Iterations: Much Ado About Yahoo!

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Editor’s Note: Semil Shah is a contributor to TechCrunch. You can follow him on Twitter at @semil.

Over the past few weeks, I’ve been genuinely surprised by the depth and reach of the reaction to any moves made by Yahoo! As someone who hasn’t been around the this place for too long, my sense is Yahoo!, despite its recent history of countless missteps, is still vitally important to the cultural memory of Silicon Valley. And, as a result, the moves its new CEO makes becomes the subject of ridiculously intense, global scrutiny, armchair speculation and analysis, and a deafening level of peanut gallery twitter blabber devoid of any reason or context.

Let’s *briefly* recap the multiple serious issues facing Yahoo up to mid-2012. There were years of board mismanagement. Musical chairs in the CEO’s office. The company abandoned search. The portal still resembles a digital media site while today’s hottest properties delivered personalized newsfeeds. An identity crisis of whether its a media company versus a technology company, the one which gave Hadoop to the world. An activist investor who rightly blasted the original board of directors and leadership. While their display ads are profitable, they won’t be able to target them as much as other properties. While Yahoo! may still wield a huge global Consumer Internet brand and act as the portal to the web for a massive audience worldwide, it remains unclear how much growth is left for a company already worth around $20B and one that turned down a juicy $45B offer from Microsoft in 2008.

Yahoo! has a secret weapon, however, and her name is Marissa Mayer.

I say “secret” for a specific reason. Now, it’s obvious to point out the company’s powerful CEO – given how well-known Mayer is, but the following bears repeating: Very, very, very few people in the entire world possess her level of operational experience, product intuition, and deep technical networks. People seem to forget these facts, instead choosing to focus on cafeteria policies. Put another way, more bluntly — only a very small handful of people possess the depth of experience she holds, building products for hundreds of millions of consumers and growing up inside one of the Valley’s most iconic, storied, and successful companies from the the beginning. Period.

The reason I’m devoting my column to this tired, overplayed topic to remind all of us just how rare her experience is. Now, let’s briefly review what Mayer has accomplished in less than a year as Chief Yahoo, in no particular order. She recruited a new CFO & COO. She added Max Levchin to the Board (which again, was originally shaken up by Loeb). She helped engineer a partial sale of Yahoo’s position in Alibaba, netting the company much-need liquidity. She helped steer a redesign of the main homepage and taken steps toward personalization of the newsfeed — anyone who has helped redesign a site even for a small company knows how political this task can be. She closed the acquisitions of Stamped, Snip.it, and OntheAir, smartly scooping up excess talent, especially for mobile, in an environment that has too many fledgling and inconsequential startups to begin with. She is drawing more positive attention for Yahoo! than anyone before her, even using Twitter and Flickr herself to communicate with the community. She improved cafeteria conditions (which also makes it more inviting for visitors). She gave employees iPhones. In about eight months since her installment as CEO, Yahoo’s market cap is up roughly 25% with around $4B in liquid assets and fewer than the 14,000+ employees she began with — and that number may come down again as her new “Work From Work” policy takes effect.

The facts above speak for themselves. In less than a year, Mayer has engineered a series of small victories on what could be a very long journey to turning around the big ship that is Yahoo. It may not even be possible to turnaround, but things are much better now. In the future, I’d broadly expect to see further downsizing (including parts of international), more data partnerships alongside their existing relationship with Facebook, many more talent acquisitions as seed-funded companies slowly die off, which will hopefully tie-in to investment in their mobile app ecosystem to extend their consumer-facing brands globally. For instance, given how hard mobile app distribution is today, Yahoo’s audience and brand could drive even more downloads on both iOS and Android if the company properly invested in this direction. Of course, on Quora there are great, detailed threads with suggestions for Yahoo’s CEO and if it can be saved at all.

Yahoo is a $20B that makes about $1B/year in profit. And, it has been in turbulent waters for years. Now, for the past eight months under the stewardship and steering of Mayer, Yahoo seems to be a good track relative to years past. This isn’t your average turnaround situation. Yahoo is a big ship that will take many more months to turn direction. We don’t know where the winds will take the company, but if the last eight months are any indication, I’m optimistic.

Interestingly, it’s Mayer’s presence that intensifies all the chatter. The Valley — and the world — cannot help but watch, which reinforces the fact that despite what popular sentiment may say, Yahoo! still matters to the web and still matters to the Valley, at least for now. But, Yahoo! needs to be turned-around and reinvented. This is Mayer’s clear purpose, and therefore she has the implicit mandate to engineer this by any means necessary. She’s trying to fix morale and culture in her own way. We can expect further reductions in force. She and the company are also under pressure to create a new property to demonstrate Yahoo! can still create. From my point of view, it will be exciting to see unfold, and I have no doubt when her tenure is complete, Mayer will have left Yahoo! in significantly better than shape than we she inherited it.

Photo Credit: Rachael Voorhees / Creative Commons Flickr