits, unlikely to change in any direction. If some part of the market develops a collective delusion about that company being a prime growth candidate, then that part will buy out the realists. When that has happened the new owners will reshape the company into the growth-or-die-trying experiment they where expecting to buy.

She should've focused on growth adjacent to Yahoo's core strengths -- trying to acquire FanDuel in its earlier days, for instance. Maybe we could've seen Yahoo lead the daily fantasy sports industry.

As I understand it, she/they did try to make a play here, acquiring Jerry Shen and Bignoggins for fantasy innovation, including daily stuff.

Unfortunately, he was quickly fired from Yahoo! for sending out an inter-department email quoting N.W.A. (the rap group) with language one wouldn't consider work appropriate – particularly at a company that size.

I guess there's a pretty good argument to be made that people deserve to be protected from concepts that offend them. I've just never heard it.

One issue is that fan duel is basically illegal in the us, despite the legislation that seems to legalize it.. Now maybe as an overseas fan duel could work.

Growth for the sake of growth is the ideology of the cancer cell.

https://en.wikiquote.org/wiki/Edward_Abbey

Also ponzi schemes.

If you're curious what an activist investor is:

"An activist investor is an individual or group that purchases large numbers of a public company's shares and/or tries to obtain seats on the company's board with the goal of effecting a major change in the company."

It's strange that Yahoo once had a very popular suite of multiplayer online Java games (mostly board games) and failed to use them to gain an early advantage on mobile apps.

When Meyer left google, I was of the opinion that it's a good move for her. She had strong signals that her rise at Google was limited. This is when Larry Page had taken over as CEO and created a new "inner circle" of 7 senior VP's and Marissa was not one of them.

I thought it was a good move for her because she gets to be a big fish in a smaller pond and gets her name out there as a CEO. Pretty much nobody would blame her if Yahoo ended up bankrupt anyway since nobody had high hopes. But at this point it feels like her brand is damaged along with Yahoo's because of the leaks of boardroom struggles more than just the failure to revive Yahoo's business.

If she had managed to turn the company around, she would have become a legendary tech CEO. Either way she has made a lot of money and stands to make even more no matter what happens. So, in the end, this was still a good move for her.

Indeed, she has greatly enriched herself while flailing:

> If Yahoo is sold and Ms. Mayer is terminated as a result, she stands to receive about $55 million. Since joining Yahoo, she has received $118.2 million in cash and equity compensation.

Amazing that someone who failed, gets such compensation. Top execs should be paid proportional to profit. Of course this would never happen, but one can dream.

I think in some ways it makes sense that she gets paid so much though.. A failing company probably needs to give a greater incentive for someone to want to be their CEO.

It'd probably be difficult for Mayer to get another CEO position in the future despite the fact that a turnaround at Yahoo would have been difficult for anyone. In a way she's being paid proportional to the risk associated with the job.

Looking at it from another way, CEO's can make a ton of money, regardless of what happens, including complete collapse of the company. While everyone else involved, loses tons of money, and their jobs. Maybe if there was more of an incentive, beyond guaranteed money. Like if after x amount of years, y goals have been met, then you get paid.

what risk ? she'll never have to work again. she'll probably sit on the board of some companies and vote their CEOs the same huge percs.

Past a certain point, money is not a big motivator for most people. There are a lot of people still working even though they have more money than they will ever use. And many who retire keep just as busy doing something different.

In her case, presumably she's ambitious and likes the work she does; the risk is that she loses opportunities to do the work.

You start to wonder though, how much better these CEOs are compared to less famous ones.

This is a common occurrence long before Mayer became CEO. Thorsten Heinz of blackberry took away a chunk of money too after he failed. Many many examples of this in the industry.

Any idea how much she made at Google?

Previous HN discussion here:

Yahoo's Marissa Mayer could get $55M in severance pay

http://www.latimes.com/business/technology/la-fi-0429-tn-mar...

https://news.ycombinator.com/item?id=11600137

And I think the whole Yahoo story vindicated Google's decision to limit her rise. Of course back then everyone was too busy shouting sexist (not completely without reason) at anyone that doubted her management chops or her ability to save Yahoo.

The flamewars of the future after Theranos and Yahoo will be endlessly entertaining.

She got 100 million+ dollars.

She doesn't need a brand anymore.

It may be damaged, but she leaves with a CEO title and a lot of money and connections. It would be easy for her to become a VC, Angel or other time of advisor. (Especially since she can pony up her own money, and does have legitimate advice to give.)

I felt this way too but...this WSJ article is indirectly [1] confirming the success of Mayer's turnaround. Mobile is where the AD revenue is since there are very few iOS/Android AD blockers like uBlock Origin (and other desktop/laptop browser based blockers). Mavens IS MOBILE. This segment is growing crazy fast. If she were too grow 50-100% more, the turnaround would be official for Yahoo and at the current rate, it looks like 1-2 years more.

I think Starboard is doing a great PR campaign against Mayer. I had their narrative believed but...now I'm extremely doubtful about the nay-sayers. Since she's generating 1.5 billion through Mavens/mobile. Yahoo was non-exist in the mobile space. She's doing a great job. Activist shareholders are a plague in many (if not most) situations. It's why Dell took Dell private, to do a proper turnaround in the tech world.

[1] https://si.wsj.net/public/resources/images/P1-BX746_YAHOO__9...

It seems to have already stopped growing.

