I'm sorry, this may be PG's backyard, but I've gotta call bullshit. Note: I am not a Yahoo employee or corporate shill.
1. "At Yahoo this death spiral started early."
Apparently this death spiral took TWELVE YEARS (the WWW is 20 years old), and Yahoo is still #1 (or #2) in terms of total properties on the web. How is this a death spiral?
2. "If there was ever a time when Yahoo was a Google-style talent magnet, it was over by the time I got there in 1998."
Are you kidding me? You're implying all the current Yahoo engineers are idiots? Then how come each piece of code they release is revered, lauded and used by everybody?
Speaking of talent: Yahoo got best paper at EVERY data-related conference in 2010. No single lab(Google,MS) or university(Stanford etc) has ever done this. Clearly you can achieve this without talent, pg!
3. "In the software business, you can't afford not to have a hacker-centric culture. Probably the most impressive commitment I've heard to having a hacker-centric culture came from Mark Zuckerberg, when he spoke at Startup School in 2007."
Which company is responsible for inventing the term "Hack Day": Yahoo. Which is the only company to _promote_ hacking culture to students? Yahoo. Yahoo != Hacker-friendly? WTFFF!!! (edit:goog does soc, but it doesnt have engineers travel around the world teaching kids hands-on like yahoo does)
4. Google and Apple are shiny and get all the attention. Yahoo's the internet's underbelly. It's audience may not be SF hipsters, but they exist and there are a lot of them. Just because they're not like you doesn't mean they dont exist. Just because Yahoo doesnt cater to you doesn't mean it doesn't exist.
5. pg's product got hosed after inclusion into Yahoo. This happens. Reading a Yahoo critique from pg is like reading a Google critique from Evan Williams (Blogger), or a Google critique from the Dodgeball guys. It's a biased opinion.
6. It's a miracle Yahoo has survived for so long despite being criticized by the media /market for more than half its lifetime. The only other company that has had it worse was Apple, when they fired Steve Jobs. Yahoo doesnt have a Steve Jobs, and has been managed badly, but the engineering is SO GOOD that it STILL does a good job overall.