Last November we all knew Yahoo cofounder Jerry Yang would be stepping down after a disastrous tenure as CEO. He spurned Microsoft without realizing the consequences, and he had no ability to describe an alternate path for the company. We weren’t alone in calling for his dismissal, and the hope was that Yahoo would find the right leader to restore their former glory. They didn’t.
In the few months between Jerry’s resignation and the beginning of the Carol Bartz era at Yahoo, there was much speculation in Silicon Valley about who might lead the once great company. People I spoke with thought Yahoo would go one of two ways. The first would be to try to find the great product visionary to lead the company forward. Their Bill Gates or Steve Jobs (Mark Zuckerberg may someday be on that list). With the right product vision Yahoo could push boldly into new territory and renew its bid to create a lasting brand and company. The second way to go would be to hire someone to sell the company, whole or in parts, and maximize shareholder value in the short run.
It’s pretty clear Yahoo went with door number 2 and chose someone who could negotiate a deal over the next great product visionary of our time. You can’t really blame them – true visionaries are by definition rare. And it’s unlikely they’d want to go to swim upstream at Yahoo during the hard rebuilding years.
So in came Bartz, and the deals started happening. We’ve mostly kept quiet. Any new CEO deserves a honeymoon phase, and Bartz barked at journalists to keep their opinions to themselves on her first day at Yahoo: “It’s been too crazy. People outside Yahoo deciding what Yahoo should do, shouldn’t do. That’s got to stop.”
But the honeymoon ended when Yahoo signed away its most important asset for next to nothing. Yahoo went from being in the enviable position of no. 2 in search to just another portal, albeit a big one. And despite what Bartz said, she held out hard for a big up front cash payment. Microsoft never gave in, and Yahoo caved. Now they’ll watch their search market share dwindle, just as AOL’s did after surrendering search to Google earlier this decade. And since all the people have left or are leaving, there is no way for Yahoo to ever recover what they once had. What in the world will happen to them if the government rejects the search deal? They’d be in very serious financial trouble almost immediately. I almost wonder if Microsoft secretly hopes for exactly that to happen.
Bartz played an excellent game of checkers. It’s just that her opponent was playing chess. And the history books will not be kind.
So what’s next for Yahoo? There’s talk of social stuff, but no one believes it. Products are being sold and shut down left and right. Yahoo may stumble along for years without a forced sale. But there are no real product gurus left there to do anything spectacular and risky. What’s Yahoo’s equivalent of the iPhone? They don’t have the stomach to try it, whatever it is.
Bartz says not to worry, that middle America still loves them: “When you get outside New York and Silicon Valley, everyone loves Yahoo.” You know who else used to say that as they began their long, slow decline? MySpace. But what they miss is that the new generation of Internet users is all about Facebook and Google, no matter where they live. Without a bold and risky plan to reshape the company, there is no way to get back those users.
Do I really want Yahoo to bring Jerry Yang back? No, not really. He loves the company but he certainly wasn’t the leader Yahoo needed. His tenure as CEO was a sad affair. But he did have passion for the product, something Bartz lacks. And frankly, he seemed willing to turn down every offer from Microsoft. After declining the initial takeover offer, maybe that was the best strategy. Giving away search hardly seems strategic.
I miss Yahoo. They used to be warriors, with a bite to back up their bark. You can throw F-bombs all day long, but if you don’t have the product muscle to back up the bluster, eventually it just gets old.