With the explosion in smartphones and the web properties Yahoo had all along, it seems almost impossible to not make money off that. But no thanks to Yahoo, they didn't invent smartphones nor mobile ads after all.

(Also, of course, companies have large freedom what revenue they attribute where, shifting revenue from areas the market perceives as "stagnant" to those of "rapid growth" even if they have no actual presence. That's how IBM is the biggest cloud company in the world.)

> It seems to have already stopped growing.

Did you even look at the graph I cited? Creating 1.5 billion in revenue in the past 3 years...how has that stopped exactly?

If you're talking about the past 4 quarters in the chart, I'd encourage you to do what most analysts do and that is compare YoY growth (Q1 with Q1, etc). That growth is very solid which is why her Maven's growth is solid, not stopping as you state.

>created a new "inner circle" of 7 senior VP's

Interesting, who was on the inner circle?

It's well documented that she struggled with the current CEO of Google, he was part of that circle.

As per John Paczkowski's AllThingsD blog post dated April 8, 2011 [0], six of them were:

* Sundar Pichai, SVP of Chrome

* Vic Gundotra, SVP of social

* Andy Rubin, SVP of mobile

* Salar Kamangar, SVP of YouTube and video

* Alan Eustace, SVP of search

* Susan Wojcicki, SVP of ads.

Nicholas Carlson's article Sex and Politics at Google: It's a Game of Thrones in Mountain View [1] goes into details about the rivalry and jockeying within Google's top ranks.

[0] http://allthingsd.com/20110408/pageyank-as-a-new-svps-are-bo...

[1] http://www.slate.com/blogs/business_insider/2013/09/20/sex_a...

And 3 of them are already out! Ouch!

That often happens with inner circles. The higher you climb, the fewer positions are available on the next rung up the ladder. And once you reach a certain rung, you are pretty much always fighting political battles just to stay where you are, let alone climb any higher.

I feel the same. I thought it was a good idea for her to take the job even if I had doubts about Yahoo's future. Assuming she wants to stay in the game, I think it likely she will have a long and successful technical management career.

Someone have the full text?

Hitting the |web| button above usually works (and did for me in this case)

Holy crap. I had no idea that existed.

Why are posts that require a sign in or subscription even allowed?

Why do people who complain about wsj on every thread even allowed? Click the "web" link.

Some of us are on mobile...

To add clarity to this statement, for some unfathomable reason, the "web" link does not show up on the mobile version of HN.

It certainly should, and does for me. If it doesn't for you, that sounds like a bug.

Great example why discussion of these meta topics is important.

I think if so many people complain about it then the link isn't very well known

I've been here for ages and it didn't occur to me to use the Web link to sneak past their sign up wall earlier today. I support no longer allowing submissions that require "one weird trick" just to read.

"Tell HN: Paywalls with workarounds are OK; paywall complaints are off topic"

https://news.ycombinator.com/item?id=10178989

That's lame. If I had seen that post that one day I would have chimed in. Good to know their stance though.

Added:

Send us update emails when you come to decisions like these. It would help keep me and others informed. I don't regularly re-read the guidelines and sometimes I miss threads like those.

The fact that the web link is on the comments page makes it pretty difficult to find. Took me quite a bit of wondering what people were talking about until I finally found it one day.

Moving the web link to page where the main link is would be an obvious solution.

It doesn't work for me on Chrome (which I usually use), but does on Safari (which I don't) I guess I have to clear my cookies or something?

I also support not submitting articles that require workarounds.

Flagging WSJ until they're shut out of HN will effect more change - they still gain SEO and popularity and social benefits from us using their contrived "trick" to leech off this community.

This isn't some kind of "contrived trick". The reason WSJ articles are available via Google search (which is what HN's "web" link does) is because Google won't index pages that can't be read by everyone clicking on a search engine result, and WSJ wants their articles to be searchable via Google.

Their contrived "hack" is left there so the internet will spread their paid content. They even experiment wth it.

http://digiday.com/publishers/wall-street-journal-paywall-go...

Thank you for this. I learned something new today!

Copy/paste the title into Google, and follow the link.

I'd consider reading it if I didn't have to sign up.

Just go a google search of the title and you can get around the sub-wall

This doesn't work for me on my default browser.

You're being downvoted, but I heartily agree. I would have no trouble paying only for the "good" content, things I will like or know I want or feel a need to read. I really think some form of microtransactions are the way to go here. This is simply one article that is, to quote another comment, a "dead horse", and not something I'd be inclined to read. Had it been an article on, say, some breaking news, or interesting financial news even, I'd happily pay and continue reading. Blanket subscriptions are the new cable t.v. channel bundles. Even though you want 3, pay for 219. Perhaps they could offer both?

It's lame that I have to use the google referrer trick: https://www.google.com/search?q=Yahoo%27s+Marissa+Mayer+Stum...

another good one is archive.is/[url]

here's the full text: https://archive.is/glTH3

Why is it lame that the publisher would like to be compensated for their work?

It might not be, but it's kinda lame to link to it here since many can't afford to pay for every single subscription site. Maybe if there was an option to pay per-article, but until then, it's simply unfeasible.

Because it makes a very hostile environment for independent journalists.

Hacker News appears to be turning into Mayer News.

Is Yahoo! acquiring YCombinator?

I think you have the buyer and seller backwards. :-)

Reply on news.ycombinator.com