Daily Management Review

Failure To Prioritise On An Agenda Led To Yahoo’s Woes


Reuters talk to the ex-executives of Yahoo to trace back the beginning of its fall.

Failure To Prioritise On An Agenda Led To Yahoo’s Woes
The meeting of Yahoo executives, in the spring of 2006, showed no apparent signs of crisis within the company. Yahoo was been a pioneer in the line of the internet, which had just made a profit of “$1.9 billion” from a revenue income of “$5.3 billion”. Tough times for the “dot-com bust” seemed like an impossibility, while the Yahoo Inc was flushed with “lucrative advertising deals” offered by popular brands of the world.
Recalling a fateful “retreat exercise”, an ex-Senior Vice President of Yahoo, Brad Garlinghouse, currently a Chief Operative Officer of “payment settlement” at Ripple Labs, said:
"It was all over the map. Some people said mail. Some people said news. Some people said search."
The termination of Yahoo was finally summed up in an agreement, whereby Yahoo will be selling its “core assets to Verizon Communications Inc”. The said event that took place this week was the result of a motion that started a decade ago. Reuters interviewed many former Yahoo managers, who unanimously agree that the downfall of Yahoo has been triggered off by “both the executive leadership and the board of directors during the company's heyday in the mid-2000s”.
The list of “missed opportunities” includes:
“...a failed bid to buy Facebook Inc for $1 billion in 2006. A 2002 dalliance with Google similarly came to naught. A chance to acquire YouTube came and went. Skype was snapped up by eBay Inc. And Microsoft Corp's nearly $45 billion takeover bid for all of Yahoo in 2008 was blocked by Yahoo's leadership”.
However, company culture at Yahoo was equally responsible for the downfall, which became “too bureaucratic and too focused on traditional brand advertising” that failed to keep up with the “fast-moving tech business”. Another Ex- Senior Product Director of Yahoo, Greg Cohn, stated:
"It became very difficult to get both investment and alignment (around new product initiatives). If you built a new product and the home page didn't want to feature it, you were hosed."
At present, under the Chief Executive Marissa Mayer, Yahoo is focussing on mobiles, while Mayer informed Reuters that “she still saw a ‘path to growth’ for Yahoo”. As a holding company of Alibaba’s stakes and Yahoo Japan, the company will continue to function.
Recalling the hay-days of Yahoo, Dan Rosensweig, Ex-COO at Yahoo:
"From our perspective, we were a media company. It didn’t feel at the time that there was a strong likelihood we would beat Google at search... Nobody could argue that we weren’t the largest front page on the internet."
While, Wenda Harris Millard, ex-Chief Sales Officer, added that all major advertisers once sought Yahoo’s alliance:
"When Coca Cola came to campus, we rolled out the purple carpet”.
"We were just doing gazillions of dollars with them”.
Nevertheless, the excitement faded soon as the deals of the big advertisers “turned out to be a trap in many ways”. Yahoo failed to adapt to the changing market scenario and continued to focus on big money rather than the future. Writing about the woes of Yahoo, Paul Graham, informs:
"The worst consequence of trying to be a media company was that they didn't take programming seriously enough. Microsoft (back in the day), Google, and Facebook have all had hacker-centric cultures. But Yahoo treated programming as a commodity."
The early efforts of social media made by Yahoo through Yahoo Groups and “market-leading products like Yahoo Mail” were neglected as the managers failed to decide which one they would prioritise on the Yahoo home page. In the meantime, potential acquisition of Flickr and Delicious went out of Yahoo’s hand.
The various initiatives taken up Yahoo, didn’t allow the staffs to concentrate on one priority, whereby Reuters informs:
“Too often, the end result was money spread too thinly across too many marginal initiatives, as Garlinghouse famously pointed out in a leaked internal document known as the Peanut Butter Manifesto”.
By the year of 2007, Yahoo had strong market competitors, like Google, Facebook, Netflix and so on all focused on one priority. Nevertheless, a turmoil regarding the “unsolicited Microsoft takeover bid in early 2008” caused a split in the management, making it difficult for the board and the employees alike to commit to the “same goal”.
However, Reuters conclude that:
“Mayer put a brave face on the deal Monday, saying the scale that will result from the Verizon combination will enable it to continue its efforts to catch up in mobile, social and advertising technology. But the history of the tech business, where companies rarely dominate from one generation to the next, suggests that any such revival is a tall order”.