What's a Post-Yang Yahoo Look Like?

Written by R. Scott Raynovich - Light Reading

Tuesday, November 18. 2008 at 10:45 AM EST 2 comments

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When I saw ex-Yahoo Inc. (Nasdaq: YHOO) CEO Jerry Yang at Web 2.0 two weeks ago, before he'd lost his CEO job, I remember being quite puzzled. "Why is this guy so happy?" I thought. "Why so complacent? Why so... unconcerned?"

Now he's stepped out of the CEO spot. Was Jerry in denial? Watch the interview here, and decide for yourself. (And comment on the board!)

The question now is: With Yang gone, can Yahoo be fixed?

I believe the company's problems lie much deeper than Yang's leadership. Yang was not a bad person. In fact, he was a brilliant founder and entrepreneur. But he was not cut out for the job as a manager of large public company, which calls for an entirely different skill set. Really, most of the blame for what happened to Yahoo lies with the Yahoo board, which thought Yang was the right leader for the company and stuck with him far too long.

There are other problems. For some reason the media and the board give glowing reviews to Sue Decker, although my examination of her record reveals that there's not much there there.

She might be a good speaker on television, but I can find little evidence that she drove fundamental product change at Yahoo. And she may have contributed to the politically charged atmosphere in the upper echelons of Yahoo. Many of her so-called "lieutenants" have left the company.

Decker's vision of salvation for Yahoo was reseller deals and sharing revenue with Google. Neither of those worked. Decker recently wrote a memo to the Yahoo troops, which The New York Times printed. In fact, by reading Decker's memo, you can gain insight into her "strategic vision," which is not in fact about leadership, but about spewing buzzwords and random statements about "metrics."  She is, after all, a former stock analyst.

For example:

Specifically, there is no doubt that we are improving monetization and driving query growth. Yahoo! continually optimizes its algorithmic and sponsored search, and we have, in 2008 alone, developed and launched hundreds of improvements all designed to enhance search quality and deliver a more relevant search experience to the company's users, including index expansions and updates, ranking models, and performance tuning.

I'm not sure about you, but this is jibber-jabber to me. "Improving monetization and driving query growth?" What about making money? "Optimizes its algorithmic and sponsored search?" What on Earth is she talking about? It was only a few months ago that she was telling us that a deal in which Google would help scratch Yahoo's back would result in the rebirth of the company.

It's an awful piece of writing. Here's more:

We plan to provide cutting-edge advances in products, platforms and services that the industry needs and expects. We will lead the way in helping advertisers navigate the continued convergence between the contextual and search ad markets.

These words are nearly completely content free. I had a teacher in high school that described writing like this as "pink gas."

Instead of focusing on fancy Silicon Valley and investment-banking terms to describe the utter nonsense, why can't the company simply give us a vision, which is essential to fixing the company? Tell us what Yahoo is, tell us what Yahoo is going to be, and tell us why Yahoo is a leader.

It's fascinating to me that Decker did not use the one most relevant piece of data in her memo: Yahoo continues to hold, by any measures, one the top two largest global Internet audiences in the world.

The fact is, there are things that Yahoo is good at. It has a ton of users. It has more marketing channels than Google (Nasdaq: GOOG). It does a very good job at aggregating, organizing, and presenting third-party content -- in ways other than search. It has many leading information sites on the Internet, such as Yahoo Finance, which I use religiously every day to gather company information.

Why does the company never talk about these things? I think it's because it can't decide what it wants to do. It's got some kind of inferiority complex, and it doesn't need one. It's a huge company, with lots of assets and lots of power.

What about: Yahoo is the most diversified Internet marketing company in the world.

There is a lot to work with here. Yahoo is like a high-end McMansion that's been neglected by slovenly owners who didn't keep up the landscaping, fix the plumbing, or plug the hole in the roof. Now there's a lot of damage, and fixing it will take some work. But it's still in a great neighborhood.

Will the board go out and hire a bunch of solid contractors, or will it call up the local real estate agency to put it on the market? I'm not sure the Yahoo board has the will or the energy to fix this company itself. It's more likely they are going to have to sell it.

With Yang's resignation, the Yahoo board has finally turned the page. The problem is, I don't think anybody -- including the board -- knows what happens on the next one.